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US Taxes for Americans in Spain: FBAR, FEIE, the Treaty and Catching Up (2026 Guide)
Updated: Oct 6
Who this guide is for: Americans in Spain, and Spanish founders selling to the US
Moving to Spain does not end your relationship with the IRS. A US citizen or green-card holder files a US return on worldwide income every year, wherever they live, and reports foreign accounts on top of it. Most of the people who call us from Madrid, Barcelona and Valencia are not trying to avoid that — they simply never heard it, or heard it years after they moved. This guide lays out the US rules that actually apply in Spain, what the Agencia Estatal de Administración Tributaria (AEAT) side of the picture means for the US return, and how to catch up if you are behind.
I am an Enrolled Agent, licensed by the US Treasury to represent taxpayers before the IRS from anywhere in the world. We work with four groups in Spain: US citizens and green-card holders living in Madrid, Barcelona, Valencia or the Costa del Sol; retirees drawing US pensions and Social Security while living in Spain; remote workers on Spain's digital-nomad and non-lucrative visas; Spanish founders, developers and agencies who want a US LLC, EIN and US bank account to bill American clients. This is general information, not individual advice.
The US-Spain tax treaty and totalization: what they do and do not do
The US and Spain have an income tax treaty in force; it coordinates pensions, dividends and residency tie-breaks, but the saving clause means it does not exempt US citizens from filing, and it does not reach Spain's separate asset-reporting regime.
The US and Spain have a totalization agreement in force, which generally prevents dual social-tax exposure and assigns coverage for most cross-border workers to one country at a time.
The single most common misunderstanding we correct: a treaty never removes the obligation to FILE. It changes how specific income types are taxed, and the saving-clause in every US treaty lets the IRS tax its own citizens as if most of the treaty did not exist.
FBAR, FATCA and the accounts you have in Spain
FBAR applies to euro accounts at Santander, BBVA, CaixaBank, Sabadell and every other Spanish bank once the combined high balance crosses the reporting threshold; pension plans and brokerage accounts count too.
FATCA (Form 8938) is a second, separate report with higher thresholds for people living abroad; missing one and not the other is common and fixable. Both are informational — no tax is due on the form itself — but the penalties for skipping them are the largest in the expat rulebook.
FEIE vs. Foreign Tax Credit in Spain
The Foreign Earned Income Exclusion covers wages and autónomo self-employment income earned while a bona fide resident of Spain or physically present abroad long enough; it does not cover pensions, rent or investment income.
Because Spanish income tax is generally comparable to or higher than US tax, the Foreign Tax Credit is often the primary tool for salaried workers; nomad-visa holders on special regimes need the choice modeled against their actual rate.
The choice is not permanent, but revoking the exclusion locks you out of it for several years, so the decision should be modeled against your actual mix of wages, self-employment and investment income before the first return is filed.
Businesses, pensions and investments: the forms that surprise people in Spain
A Spanish SL or a stake in a family company can trigger Form 5471; Spanish and other European funds held through a local bank are usually PFICs, and Spanish pension plans carry their own reporting questions.
Spain separately requires residents to report foreign assets, so an American in Spain is often filing asset reports in both directions — the FBAR to the US and a foreign-asset declaration to Spain — with different thresholds and different forms.
Every one of these forms carries an automatic, per-form penalty for non-filing that has nothing to do with whether tax was owed — which is why they matter more than the 1040 itself for many long-term residents.
What the Agencia Estatal de Administración Tributaria (AEAT) taxes — and how it interacts with your US return
Spain taxes residents on worldwide income, and some regions also apply a wealth-type tax on net assets; both interact with the US return only through the credit mechanism, and only for taxes that qualify.
Spanish banks report US-linked accounts under FATCA, so unreported Spanish accounts are generally visible to the IRS; visa-driven tax residency can also start earlier than people expect.
We are a US firm: we handle the US side in-house and coordinate with your local accountant on the Spain side, rather than pretending to be licensed in both.
Spain-specific patterns we see
Three things come up in Spain cases more than anywhere else:
Spain's special expat regimes and nomad-visa rules attract Americans who assume a flat local rate ends the story; it ends nothing on the US side, and the FEIE-versus-credit choice has to be redone for the new rate.
The Spanish foreign-asset declaration carries famously harsh local penalties, and clients routinely confuse it with the FBAR — they are separate filings to separate governments with no shared form.
Autónomo freelancers billing US clients sit between two systems: Spanish social contributions on one side, the totalization agreement on the other, and the certificate-of-coverage question decides which one they pay.
Behind on US taxes? The streamlined path back
Americans in Spain who have not filed for years generally qualify for the Streamlined Foreign Offshore Procedures — three years of returns, six years of FBARs, a non-willfulness statement and no failure-to-file penalty — as long as the IRS has not already written to them.
The program is designed for exactly this population, and the non-willfulness statement is the part that needs a professional's attention — it is a signed narrative to the IRS, not a checkbox.
Spanish founders and freelancers: reaching US clients with a US LLC
Not everyone reading this is American. Many of our Spain clients are Spanish founders, freelancers and agencies who bill US customers and want dollar banking, Stripe and a US invoice. A non-US person can own a US LLC and get an EIN without a Social Security Number; the annual price is a Form 5472 information return and a pro-forma 1120, and the reward is US market access without a US tax return on the owner's worldwide income in most single-owner setups.
The trap is doing it halfway — forming the LLC and skipping the 5472, which carries its own automatic penalty.
Spain cities we serve
We work with clients in Madrid, Barcelona, Valencia, Seville, Málaga, Bilbao and Alicante and everywhere else in Spain, entirely by video call, secure portal and e-signature, on US hours and Spain hours.
Frequently Asked Questions
Do I have to file US taxes if I live in Spain?
Yes. US citizens and green-card holders file on worldwide income every year regardless of where they live; the treaty and the FEIE reduce the tax, not the filing duty.
Do my Spain bank accounts need an FBAR?
FBAR applies to euro accounts at Santander, BBVA, CaixaBank, Sabadell and every other Spanish bank once the combined high balance crosses the reporting threshold; pension plans and brokerage accounts count too.
Is there a US-Spain tax treaty?
The US and Spain have an income tax treaty in force; it coordinates pensions, dividends and residency tie-breaks, but the saving clause means it does not exempt US citizens from filing, and it does not reach Spain's separate asset-reporting regime.
Does Spain have a Social Security totalization agreement with the US?
The US and Spain have a totalization agreement in force, which generally prevents dual social-tax exposure and assigns coverage for most cross-border workers to one country at a time.
I have not filed in years while living in Spain. What now?
Americans in Spain who have not filed for years generally qualify for the Streamlined Foreign Offshore Procedures — three years of returns, six years of FBARs, a non-willfulness statement and no failure-to-file penalty — as long as the IRS has not already written to them.
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This article is general information, not individual tax advice. Book a free 20-minute review or call, text or WhatsApp us to talk through your own situation.
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