There is a tax treaty between the United States and Spain that helps determine in which country different types of U.S. taxes should be paid for expats and when they should be paid. The aim of the agreement is to ensure that taxes are paid to the right country. Navigating through the contract on your own can be a bit complicated, so it`s a good idea to consult an expatriate tax professional if you`re not sure about the requirements of your situation. Each year, U.S. citizens and permanent residents must file expatriate tax returns with the federal government, wherever they reside. In addition to the typical tax return, many people also need to file a tax return that lists assets held in overseas bank accounts using Form FinCEN 114 (FBAR). Example: U.S. agreements allow the U.S. Social Security Agency to add up U.S. and foreign coverage credits only if the employee has earned at least six-quarters of U.S. coverage.
(“Quarter” is for work credits, with a credit for each salary of $1,200 for 2014, up to a maximum of four credits per year.) Similarly, a person may need minimum coverage under the foreign country`s system for having imputed U.S. coverage to meeting foreign benefit eligibility requirements. Under the Beckham Law, only income received in Spain is taxed. This is a great advantage. However, the fixed rate can only apply to income up to 600,000 euros. This income tax agreement with Spain, the official name of the agreement, helps determine which taxes should be paid to which country in a large number of situations. There is a particular tax reflection for expatriates who are on temporary assignments. Specific requirements must be met, but it is possible to opt for flat-rate taxation of 24% instead of progressive rates and avoid taxes on income from foreign sources. This is also a case-by-case assessment where an experienced expat tax advisor can help. Data protection law requires us to inform you that we have the right to collect this information in accordance with section 233 of the Social Security Act.
Although it is not mandatory for you to provide information from the Social Security Administration (SSA), a certificate of coverage can only be issued if an application has been received. The information is necessary to enable the SSA to determine whether the work should only be covered by the U.S. social security system, in accordance with an international agreement. Without the certificate, work can be taxed under both the U.S. and foreign social security system. If you do not agree to decide on your entitlement to benefits under the agreement, please contact a U.S. or Spanish social security service. People there can tell you what you need to do to appeal the decision. Prior to the agreement, workers, employers and the self-employed could be required, in certain circumstances, to pay social security taxes, both in the United States and Spain, for the same work. .