How Spain Taxes US Retirement Accounts: 401(k), Traditional IRA and Roth IRA

You spent thirty or forty years building a retirement account under one country’s rules. Now you are thinking about drawing it down while living under another country’s rules. The question that keeps people awake is not really “how much tax will I pay” — it is “did I just do something irreversible by moving in January instead of July?”

That instinct is correct. With US retirement accounts, timing and characterization usually matter more than rates.

The short answer

Once you are a Spanish tax resident, Spain taxes your worldwide income — including distributions from US retirement accounts. The US continues to tax you as a citizen regardless of where you live. The treaty allocates taxing rights and provides relief, but it does not switch either system off. There is no universal answer for a 401(k), an IRA or a Roth, because the outcome turns on facts specific to you.

Why there is no single answer

Anyone who tells you “Spain taxes a 401(k) at X%” is skipping three questions that come first.

1. When did you become a Spanish tax resident? Spanish tax residency is a status with a start date, and the date can fall in the middle of the year you move. Spain does not operate a split-year treatment the way some other systems do. For most people, residency applies to the whole tax year or to none of it — which is why the month you arrive, and the month you take a large distribution, can matter enormously.

2. How does Spain characterize the product? The US groups very different things under “retirement account”. An employer plan, an individual account you funded yourself, and an account funded with money already taxed are three different animals. Spanish tax law has no direct equivalent to any of them, so each has to be mapped onto a Spanish category — and the category determines the rate scale, the timing, and whether the treaty article you were relying on even applies.

3. What does the treaty allocate, and what does the saving clause claw back? These are two separate mechanisms and people routinely read only the first.

Spanish tax residency is not just “183 days”

This is the single most common error in English-language content on the subject, and it costs people money.

Article 9 of Spain’s personal income tax law sets out more than one route into residency. Spending more than 183 days of the calendar year in Spanish territory is one. Having the main base or center of your economic interests in Spain is another, and it can apply to someone who spent far fewer days here. There is also a rebuttable presumption where a non-separated spouse and dependent minor children habitually reside in Spain.

You cannot plan around the day count alone, because the day count is not the only door.

There is a second trap specific to retirees. If you hold a non-lucrative residence permit, the immigration regulation approved by Royal Decree 1155/2024 — in force since 20 May 2025 — requires more than 183 days of real and effective residence in Spain during the calendar year in order to renew the permit. From the first renewal onward, the physical presence that keeps your residence permit alive is the same physical presence that establishes Spanish tax residency. The comfortable separation between “immigration residency” and “tax residency” that a great deal of US-facing content still sells does not survive that requirement. We set out the wider picture in our guide to tax residency in Spain.

What the treaty actually says

The convention between Spain and the United States, signed in 1990 and amended by the protocol of 14 January 2013 which entered into force on 27 November 2019, contains language people quote loosely. The precise wording matters.

Pensions from past employment. Article 20(1)(a) provides that pensions and other similar remuneration derived by a resident of a contracting state, by reason of past employment, “sólo pueden someterse a imposición en ese Estado” — may be taxed only in that state. For a Spanish resident, that points to Spain.

Social security. Article 20(1)(b) provides that social security benefits paid by a contracting state “pueden someterse a imposición” in the paying state. That is “may be taxed”, not “shall be taxed only”. It is a non-exclusive allocation, and it does not say that Spain cannot tax the benefit. Content asserting that US Social Security is “taxable only in the United States” is misreading this paragraph — a mistake common enough that we corrected it on our own site. Our detailed treatment is in the US–Spain tax treaty explained.

Government service. Article 21 deals separately with remuneration paid by a state for services rendered to it. Career civil servants, military retirees and some public-sector pensioners are on a different track from private-sector retirees, and the analysis genuinely differs.

The saving clause: why the treaty does not switch off the IRS

The United States taxes on the basis of citizenship. The convention contains a saving clause permitting the United States to tax its own citizens broadly as if the treaty had not entered into force, subject to a limited list of preserved benefits.

The practical consequence: filing in Spain does not replace your Form 1040, and filing your Form 1040 does not satisfy Spain. You are in both systems at once, and the mechanism that stops you paying twice on the same income is a credit, claimed in the correct direction, in the correct year, with the correct sourcing. Getting the direction wrong is one of the most expensive avoidable errors in this area, and it is a matter for a US-licensed tax professional working alongside your Spanish adviser.

Roth accounts: the warning that matters most

Do not assume a Roth IRA is exempt in Spain.

The logic that makes a Roth attractive in the United States — you already paid tax on the contributions, so qualified distributions come out tax-free — is a feature of US domestic law. Spain has no Roth equivalent, and the convention does not create one. A US domestic exemption is not automatically imported into Spanish taxation of a Spanish resident.

We are deliberately not publishing a single-line rule here, because there is not one that is safe for every reader. What we can say plainly: if your retirement plan assumes your Roth will be untaxed after you move, that assumption needs to be tested against your facts before you move, not after your first distribution.

Where the Spanish tax base works differently

Two structural differences surprise almost every American we advise.

Spain splits income into two bases. General income and savings income are taxed on different scales. Which base a distribution lands in changes the outcome substantially — and that is a characterization question, not a rate question.

Your region matters. Personal income tax in Spain is partly state and partly regional. The autonomous communities set their own scales and reliefs. Two retirees with identical accounts and identical distributions can face different Spanish tax simply because one settled in Andalucía and the other elsewhere. This is one of the few genuinely controllable variables in the whole picture, and it is decided by where you buy or rent — a decision most people make for reasons of climate and family, with no idea it has a tax consequence.

Three sets of reporting obligations, not one

These are constantly conflated. They are separate, with different authorities, thresholds and forms.

