FATCA and Spanish Tax Residency: What US Expats Need to Know

US citizens and green card holders are taxed on worldwide income no matter where they live, and that obligation does not change when you establish Spanish tax residency. What does change is that you now sit inside two overlapping reporting systems at once — US rules aimed at foreign accounts, and Spain's own rules aimed at assets held abroad (which, from Spain's perspective, includes your US accounts). Understanding where each system starts and stops is the single most common source of confusion for American clients.

FATCA and FBAR: two different US requirements

These are frequently confused, but they are separate filings with separate thresholds and separate purposes.

Note that the Form 8938 threshold is higher for Americans genuinely living abroad than for US residents — but it is easy to miscalculate if you are only counting bank accounts and forgetting Spanish pension products, investment accounts, or certain life insurance policies with cash value, which can also count as specified foreign financial assets. FBAR, by contrast, has one flat threshold that catches far more people because $10,000 combined across accounts is a low bar once you have a Spanish current account, a savings account, and perhaps a joint account with a spouse.

Full details and current thresholds are published by the IRS.

Spain's mirror-image rules: Modelo 720 and Modelo 721

Spain runs its own foreign-asset disclosure regime for its own tax residents, and once you are Spanish tax resident, your US accounts are the "foreign" assets from Spain's point of view.

• Modelo 720 covers foreign bank accounts, foreign securities/investments, and foreign real estate, reported in three separate categories. The filing obligation is generally triggered when the value in any one category exceeds €50,000.
• Modelo 721 is the newer, separate form specifically for cryptocurrency held on platforms or wallets located outside Spain, also with a €50,000 threshold.
• Both are informational declarations, not tax payments in themselves, but historically carried severe penalties for non-filing; those penalties were revised after EU court scrutiny, though the filing obligation itself remains in force.
• Both are typically due between January 1 and March 31 for the prior calendar year.

If you qualify for the Beckham Law special regime, you are generally exempted from the Modelo 720/721 filing obligation for as long as that regime applies — one of the regime's lesser-known benefits, and a good reason to check eligibility before assuming you owe this filing.

Where the two systems actually overlap

They do not offset each other — filing FBAR does not satisfy Modelo 720, and vice versa. A US citizen resident in Spain with meaningful savings, brokerage accounts, or retirement accounts back in the US may need to file all of: a US federal return, FBAR, potentially Form 8938, a Spanish IRPF return declaring worldwide income, and Modelo 720/721 if thresholds are crossed. This is not optional stacking — each authority requires its own filing regardless of what you report to the other.

Double taxation relief

The US/Spain tax treaty and the US Foreign Tax Credit mechanism exist precisely to prevent the same income from being taxed twice, but the "savings clause" in the treaty preserves the US government's right to tax its citizens as if the treaty did not exist. In practice, most Americans in Spain rely on the Foreign Tax Credit for Spanish tax paid, rather than treaty exemptions, to avoid double taxation on the US return. Our companion guide on US/UK-Spain tax treaties covers this mechanism in more depth.