Spain-side tax for Americans in Spain 2026 — Beckham Law, AEAT compliance, and US CPA coordination

American expats in Spain face the most complex tax position of any expatriate group: two complete tax systems (IRS + AEAT), two sets of annual filings, two disclosure regimes (FBAR/FATCA + Modelo 720), and a bilateral treaty (the 1990 Spain-US Convention) with a saving clause that preserves US taxing rights even on Spanish-source income. Most Spanish tax advisors have never prepared a US dual-filing strategy. Most US CPAs don't know how to navigate the AEAT. The Beckham Law — Spain's headline tax incentive, offering 24% flat tax for 6 years — creates specific IRS interactions that most Spanish advisors are unaware of and most US CPAs have never encountered. Missing the 6-month Modelo 149 deadline forfeits the entire 6-year benefit permanently.

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Why BMC

Specialised advice and personal service

BMC handles every Spain-side tax obligation for US citizens resident in Spain: Beckham Law eligibility assessment and Modelo 149/151 filing, annual IRPF (Modelo 100), Modelo 720 overseas asset declaration, AEAT representation, and Modelo 210 for US persons with Spanish property income. We coordinate systematically with your US CPA or Enrolled Agent — sending an annual jurisdiction brief with Spanish taxes paid by category, Beckham election status, and Modelo 720 valuations for consistent FTC, FEIE, and Form 8938 completion on the US side.

  • BMC handles the Spain side (Beckham Law, IRPF, Modelo 720, AEAT); your US CPA or Enrolled Agent handles the IRS side (Form 1040, FBAR, Form 8938). Two advisors, one coordinated strategy.

  • Beckham Law (Art. 93 LIRPF, Ley 28/2022)

    24% flat rate on Spanish-source income up to €600,000 for 6 years — Modelo 149 must be filed within 6 months of commencing activity. Deadline is absolute.

  • The 1990 Spain-US DTT saving clause (Article 1.4) preserves IRS taxing rights on US citizens even when Spanish tax has been paid — Foreign Tax Credit (Form 1116) is the primary double-taxation relief mechanism.

  • Modelo 720 is mandatory for Spanish residents with overseas assets >€50,000 per category — 401k, IRA, brokerage accounts all fall in Category 2; US bank accounts in Category 1.

How we work

From first contact to case completion

  1. Beckham Law eligibility assessment

    We verify all requirements under Article 93 LIRPF: five-year non-residency in Spain, qualifying activity type (Spanish employer, assigned worker, Digital Nomad Visa remote work, Entrepreneur Visa activity, non-controlling directorship), absence of a permanent establishment trigger. We model the Beckham vs standard IRPF savings for your specific income mix and — critically — the IRS saving clause interaction: how much foreign-source income is involved, whether the FTC on Spanish employment income will fully cover the IRS bill, and whether FEIE creates a better US outcome. We present the analysis in a brief that you share with your US CPA for US-side validation.

  2. Modelo 149 filing — Beckham application

    Where Beckham Law is recommended, we prepare and file the Modelo 149 (comunicación de la opción por el régimen especial aplicable a los trabajadores desplazados a territorio español) within the 6-month deadline. The clock starts from the date of first Social Security contribution or, for non-employed applicants, from the date of first qualifying activity. We coordinate with your employer (if applicable) to adjust withholding to 24% from AEAT approval (Modelo 150). We track the AEAT resolution and notify you immediately on approval.

  3. Annual Modelo 151 / IRPF filing

    During the Beckham regime, we prepare and file the annual Modelo 151 (declaración especial del régimen de impatriados) in the April–June window. We classify all income items correctly: Spanish-source employment income (taxed at 24%), Spanish bank interest and dividends (if applicable), and identify foreign-source income correctly excluded from the Spanish return. For non-Beckham clients, we prepare the standard Modelo 100 IRPF return with correct treatment of all US-source income under the 1990 DTT.

  4. Modelo 720 — overseas asset declaration

    We prepare your Modelo 720 for all three categories of overseas assets exceeding €50,000: Category 1 (foreign bank accounts — your US checking, savings), Category 2 (foreign securities and financial rights — 401k, IRA, Roth IRA, brokerage accounts, any US pension plan), Category 3 (foreign real estate — any US property you own). We align values with those your US CPA reports on FBAR (FinCEN 114) and Form 8938 to ensure consistency across all three filings.

