Retiring in Spain as an American: What No One Tells You (Based on Real Expert Q&A)
Every year, I help hundreds of expats relocate to Spain, including many retirees looking for a better quality of life. But the journey isn’t always straightforward. Between taxes, legal structures, and financial planning, things get complicated fast.
That’s why I work closely with leading experts, including international tax advisors and cross-border financial planners. This blog was written in collaboration with the EY Tax Advisor team and SJB Global, and it reflects the most common concerns for Americans looking to retire in Spain.
The questions below were originally answered in a live webinar where we covered:
Tax residency and the 183-day rule
Double taxation: how Social Security, pensions, and retirement plans are handled
Wealth tax, IRAs, and regional differences
Visa options and why the Golden Visa is no longer available
Special regimes like Madrid’s Mbappé law—and why retirees usually don’t qualify
Estate planning: wills, inheritance tax, and spouse protections
Practical banking and money transfer advice
If you're considering retiring in Spain from the U.S., this guide brings together key takeaways to help you plan smart and avoid costly surprises.
When do you become a Spanish tax resident?
If you spend 183 days or more in Spain in a calendar year, you'll be considered a Spanish tax resident—even if all your income stays in the U.S.
Other triggers include your economic center (e.g. U.S. income but dependent in Spain) or your family living here.
Once resident, Spain taxes your worldwide income and assets, even those in the U.S.—including IRAs, pensions, and Social Security.
Implication: Keeping your U.S. bank account active doesn’t prevent Spanish reporting and potential taxation.
Can I collect Social Security if I retire to Spain?
Yes—you can absolutely continue receiving your U.S. Social Security benefits while living in Spain. The two countries have a bilateral agreement in place that ensures your payments won’t stop, regardless of where you reside.
You can choose to have your benefits deposited into a U.S. or Spanish bank account. But here’s the key point:
If you become a Spanish tax resident, you must declare this income on your Spanish tax return.
While Spain typically does not tax U.S. Social Security directly, tax advisors from our webinar pointed out that it can still impact your total taxable income bracket—raising the effective rate applied to your other income sources (like pensions or investment withdrawals).
Bottom line: You’ll receive the money—but how it affects your taxes depends on your overall income picture and residency status.
Can a US citizen move to Spain permanently?
Yes—retiring permanently to Spain is absolutely possible for U.S. citizens. The most common pathway is the non-lucrative visa, which is designed for people who can support themselves without working locally.
This visa allows you to live in Spain full-time as long as you:
Don’t engage in any work or business activity in Spain
Can prove sufficient financial means (via savings or passive income)
Hold private health insurance with full coverage
The popular Golden Visa—which once granted residency through property investment—was officially discontinued in 2024.
Visa requirements vary, so it’s important to review them carefully or work with an immigration advisor to ensure your documentation is complete and your financial profile fits the criteria.
Tip: Many retirees apply while still in the U.S., then switch to long-term residency after living in Spain for several years.
How much do I need to earn to retire in Spain?
To qualify for Spain’s non-lucrative visa, you’ll need to show that you can support yourself without working.
As of now, the minimum income requirement is:
~€30,000 per year for an individual
~€37,000–€40,000 per year for a couple
This income can come from:
U.S. Social Security
Pensions or annuities
Dividends or rental income
Retirement account withdrawals (if consistent and documented)
📍 Some Spanish consulates or regions may ask for slightly higher thresholds, so it’s wise to confirm with the specific consulate where you’ll apply.
Tip: You can also meet the requirement by showing sufficient savings—typically a lump sum in a liquid account that covers at least one year’s living expenses.
What if all our income and wealth are in the US? Can we shelter it from Spanish taxes if we stay more than 183 days?
Unfortunately, no. As confirmed by our tax advisor during the webinar:
If you spend more than 183 days in Spain, you’re considered a Spanish tax resident—regardless of where your income is generated or where your assets are held.
That means:
All worldwide income, including U.S. retirement accounts, pensions, dividends, and Social Security, becomes reportable and taxable in Spain.
There is no legal structure that fully shelters U.S.-based retirement income from Spanish taxation once tax residency begins.
🛡️ The best strategy is proactive planning.
Work with a cross-border tax advisor before you move to explore tax-efficient withdrawal strategies, optimal residency timing, and possible regional benefits (like Madrid’s wealth tax rebate).
📞 Book Your Free Call with a Vetted Cross-Border Financial Advisor
Ready to get personalized advice on managing your 401(k), avoiding wealth tax, or planning your income as a US expat in Spain? Schedule a no-obligation call with one of our trusted financial experts today.
Claim Your Free Financial ConsultationAre there any special tax regimes that could help reduce my tax bill?
Spain does offer several special tax regimes—but most are designed for working professionals, not retirees.
One high-profile example is the “Mbappé regime” (named after the footballer’s high-profile move), officially introduced by the Madrid regional government. Under this law:
New residents in Madrid can deduct 20% of eligible earned income for up to six years.
It’s designed to attract working individuals, especially executives and high earners.
❗ But there’s a catch:
This regime only applies to active earned income—like salaries or self-employment.
It does not apply to:
Pensions
Dividends or investment income
IRA/401(k) withdrawals
U.S. Social Security
💡 Bottom line: Retirees won’t benefit from the Mbappé regime, but Madrid still offers one of the most retiree-friendly tax environments due to its 100% wealth tax rebate and favorable inheritance rules.
