Establishing Tax Residency Timeline

Post new topic

Dani Ramz Member

Member since 03 October 2022

Dani RamzMember15 January 2025 23:43:03

I'm hoping someone here may have insight on this (maybe you've experienced it before when you first moved to Spain):

I'm a US citizen (so always a tax resident of the US) hoping to move with my family to Spain in late May/early June on the Digital Nomad Visa. We have to return to the US for the month of August for multiple family weddings and also hope to do a bit of traveling around Europe too in the Fall.

Say with the move timing and the month absence we do not hit the 183 days needed to be a tax resident - that means we aren't tax residents of Spain for that year, just the US, right? I know we'd still have to pay tax on income generated in Spain but mainly wondering about the income we made in the US prior to the move.

But say we do spend 183+ days in Spain, what happens to the income generated in the US prior to the move (in Jan - May)? We typically get taxes taken out of paychecks in the US so that tax will have already been paid to the US - how will we pay that to Spain?

Either way, I know we shouldn't be double taxed because of the tax treaties but just trying to figure out how it will place out. A few scenarios I've thought of:

Would we get charged by Spain and then request a refund from the US when we file those taxes?
Would Spain credit us for what was already paid to the US?
Will we only be responsible for paying worldwide income after tax residency is established (meaning Spain won't look at income generated BEFORE we became tax residents)?

Any insight would be super appreciated.

Thank you!

gwynj Bulgaria Expert

Member since 30 June 2020

gwynjBulgaria ExpertToday 06:21:47

2310

@Dani Ramz

I don't know any of the specifics, but as a US citizen you will remain a tax resident even when you move abroad. By living in Spain, you will become a tax resident there too. As a tax resident in two countries, you will owe tax to both. But there's a DTA so you typically don't pay tax twice on the same income, and you get credit in one for tax paid in the other. Which is probably your main concern.

Rules on tax residence are commonly based on the "substantial presence test" (i.e. more than 183 days in the year), but it's not the only condition. For example, if your family (spouse, children) lives there, or your "center of economic interests" is there (i.e.most of your property/money/business activity). It could well be your tax residence is triggered by the family move, rather than the days.

Usually, tax residence applies to tax years, rather than a point of time. But it depends, and I don't know Spain's exact rules on this.

Additionally, there might be some special tax conditions/exemptions attached the DNV, so it might be good to check on this too.

Articles to help you in your expat project in Spain

Taxes in Spain
If you are a foreigner living in Spain for more than 183 days in a calendar year, you are classed as a resident ...
Paying tax in Spain
UK tax payer 鈥� but now living in Spain full time?
Tax in Alicante : Get to know SUMA
Get to know SUMA
Working in Tenerife
Are you looking for a job in Tenerife? While there are certainly opportunities, especially for fluent Spanish ...
Internet in Spain
Whether for work or play or keeping in touch with friends and relatives abroad, getting online will most likely be ...
Working in the Canary Islands
The Canary Islands is Spain's southernmost autonomous community, an archipelago in the Atlantic Ocean, more ...
Popular neighbourhoods in Seville
Once you have decided to make the beautiful city of Seville your home, the next order of business is finding a ...
Accommodation in Madrid
Madrid, the bustling capital of Spain, is a popular destination for thousands of expatriates each year. With its ...