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The problem

American expats in Spain face the most complex tax position of any expatriate group: two complete tax systems (IRS + AEAT), two sets of annual filings, two disclosure regimes (FBAR/FATCA + Modelo 720), and a bilateral treaty (the 1990 Spain-US Convention) with a saving clause that preserves US taxing rights even on Spanish-source income. Most Spanish tax advisors have never prepared a US dual-filing strategy. Most US CPAs don't know how to navigate the AEAT. The Beckham Law — Spain's headline tax incentive, offering 24% flat tax for 6 years — creates specific IRS interactions that most Spanish advisors are unaware of and most US CPAs have never encountered. Missing the 6-month Modelo 149 deadline forfeits the entire 6-year benefit permanently.

Our solution

BMC handles every Spain-side tax obligation for US citizens resident in Spain: Beckham Law eligibility assessment and Modelo 149/151 filing, annual IRPF (Modelo 100), Modelo 720 overseas asset declaration, AEAT representation, and Modelo 210 for US persons with Spanish property income. We coordinate systematically with your US CPA or Enrolled Agent — sending an annual jurisdiction brief with Spanish taxes paid by category, Beckham election status, and Modelo 720 valuations for consistent FTC, FEIE, and Form 8938 completion on the US side.

Process

How we do it

1

Beckham Law eligibility assessment

We verify all requirements under Article 93 LIRPF: five-year non-residency in Spain, qualifying activity type (Spanish employer, assigned worker, Digital Nomad Visa remote work, Entrepreneur Visa activity, non-controlling directorship), absence of a permanent establishment trigger. We model the Beckham vs standard IRPF savings for your specific income mix and — critically — the IRS saving clause interaction: how much foreign-source income is involved, whether the FTC on Spanish employment income will fully cover the IRS bill, and whether FEIE creates a better US outcome. We present the analysis in a brief that you share with your US CPA for US-side validation.

2

Modelo 149 filing — Beckham application

Where Beckham Law is recommended, we prepare and file the Modelo 149 (comunicación de la opción por el régimen especial aplicable a los trabajadores desplazados a territorio español) within the 6-month deadline. The clock starts from the date of first Social Security contribution or, for non-employed applicants, from the date of first qualifying activity. We coordinate with your employer (if applicable) to adjust withholding to 24% from AEAT approval (Modelo 150). We track the AEAT resolution and notify you immediately on approval.

3

Annual Modelo 151 / IRPF filing

During the Beckham regime, we prepare and file the annual Modelo 151 (declaración especial del régimen de impatriados) in the April–June window. We classify all income items correctly: Spanish-source employment income (taxed at 24%), Spanish bank interest and dividends (if applicable), and identify foreign-source income correctly excluded from the Spanish return. For non-Beckham clients, we prepare the standard Modelo 100 IRPF return with correct treatment of all US-source income under the 1990 DTT.

4

Modelo 720 — overseas asset declaration

We prepare your Modelo 720 for all three categories of overseas assets exceeding €50,000: Category 1 (foreign bank accounts — your US checking, savings), Category 2 (foreign securities and financial rights — 401k, IRA, Roth IRA, brokerage accounts, any US pension plan), Category 3 (foreign real estate — any US property you own). We align values with those your US CPA reports on FBAR (FinCEN 114) and Form 8938 to ensure consistency across all three filings.

5

US CPA coordination package

Each year, we prepare a structured jurisdiction brief for your US CPA: (1) Total Spanish taxes paid by income category (employment, interest, dividends, capital gains) for FTC calculation; (2) Beckham election status and foreign-source income excluded from Spain (for IRS modelling); (3) Modelo 720 declared values matching Form 8938/FBAR; (4) Any AEAT notices or outstanding correspondence. This brief saves your US CPA significant research time and ensures both returns are fully consistent.

24%
Beckham Law flat rate on Spanish-source income (up to €600k)
6 years
Maximum Beckham Law regime duration
6 months
Absolute deadline to file Modelo 149 (Beckham application)
€50,000
Modelo 720 disclosure threshold per asset category

I was on the Beckham Law and assumed my US CPA and my Spanish gestor were talking to each other — they weren't. BMC replaced the Spanish side and immediately sent my CPA in Boston a proper brief with Spanish taxes paid by category for his FTC work. Turned out the old filing had missed €8,000 in FTC claims. The coordination alone paid for two years of BMC fees.