Wealth Tax Across Spain’s 17 Regions
| Region | Wealth Tax Status | Notes |
|---|---|---|
| Madrid | 100% rebate | No wealth tax regardless of net worth |
| Andalucía | 100% rebate | Introduced in 2022 |
| Valencia | Enforced, low threshold | Starts at ~€500,000–€700,000 net assets |
| Catalonia | Enforced, strict | Lower exemptions, complex valuation |
| Balearic Islands | Enforced, moderate | Common issue for second-home owners |
| Galicia | Enforced, moderate | Thresholds vary with deductions |
| Castilla-La Mancha | Enforced | National default rules |
| Castile and León | Enforced | No special rebates |
| Aragon | Enforced | National rules |
| La Rioja | Enforced | National rules |
| Murcia | Enforced | No regional modifications |
| Navarre | Separate regime | Own tax system—consult local advisor |
| Basque Country | Separate regime | Own tax system—must review provincial rules |
| Asturias | Enforced | National rules |
| Cantabria | Enforced | Follows national base |
| Canary Islands | Enforced | No regional rebates |
| Extremadura | Enforced | Applies standard Spanish rates |
Note: Wealth tax applies to global net assets, including U.S.-based accounts and property. Regional rebates can make a major difference in your annual tax bill.
What happens to our IRA accounts if we leave them in the US?
Your IRA and other retirement accounts can absolutely remain in the U.S.—but they don’t escape Spanish tax obligations.
Once you're a Spanish tax resident:
The full value of your IRA is included in your net worth for Spanish wealth tax
Spain taxes the gross account value, not just the distributions
If your total net assets exceed regional thresholds (e.g., €700,000 in Valencia, €3 million in Madrid), you may owe annual wealth tax
📌 Tip from our webinar: Ensure accurate annual valuations and track balances carefully—especially if assets fluctuate due to market movement.
Can I transfer my retirement funds to Spain without huge tax implications?
No—Spain does not allow tax-deferred transfers from U.S. retirement accounts.
If you withdraw funds to move them to Spain:
The U.S. will treat it as a taxable distribution
Spain will also tax the amount as income if you're a resident
🔁 In short: it often results in double taxation unless structured very carefully.
That’s why most clients choose to:
Keep retirement accounts in the U.S.
Withdraw gradually to limit tax exposure in both countries
What about the Rule of 55?
The Rule of 55 is a U.S.-specific provision that allows penalty-free withdrawals from a 401(k) or 403(b) if you separate from service after age 55.
However:
Spain does not recognize this rule for tax purposes
Withdrawals are fully taxable in Spain as regular income
You may avoid the 10% penalty in the U.S., but not the income tax
📌 Bottom line: You’ll still need to declare the income in Spain, and it could push you into a higher tax bracket.
If we leave investments with a US firm, how will that impact taxes?
Many retirees keep their investments managed in the U.S.—which is fine. But there are tax implications:
Spain will tax the income those investments generate (interest, dividends, capital gains)
You must report these annually as a tax resident
Some U.S. mutual funds and ETFs may be treated as PFICs (Passive Foreign Investment Companies), which can trigger harsh penalties and complex reporting on the U.S. side if not handled correctly
💡 Work with a cross-border advisor to avoid costly surprises and optimize investment structures.
How do we handle taxes on US retirement benefits? Can we elect to pay in Spain instead?
It depends on the income type.
U.S. Social Security: Only the U.S. has taxing rights, according to the treaty
Other retirement income (e.g. IRA, 401(k) withdrawals): Spain generally has taxing rights once you’re a resident
⚠️ One common point of confusion:
Even if Spain doesn't tax U.S. Social Security directly, it may count it when calculating your total taxable income, which can increase the rate applied to other income.
Should I have my pension/social security paid to a US or Spanish bank?
Most cross-border advisors—including those in our recent webinar—recommend keeping your payments deposited into a U.S. bank account.
From there, you can use specialized currency exchange platforms to transfer funds to Spain when needed. This approach offers:
Better exchange rates than traditional banks
Lower international transfer fees
More control over the timing of your conversions
💡 Tip: Some platforms even let you schedule transfers or hold funds until rates are more favorable.
What's the best way to transfer funds to Euros?
Avoid high-street banks—they tend to offer poor exchange rates and hefty fees.
Instead, consider using:
Wise
These services offer:
Transparent rates close to market value
Fast transfers
Options like forward contracts to lock in exchange rates for future transfers (a smart move for retirees on fixed incomes)
🔍 Our tax advisor highlighted forward contracts as a helpful budgeting tool—especially during currency volatility.
If I die as a Spanish resident, can my wife stay in the home?
Yes—but inheritance taxes and local succession rules come into play.
Here’s what to know:
Each autonomous region in Spain sets its own inheritance tax rates, exemptions, and thresholds
In Madrid, for example, spouses and children often benefit from generous tax exemptions
In Catalonia, Valencia, and Balearic Islands, tax allowances are more limited
📌 Proper estate planning ensures your spouse can remain in the property without unnecessary legal or financial complications.
Should we have a Spanish will?
Yes—definitely.
Our legal expert strongly advised having a Spanish will if you plan to reside in or own property in Spain.
A Spanish will:
Ensures your wishes are respected under local law
Simplifies the probate process
Avoids the automatic application of your home country’s succession laws
Reduces administrative delays and legal costs for your heirs
📌 Without a local will, your estate may be subject to lengthy and costly international legal procedures.
Let me know if you'd like to add visual icons, checklists, or a regional comparison chart for inheritance tax benefits.
Need help making the move?
If you're planning to retire in Spain and want to do it right, I can connect you with vetted professionals—from cross-border financial planners to top-tier tax advisors and FX currency experts. These are the same trusted partners I work with to help hundreds of expats each year.
Just fill out the form below to request a free introduction. No pressure—just reliable help to get your plans moving.
📞 Book Your Free Call with a Vetted Cross-Border Financial Advisor
Ready to get personalized advice on managing your 401(k), avoiding wealth tax, or planning your income as a US expat in Spain? Schedule a no-obligation call with one of our trusted financial experts today.
Claim Your Free Financial Consultation