I am just starting to investigate the required taxes on retirement earnings with a NLV.
It seems as though it may be over 30-35%. Has anyone found a way to be in a lower tax bracket? Thank you!
Can you explain the acronym - NLV?
What country are you moving from and what will be the primary source of your retirement income while living in Spain?
Do you plan to become a Spanish Tax resident?
I am working on my Spanish NLV (non-lucrative visa) as well. Do I have the option of becoming a Spanish tax resident? I am moving from the USA.
@Conor55
Non lucrative visa. Moving from US. I've done a lot of research and seems as though taxes on retirement income will be over 35%
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Best
@Conor55
NLV is a Non Lucrative Visa
you are not allowed to work, but can have a passive income, pension and savings.
There's a tax treaty between US and Spain, you may want to find a tax accountant who is familiar with this agreement and taxation of US expats.
If you are on an NLV, in the first 5 years of the visa you can't leave the country for 183 days of the year. This amount of time is what is used to determine whether or not you are a Spain tax resident. So, should you abide by the restrictions of NLV, you will be a tax resident subject to Spain taxes the first 5 years.
After that, your visa can be converted to long term and you could leave Spain for a longer period of time, maybe enough to avoid being a tax resident. But you would have to leave, implying having a home somewhere. Or doing a lot of holiday traveling. I know people who do that.
You will be subject to Spanish income tax when you become a Spanish resident and it is higher than US federal tax. Spain has some of the world's highest income tax rates and has a wealth tax. You will have to file both Spanish and US tax return. You will get credit from you US federal taxes for tax paid in Spain. You will need a US based CPA to prepare your US Tax return and a Spanish accountant to prepare and file your Spanish return. The Spanish tax preparers typically charge three times more than the US equivalent.
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