David Thornton VP of Engineering, US software company, Madrid

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Free checklist: US citizen in Spain — AEAT deadlines and IRS coordination calendar 2026

The Spain-side tax picture for US citizens

When a US citizen establishes Spanish tax residency, two complete tax systems simultaneously claim jurisdiction over their worldwide income:

  • AEAT (Agencia Estatal de Administración Tributaria): Spain taxes worldwide income of Spanish residents under the IRPF (Impuesto sobre la Renta de las Personas Físicas). On income above €300,000 the combined top rate ranges from 45% to 53.85% depending on the autonomous community (2026).
  • IRS (Internal Revenue Service): The US taxes worldwide income of US citizens regardless of where they live — citizenship-based taxation (CBT), one of only two countries in the world (along with Eritrea) to apply this principle.

The 1990 Spain-US Double Tax Convention mitigates — but does not eliminate — this dual exposure. The primary mechanism is the Foreign Tax Credit: Spanish taxes paid offset the US tax due on the same income, generally eliminating actual double payment. But the compliance burden remains: two sets of returns, two disclosure regimes, two filing deadlines.

BMC’s role is the Spanish side. Your US CPA’s role is the IRS side. This is not a limitation — it is the right architecture for getting both sides done correctly by experts in each system.

The Beckham Law: Spain’s headline offer for international professionals

The Beckham Law (Régimen especial de tributación aplicable a los trabajadores desplazados a territorio español, Article 93 of the LIRPF, as substantially amended by Ley 28/2022) is Spain’s most significant tax incentive for internationally mobile professionals.

What it offers

  • Flat rate of 24% on Spanish-source income up to €600,000 per year
  • 47% rate on Spanish-source income above €600,000
  • Foreign-source income generally not taxed in Spain during the regime
  • Duration: up to 6 years (year of arrival + 5 subsequent years)
  • Application via Modelo 149 within 6 months of commencing activity in Spain — deadline is absolute and irrevocable

Who qualifies

  • Workers employed by a Spanish employer (Trabajadores desplazados por cuenta ajena)
  • Workers assigned from a foreign group company to a Spanish group entity
  • Remote workers under the Digital Nomad Visa (Ley 14/2013 as amended by Ley 28/2022)
  • Entrepreneurs under the Entrepreneur Visa with qualifying startup activity
  • Professionals providing highly qualified services to entities engaged in I+D+i activities where >40% of income derives from that activity
  • Non-executive directors of non-controlled companies
  • Spouses and children under 25 (or any age if disabled) of the above, if they move simultaneously and meet the non-residency test

Who does not qualify

  • Spanish citizens who have lived in Spain in any of the 5 preceding tax years
  • Anyone establishing a permanent establishment in Spain before arriving
  • Anyone who cannot demonstrate a genuine qualifying trigger for the Spanish move

The six-month deadline: why timing is everything

The Modelo 149 application must be filed within 6 months from the date of commencement of the qualifying activity in Spain. This date is typically the date of the first Social Security contribution (for employed workers) or the date of first professional activity (for self-employed and entrepreneurs).

Missing this deadline is irreversible. There is no extension mechanism, no administrative discretion, and no possibility of retroactive application. BMC’s onboarding protocol includes an immediate Beckham eligibility check and clock-start confirmation as part of the arrival process for every client.

Annual Spanish tax obligations

Modelo 151: the Beckham annual return

During the Beckham regime, residents file Modelo 151 (not the standard Modelo 100) in the April–June window for the preceding calendar year. Modelo 151 covers only Spanish-source income — foreign-source income is excluded from the Spanish return entirely. The 24% flat rate applies to the Spanish base; the withholding retained by the employer (adjusted to 24% after Beckham approval) is credited against the Modelo 151 liability.

Standard IRPF (Modelo 100)

For US residents in Spain who are not on the Beckham regime, the standard IRPF return (Modelo 100) reports all worldwide income. US-source income — dividends from US stocks, interest from US bank accounts, distributions from 401k/IRA, gains from selling US property — must all be declared with correct treaty-based treatment.

Modelo 720: overseas asset disclosure

Modelo 720 is the cornerstone of Spain’s offshore disclosure regime. For US residents in Spain, this typically means declaring all three categories:

Category 1 — Bank accounts: US checking accounts, savings accounts, money-market accounts. Threshold: aggregate balance >€50,000 at any point during the year or on 31 December.