• Modelo 720 is a Spanish informative return on assets and rights held abroad. It is not a tax. Its old penalty regime was struck down by the Court of Justice of the European Union on 27 January 2022 in case C-788/19 as disproportionate, and Spain replaced it through Law 5/2022; the general penalty regime of the General Tax Law now applies. The obligation to report remains in force — only the sanctions changed. See our guide to Modelo 720.
• FBAR is a US filing with FinCEN, not with the IRS, covering foreign financial accounts above an aggregate threshold.
• FATCA reporting on Form 8938 is a US filing with the IRS, with different thresholds and a different asset definition.

Satisfying one does not satisfy the others. Our US expat tax guide for Spain sets out the US side in more detail.

Common mistakes

• Taking a large distribution in the year of the move without establishing the residency start date first. This is the single most expensive mistake we see, and it is entirely avoidable.
• Assuming the treaty means “pay tax once, in one country”. It allocates and relieves; it does not exempt.
• Treating all three account types as one product because the US groups them under a single heading.
• Rolling or restructuring US accounts after arriving, on the assumption that a move that is neutral under US rules is neutral under Spanish ones.
• Choosing where to live in Spain purely on lifestyle, then discovering the regional scale applies to every future year of distributions.
• Reporting nothing in Spain because tax was withheld in the US. Withholding is not a filing, and a Spanish resident’s obligations do not disappear because a US institution deducted something.

Decisions to make before you move

1. Fix, in writing, the intended date your Spanish tax residency begins — and understand what would move it.
2. Model the year of the move separately from the years after it. They behave differently.
3. Decide the sequence of any large distributions, sales or restructurings relative to that date.
4. Choose your region in Spain with the tax scale in front of you, alongside the lifestyle criteria.
5. Establish which of your accounts are genuinely settled in treatment and which require individual analysis, so you know where the real exposure is.
6. Put your Spanish adviser and your US adviser in contact before decisions are executed, not afterwards.

What to gather

Recent US tax returns; statements for every retirement account with the plan type identified; your Social Security award or estimate; details of any employer or government pension; a schedule of other assets by country; your intended arrival date and expected days in Spain per year; marital status and marital property regime; and your existing US will, trust documents and powers of attorney.

When you need a US professional

We are a Spanish law firm. We do not provide US tax or immigration advice, and we do not prepare US filings. You will need a US-licensed professional — a CPA or a US tax attorney, and often a financial adviser — for the US side of the credit calculation, for your Form 1040 position, for FBAR and Form 8938, and for the US consequences of any restructuring. CostaLuz Lawyers coordinates the Spanish legal, property, tax and estate-planning side of your retirement, working with your US advisers where necessary.

Frequently asked questions

Is my Roth IRA tax-free in Spain?

Do not assume so. The tax-free treatment of qualified Roth distributions is a feature of United States domestic law. Spain has no Roth equivalent, and the Spain–US convention does not create one. Whether and how Spain taxes distributions from your Roth depends on how the product is characterized under Spanish rules and on your own circumstances, which is why this needs to be analyzed individually before you move rather than after your first withdrawal.

Does the US–Spain treaty mean I only pay tax once?

Not exactly. The convention allocates taxing rights between the two countries and provides mechanisms to relieve double taxation, usually through a credit. It does not switch either tax system off. Because the United States taxes on the basis of citizenship and the convention contains a saving clause, a US citizen resident in Spain is generally within both systems at the same time, and the relief has to be claimed correctly, in the right direction and in the right year.

Is US Social Security taxable only in the United States?

No, and this is a widespread misreading. Article 20(1)(b) of the convention says that social security benefits paid by a contracting state may be taxed in that state. “May be taxed” is a non-exclusive allocation. It does not say that the country of residence cannot tax the benefit. Any content telling you Spain will not tax your Social Security is stating something the treaty text does not say.

Do I still file US tax returns after moving to Spain?

Yes. United States tax obligations follow citizenship, not residence. Moving to Spain does not end your Form 1040 filing obligation, and it may add filings — FBAR with FinCEN and Form 8938 with the IRS have their own thresholds. Filing in Spain does not replace filing in the United States, and filing in the United States does not satisfy your Spanish obligations. Both run in parallel.

When exactly do I become a Spanish tax resident?

It is not decided by the day count alone. Spanish law provides more than one route: spending more than 183 days of the calendar year in Spanish territory, having the main base or center of your economic interests in Spain, and a rebuttable presumption based on where a non-separated spouse and dependent minor children habitually reside. Because Spain does not apply a split-year treatment in the way some systems do, the year of your move needs to be analyzed on its own.

Before your first distribution as a Spanish resident

The most valuable thing you can do costs the least: establish your residency start date and the sequence of your distributions before you move, not after. Almost everything expensive in this area is a timing problem that looked like a rate problem.

Before choosing a visa, buying a property or becoming tax resident in Spain, obtain coordinated advice. Send us your expected retirement income by source, your intended arrival date and your family circumstances at marialuisa@costaluzlawyers.es, or book a planning consultation at calendly.com/marialuisa-b4a. If you are already in the zone and need same-day contact, our client line is +34 919 499 342 (English and Spanish).

Related reading: our overview of retiring in Spain from the United States, and paying income tax on foreign pensions in Spain.

This article is general information about Spanish law and is not legal advice for any particular transaction. Whether, and how, the rules described here apply depends on your residency status, the characterization of each account, the date of your move and your own documentation. Nothing here is United States tax or legal advice; for the US side you require a US-licensed professional. For advice on your own situation, contact CostaLuz Lawyers.

Reviewed by María Luisa de Castro, ICA Cádiz nº 2745.

AI Disclosure: this article was drafted with AI assistance and reviewed by a Spanish-qualified lawyer at CostaLuz Lawyers before publication.