US–Spain Double Taxation Treaty & FATCA: Guide for Americans in Spain 2026

The Convention between the United States and Spain for the Avoidance of Double Taxation (signed 22 February 1990, Protocol 2013) significantly reduces but does not always eliminate double taxation. The US taxes its citizens on worldwide income regardless of where they live — this is unique among developed countries. As a US citizen in Spain, you must file both a Spanish IRPF return and a US federal return (Form 1040) every year. The treaty and the Foreign Tax Credit (Form 1116) mechanism allow you to credit Spanish taxes paid against your US liability, usually eliminating actual double payment — but not double filing.

FATCA (Foreign Account Tax Compliance Act, enacted 2010) requires US persons to report foreign financial accounts to the IRS. Obligations: (1) FBAR (FinCEN 114): file if total foreign accounts exceed $10,000 at any point in the year — due 15 April, auto-extension to 15 October. (2) Form 8938 (FATCA proper): file with Form 1040 if foreign financial assets exceed $200,000 at year-end (or $300,000 at any point) for US residents abroad. Spanish banks are also required by law to report US account holders to the IRS via the Spanish AEAT under the intergovernmental agreement (IGA) between Spain and the USA.

Art. 20 CDI USA–Spain: US Social Security benefits paid to a resident of Spain are taxable ONLY in the USA. Spain cannot tax them. The US generally withholds 30% on Social Security paid to non-residents, but the treaty reduces this to 0% for Spanish residents — you should file Form W-8BEN with the Social Security Administration to claim the treaty rate. Additionally, the Spain–USA Social Security Totalization Agreement (1988) prevents both countries from simultaneously charging Social Security contributions — relevant if you work in Spain for a US employer.

Yes — if you qualify under the bona fide residence test or the physical presence test. For 2026, the FEIE limit is approximately $130,000 per person (indexed for inflation). If you are a genuine Spanish resident and earn a salary in Spain, you can exclude up to this amount from US federal income tax. However, FEIE does NOT apply to self-employment income (you still owe self-employment tax) and it cannot be combined with the Foreign Tax Credit for the same income dollar. FEIE is reported on Form 2555.

Art. 13 CDI USA–Spain: capital gains from immovable property are taxed in the country where the property is located. Spain taxes the gain at 19-27% (savings income scale). The US also taxes the gain as capital gain (0%, 15% or 20% depending on income bracket). You apply a Foreign Tax Credit (Form 1116) in your US return for the Spanish capital gains tax paid. Note: the US does not recognise the Spanish 3% withholding retention as the final tax — it is a credit against the Spanish capital gains tax, which must still be reconciled in Model 210.

The Agreement on Social Security between Spain and the USA (1988) prevents dual Social Security contributions when a worker is sent from one country to the other. Key rules: (1) If you work in Spain for a US company and are temporarily assigned (up to 5 years), you pay only US Social Security — not Spanish RETA/SS. (2) If you are self-employed in Spain for more than 5 years, you pay Spanish Social Security (RETA). (3) The agreement also allows combining contribution periods for eligibility to benefits in both countries.