Category 2 — Securities and financial rights: US brokerage accounts (stocks, ETFs, mutual funds), 401k plans (all types), IRA (Traditional, Roth, SEP, SIMPLE), US insurance contracts with cash value, interests in US LLCs or partnerships. Threshold: aggregate value >€50,000 on 31 December.

Category 3 — Real estate abroad: Any US real property owned outright or through an entity. Threshold: aggregate value >€50,000.

Values are declared at market value (for securities) or account balance (for bank accounts). These values must be consistent with what your US CPA reports on FBAR and Form 8938 — BMC coordinates directly with your US CPA to ensure consistency.

Modelo 210: non-resident property income

If you own Spanish property but are not yet a Spanish tax resident (for example, while in the US before your move), rental income from Spanish property is subject to IRNR (Impuesto sobre la Renta de No Residentes) at a standard rate of 19% for EU/EEA residents and 24% for non-EU residents — US citizens pay 24%. BMC files the annual Modelo 210 (1 to 20 April of the following year) for US owners of Spanish rental property who are not Spanish tax residents.

US-Spain treaty mechanics: the technical layer

The 1990 Spain-US Convention allocates taxing rights as follows for the most common income types affecting US expats:

Employment income (Article 15)

Primary taxing rights: Spain, for work performed in Spain. US retains secondary taxation rights under saving clause, offset by FTC on Spanish employment taxes paid.

Pensions (Articles 19–20) (confirm exact article numbers for private vs government pensions in the current treaty text)

Private and occupational pensions: residence state (Spain) has primary taxing rights on periodic distributions. US government pensions: US retains primary taxing rights regardless of residency.

Dividends (Article 10)

Spanish withholding reduced to 15% (15% general; 5% for ≥25% shareholding) — confirm exact treaty rates. US dividends: taxed in Spain; FTC for US withholding.

Interest (Article 11)

Generally taxed in residence state (Spain); withholding in source state reduced (confirm exact treaty rates).

Capital gains (Article 13)

Real estate gains: taxed in the country where property is situated. Personal property gains: generally residence state. Specific rules for shares of real-estate companies.

The saving clause and FTC in practice

For most US citizens in Spain paying standard IRPF (combined top rate of 45% to 53.85% depending on the region, 2026), the FTC fully offsets the US tax liability on Spanish-source income, as the Spanish rate exceeds the US rate. Excess Spanish credits create FTC carryforwards. Under Beckham Law (24% flat), the FTC may not fully offset US tax if the US marginal rate exceeds 24% — the difference is real US tax due. Individual modelling is essential.

The coordination calendar: Spain + US deadlines

DeadlineFilingResponsible
31 October (prior year)FBAR (FinCEN 114) — automatic extensionUS CPA
15 JuneIRS Form 1040 (overseas automatic extension)US CPA
31 MarchModelo 720 (Q1 of following year)BMC
April–JuneModelo 151 / Modelo 100 IRPFBMC
Within 6 months of activity startModelo 149 — Beckham applicationBMC
15 AprilFBAR (FinCEN 114) — standard filingUS CPA

BMC provides every client with an integrated Spain + US deadline calendar at the start of each tax year.

What comes next

Comprehensive tax planningOptimise your tax burden with a complete tax strategy: personal income tax, corporate tax, international taxation, and special territories.
Corporate advisoryFrom incorporation to sale: we accompany entrepreneurs at every stage of the business lifecycle.
Comprehensive legal advisoryCommercial law, employment law, compliance, and data protection: a multidisciplinary legal team to cover all your business needs.
FAQ

