🇪🇸 Spain - The First Steps

Christina and I have traveled a lot throughout Europe over the past fifteen years or so. We were married in France and have spent time in Hungry, Austria, the Czech Republic and most recently a lot of time in Spain and Portugal. We love Europe, the culture, the food and the landscapes. For years we have talked about living abroad somewhere in Europe during our retirement.

Over the past few years we have looked more and more at the possibility of making this move earlier while still working if possible which brings into focus a huge host of new questions. How do we do this? What visa do we use? How do or can we work legally? How will be be taxed? Will we be double taxed given we are United States citizens? The questions quickly become pretty endless. We did our best to research on our own via internet search, AI chatting, Reddit groups and Facebook groups. We found a ton of good information but at some point you need someone to validate the information you have found and add to that information with reality.

So this week we took the very first steps on our journey and we spoke to a Spanish immigration lawyer. We discussed the most likely possible routes of doing this which would include being a W2 employee of an American company or a 1099 contract employee of an American company. For a W2 employee we would have to work for a company willing to have a Spanish entity, or using an Employer of Record (EOR) which in a nutshell is an organization you work for that has an entity in the country in which you want to work and you then contract for your American company through them on a contract basis and pay them a monthly fee. In our case the most likely path turns out to be employee(s) of our own company Cascadia Ascent which is an LLC we formed late last year as a way for Christina to do contract work. Under this setup we would work for our own company, which itself has contracts with other companies but from a tax perspective our LLC is the only one that is a tax liability. The only hurdle for this is that the company needs to have been in existence for at least a year so that's a hurdle but likely fits with our timeline. Now the question is what our tax rate would be with the given scenarios. There are really mainly two possibilities. The first is that we fall into the countries traditional tax system that is used by all it's citizens and your tax rate could be anywhere from 19% all the way up to 49% depending on income. The other option would be that we could qualify and apply for the Beckham's law which would effectively lock in our tax rate at 24% for the first five years working in Spain. After that period you would default back to the Spanish tax bracket of between 19 and 49% percent. At that point we would potentially be looking at retiring anyway so this is likely not an issue for us.

Next stop, the international tax attorney.