Frequently asked questions

BMC handles everything on the Spanish AEAT side: Beckham Law assessment and Modelo 149/151 application, annual IRPF return (Modelo 100 or 151), Modelo 720 overseas asset declaration, AEAT representation for inspections or correspondence, and Modelo 210 for non-resident income from Spanish property. Your US CPA or Enrolled Agent handles everything on the IRS side: Form 1040 annual return, FBAR (FinCEN Form 114) filing via the BSA E-Filing portal, Form 8938 (FATCA) as an attachment to Form 1040, Form 1116 (Foreign Tax Credit calculation), Form 2555 (FEIE, if elected), and US-specific planning for 401k/IRA distributions. Each year BMC sends your US CPA a jurisdiction brief with the Spanish data they need for accurate FTC calculations and consistent Form 8938 values. This model ensures regulatory compliance on both sides and eliminates the gap-and-overlap risk that arises when one generalist tries to handle both.
The Beckham Law (Art. 93 LIRPF) exempts foreign-source income from Spanish tax during the regime. For US citizens, this creates a specific interaction with the IRS saving clause in Article 1.4 of the 1990 Spain-US Convention: the US retains the right to tax foreign-source income even though Spain has exempted it — and because no Spanish tax is paid on that income, no FTC credit is generated to offset the US tax. The practical impact depends on what your 'foreign-source income' actually is: (1) If your income is predominantly Spanish-source (salary from Spanish employer paid in Spain), the Beckham Law saves substantial Spanish tax, and the FTC on that Spanish employment income typically covers the IRS bill with no residual US tax. (2) If you have significant US-source income (US dividends, US rental income, US client payments, US pension distributions), those amounts face full IRS tax with no Spanish credit to offset. Individual modelling by both BMC and your US CPA is essential before applying for Beckham Law. The IRS has not issued formal guidance on the Beckham-saving-clause interaction (confirm whether any subsequent IRS Rev. Proc. or PLR addresses this with your US CPA before planning).
The Foreign Earned Income Exclusion (FEIE, Form 2555) allows qualifying US citizens abroad to exclude up to $126,500 (2024 figure; indexed for inflation annually) of foreign-earned income from their US taxable base, provided they meet the physical presence test (330 days outside the US in a 12-month period) or the bona fide residence test (established residence in Spain). Under FEIE, excluded income creates no FTC entitlement — it's simply not in the US tax base. The Foreign Tax Credit (Form 1116) instead takes Spanish taxes paid and offsets them dollar-for-dollar against US taxes due on the same income. For Americans under the Beckham Law paying 24% Spanish tax: if your US marginal rate is also around 24%, the FTC is roughly dollar-for-dollar and FEIE provides no additional benefit (but also no harm up to the FEIE ceiling). For Americans under standard IRPF, whose combined top rate ranges from 45% to 53.85% depending on the region (2026): the FTC will typically fully eliminate the US tax on Spanish-source income, with potential carryforward credits. The optimal combination — FEIE for some income, FTC for others — requires modelling by your US CPA with the full Spanish tax data BMC provides.
The Spain-US Double Tax Convention (Convenio, 1990, BOE-A-1990-27170) is the bilateral treaty governing how income is taxed when earned by residents of one country in the other. It allocates taxing rights by income category and provides relief mechanisms (primarily the Foreign Tax Credit) to prevent the same income from being taxed twice. The saving clause — Article 1.4 — is the US-specific provision that states: the US may tax its citizens and residents as if the Convention had not entered into force for most purposes. Unlike tax treaties between non-US countries where a bilateral exemption means the income is only taxed in one country, the US saving clause means the US retains the right to tax US citizens regardless. The Convention still helps: it reduces Spanish withholding on dividends and interest, allocates pension taxing rights, and — most importantly — the FTC mechanism in Article 24 (confirm the exact article number in the current treaty text) means you claim Spanish taxes paid as a credit against US taxes due on the same income. The net effect in most cases for US residents in Spain: you pay Spanish rates (which are generally equal to or higher than US rates), and the excess Spanish tax creates FTC carryforwards available for future years.
Modelo 720 (Declaración Informativa sobre bienes y derechos situados en el extranjero) is a mandatory disclosure form for Spanish tax residents with overseas assets exceeding €50,000 per category. The three categories: (1) foreign bank accounts — US checking, savings, money-market accounts; (2) foreign securities and financial rights — 401k, IRA, Roth IRA, brokerage accounts, US mutual funds, US insurance with cash value; (3) foreign real estate. Filing deadline: between 1 January and 31 March of the year following the year you first became Spanish tax resident (or following any year in which a previously declared category increases by >€20,000 or an asset is disposed of). Modelo 720 is an informational disclosure — no additional Spanish tax is due on the assets themselves. However, failure to file attracts fixed penalties: €20 per item not declared (minimum €300, maximum €20,000), with the added risk that the AEAT can treat undisclosed amounts as unjustified wealth, potentially subject to IRPF + penalty. Spain reformed the Modelo 720 penalties in 2022 following an EU Court of Justice ruling (Case C-788/19) finding the original penalty regime disproportionate; the reformed regime is less draconian but still significant. BMC prepares Modelo 720 in full coordination with FBAR and Form 8938 values.
Under Articles 18–19 of the 1990 Spain-US Convention (confirm the exact article numbers for private vs government pensions in the current treaty text), the US recognises the tax-deferred status of qualifying Spanish pension plans, and Spain reciprocally recognises qualifying US retirement plans. Practically, this means: (1) 401k, Traditional IRA, SEP-IRA — while the plan is in accumulation (undistributed), no Spanish tax applies to the growing balance. When distributions begin after establishing Spanish residency, the distributions are treated as rendimiento del trabajo (employment income) in the Spanish IRPF return, taxed at progressive IRPF rates (or 24% flat under Beckham Law). The 1990 Convention allocates taxing rights on periodic pensions to the residence state (Spain), so the distributions are generally taxable in Spain with FTC credit for any US withholding. (2) Roth IRA — the most complex case: Roth IRA distributions are tax-free in the US, but Spain has no equivalent Roth concept and the 1990 Convention does not contain an explicit Roth exemption. The AEAT may treat Roth distributions as taxable employment income in Spain, creating genuine double taxation (no US tax to credit). Pre-move planning of Roth IRA positions — potentially via Roth conversions before becoming Spanish resident — is advisable for Americans with significant Roth IRA balances. Consult your US CPA on the conversion mechanics; BMC advises on the Spanish side.
It is the popular name for Article 17 bis of the Community of Madrid's Legislative Decree 1/2010, added by Law 4/2024: a 20% deduction on the acquisition value of certain investments (debt and equity in any entity) for people who were not Spanish resident in the previous five years, become Madrid IRPF taxpayers and hold the investment for six years. It applies against the regional share of ordinary IRPF, so it does not stack with the Beckham regime (Art. 93.2 LIRPF). For a US citizen in Madrid, the two paths are compared.

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Frequently asked questions

Questions about American Expat Spain Tax: AEAT Side — Beckham Law, IRPF, Modelo 720 | BMC

BMC handles everything on the Spanish AEAT side: Beckham Law assessment and Modelo 149/151 application, annual IRPF return (Modelo 100 or 151), Modelo 720 overseas asset declaration, AEAT representation for inspections or correspondence, and Modelo 210 for non-resident income from Spanish property. Your US CPA or Enrolled Agent handles everything on the IRS side: Form 1040 annual return, FBAR (FinCEN Form 114) filing via the BSA E-Filing portal, Form 8938 (FATCA) as an attachment to Form 1040, Form 1116 (Foreign Tax Credit calculation), Form 2555 (FEIE, if elected), and US-specific planning for 401k/IRA distributions. Each year BMC sends your US CPA a jurisdiction brief with the Spanish data they need for accurate FTC calculations and consistent Form 8938 values. This model ensures regulatory compliance on both sides and eliminates the gap-and-overlap risk that arises when one generalist tries to handle both.
The Beckham Law (Art. 93 LIRPF) exempts foreign-source income from Spanish tax during the regime. For US citizens, this creates a specific interaction with the IRS saving clause in Article 1.4 of the 1990 Spain-US Convention: the US retains the right to tax foreign-source income even though Spain has exempted it — and because no Spanish tax is paid on that income, no FTC credit is generated to offset the US tax. The practical impact depends on what your 'foreign-source income' actually is: (1) If your income is predominantly Spanish-source (salary from Spanish employer paid in Spain), the Beckham Law saves substantial Spanish tax, and the FTC on that Spanish employment income typically covers the IRS bill with no residual US tax. (2) If you have significant US-source income (US dividends, US rental income, US client payments, US pension distributions), those amounts face full IRS tax with no Spanish credit to offset. Individual modelling by both BMC and your US CPA is essential before applying for Beckham Law. The IRS has not issued formal guidance on the Beckham-saving-clause interaction (confirm whether any subsequent IRS Rev. Proc. or PLR addresses this with your US CPA before planning).
The Foreign Earned Income Exclusion (FEIE, Form 2555) allows qualifying US citizens abroad to exclude up to $126,500 (2024 figure; indexed for inflation annually) of foreign-earned income from their US taxable base, provided they meet the physical presence test (330 days outside the US in a 12-month period) or the bona fide residence test (established residence in Spain). Under FEIE, excluded income creates no FTC entitlement — it's simply not in the US tax base. The Foreign Tax Credit (Form 1116) instead takes Spanish taxes paid and offsets them dollar-for-dollar against US taxes due on the same income. For Americans under the Beckham Law paying 24% Spanish tax: if your US marginal rate is also around 24%, the FTC is roughly dollar-for-dollar and FEIE provides no additional benefit (but also no harm up to the FEIE ceiling). For Americans under standard IRPF, whose combined top rate ranges from 45% to 53.85% depending on the region (2026): the FTC will typically fully eliminate the US tax on Spanish-source income, with potential carryforward credits. The optimal combination — FEIE for some income, FTC for others — requires modelling by your US CPA with the full Spanish tax data BMC provides.
The Spain-US Double Tax Convention (Convenio, 1990, BOE-A-1990-27170) is the bilateral treaty governing how income is taxed when earned by residents of one country in the other. It allocates taxing rights by income category and provides relief mechanisms (primarily the Foreign Tax Credit) to prevent the same income from being taxed twice. The saving clause — Article 1.4 — is the US-specific provision that states: the US may tax its citizens and residents as if the Convention had not entered into force for most purposes. Unlike tax treaties between non-US countries where a bilateral exemption means the income is only taxed in one country, the US saving clause means the US retains the right to tax US citizens regardless. The Convention still helps: it reduces Spanish withholding on dividends and interest, allocates pension taxing rights, and — most importantly — the FTC mechanism in Article 24 (confirm the exact article number in the current treaty text) means you claim Spanish taxes paid as a credit against US taxes due on the same income. The net effect in most cases for US residents in Spain: you pay Spanish rates (which are generally equal to or higher than US rates), and the excess Spanish tax creates FTC carryforwards available for future years.
Modelo 720 (Declaración Informativa sobre bienes y derechos situados en el extranjero) is a mandatory disclosure form for Spanish tax residents with overseas assets exceeding €50,000 per category. The three categories: (1) foreign bank accounts — US checking, savings, money-market accounts; (2) foreign securities and financial rights — 401k, IRA, Roth IRA, brokerage accounts, US mutual funds, US insurance with cash value; (3) foreign real estate. Filing deadline: between 1 January and 31 March of the year following the year you first became Spanish tax resident (or following any year in which a previously declared category increases by >€20,000 or an asset is disposed of). Modelo 720 is an informational disclosure — no additional Spanish tax is due on the assets themselves. However, failure to file attracts fixed penalties: €20 per item not declared (minimum €300, maximum €20,000), with the added risk that the AEAT can treat undisclosed amounts as unjustified wealth, potentially subject to IRPF + penalty. Spain reformed the Modelo 720 penalties in 2022 following an EU Court of Justice ruling (Case C-788/19) finding the original penalty regime disproportionate; the reformed regime is less draconian but still significant. BMC prepares Modelo 720 in full coordination with FBAR and Form 8938 values.
Under Articles 18–19 of the 1990 Spain-US Convention (confirm the exact article numbers for private vs government pensions in the current treaty text), the US recognises the tax-deferred status of qualifying Spanish pension plans, and Spain reciprocally recognises qualifying US retirement plans. Practically, this means: (1) 401k, Traditional IRA, SEP-IRA — while the plan is in accumulation (undistributed), no Spanish tax applies to the growing balance. When distributions begin after establishing Spanish residency, the distributions are treated as rendimiento del trabajo (employment income) in the Spanish IRPF return, taxed at progressive IRPF rates (or 24% flat under Beckham Law). The 1990 Convention allocates taxing rights on periodic pensions to the residence state (Spain), so the distributions are generally taxable in Spain with FTC credit for any US withholding. (2) Roth IRA — the most complex case: Roth IRA distributions are tax-free in the US, but Spain has no equivalent Roth concept and the 1990 Convention does not contain an explicit Roth exemption. The AEAT may treat Roth distributions as taxable employment income in Spain, creating genuine double taxation (no US tax to credit). Pre-move planning of Roth IRA positions — potentially via Roth conversions before becoming Spanish resident — is advisable for Americans with significant Roth IRA balances. Consult your US CPA on the conversion mechanics; BMC advises on the Spanish side.
It is the popular name for Article 17 bis of the Community of Madrid's Legislative Decree 1/2010, added by Law 4/2024: a 20% deduction on the acquisition value of certain investments (debt and equity in any entity) for people who were not Spanish resident in the previous five years, become Madrid IRPF taxpayers and hold the investment for six years. It applies against the regional share of ordinary IRPF, so it does not stack with the Beckham regime (Art. 93.2 LIRPF). For a US citizen in Madrid, the two paths are compared.
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