Yes. Under Article 20(1)(a) of the US-Spain tax treaty, a pension paid for past employment is taxable only in the country where the recipient lives, so Spain taxes a 401(k) distribution received by a Spanish resident. A qualified Roth distribution is tax free in the United States and is not exempt in Spain.
| Income | Treaty article | Taxing right | What the other country does |
|---|---|---|---|
| 401(k) or employer pension distribution | Article 20(1)(a) | Spain only | Article 1(3) lets the United States tax its citizens anyway; Article 24(3) makes a credit work |
| Traditional IRA distribution | Article 20(1)(a) or Article 23(1) | Spain only on either reading | Same citizenship override, same resourcing rule |
| Qualified Roth IRA distribution | Article 20(1)(a) or Article 23(1) | Spain only | No US tax arises, so there is nothing for the Spanish tax to offset |
| Growth inside any of those accounts | Article 20(5) | Neither, until it is paid out | Deferral holds on both sides; a transfer to another fund in the same country is not a payment |
| US Social Security | Article 20(1)(b) | The United States may tax, and so may Spain | Spain allows a credit for the US income tax actually paid under Article 24(1)(a) |
| US government or military pension | Article 21(2) | The United States only, unless the recipient is also a Spanish national | Spain may count the exempt amount when rating the rest under Article 24(1)(c) |
Which country taxes a 401(k) distribution
Spain, and only Spain, holds the treaty right to tax it. Article 20(1)(a) of the 1990 convention gives the country of residence an exclusive taxing right over pensions and other similar remuneration paid in consideration of past employment, and the Technical Explanation adds that this holds wherever the past employment occurred.
The United States does not stop collecting, because Article 1(3) lets each country tax its own citizens as if the convention had never come into effect. Article 24(3) answers that: income the United States taxes by reason of citizenship is deemed to arise in Spain so far as is needed to avoid double taxation, provided the US tax is never less than a non-citizen would pay. The Spanish tax becomes creditable against the US bill on the same money.
Why Spain cannot tax the growth inside the account
It cannot reach that growth until the money is paid out. Article 20(5), added by the Protocol signed in Madrid on 14 January 2013 and in force since 27 November 2019, lets income earned by a pension fund in one country be taxed as the income of a participant only when, and to the extent that, it is paid to that individual.
The Treasury Technical Explanation puts the case plainly: where a US citizen contributes to a US qualified plan while working in the United States and then establishes residence in Spain, paragraph 5 prevents Spain from taxing currently the plan’s earnings and accretions with respect to that individual. A transfer to another pension fund in the same country is not a payment either.
The accounts are named rather than left to inference. The Memorandum of Understanding accompanying the Protocol lists section 401(a) plans including 401(k) plans, section 403(a) and 403(b) plans, section 408 individual retirement accounts, section 408A Roth individual retirement accounts, section 408(p) SIMPLE accounts, section 408(k) simplified employee pensions, section 457(b) plans and the Thrift Savings Fund.
What happens to a Roth IRA
Spain taxes the payment. The Roth enters the treaty only as a pension fund, which protects its internal growth under Article 20(5); nothing in the convention exempts the distribution itself, and Ley 35/2006 carries no category that mirrors the US exemption. A qualified Roth distribution — made after the five-year period and on or after age 59 and a half, per Publication 590-B — costs nothing in the United States and is therefore not sheltered in Spain.
That reverses the usual arithmetic. For a traditional 401(k) or IRA the Spanish tax is credited against a real US liability, so broadly the higher of the two rates is what gets paid. For a Roth there is no US tax to credit, the Spanish charge is the whole cost, and the exemption bought with after-tax contributions is spent.
Which Spanish income box the payment lands in
The box decides the rate, and no Spanish statute names a US account. Article 66 of Ley 35/2006, read with Article 76, taxes the savings base at 19 percent on the first 6,000 euros, 21 percent to 50,000, 23 percent to 200,000, 27 percent to 300,000 and 30 percent above that. Employment income is taxed on the general base instead.
The general base is split between two scales. The state scale in Article 63 runs from 9.5 percent to 24.5 percent above 300,000 euros, and Article 74 leaves each autonomous community to approve its own scale on top, so the combined marginal rate turns on where in Spain a person lives.
Article 17.2.a puts benefits paid to the beneficiaries of pension plans into employment income, but the plans it names are those regulated by Real Decreto Legislativo 1/2002 and by the European directive on occupational pension funds. A US 401(k) is neither. Whether a given distribution is employment income under Article 17.1, as deriving from past work, or capital income on the savings base, the text does not settle, and the two answers sit about twenty points apart.
US Social Security runs the other way
The United States taxes it, and Spain may tax it as well. Article 20(1)(b) allows social security benefits paid by one country to a resident of the other to be taxed by the paying country, and the Technical Explanation is explicit that the paragraph confers no exclusive right: the payments may be taxable in both countries, with the country of residence giving relief under Article 24.
Spain gives that relief as a credit for the income tax actually paid in the United States, capped at the part of the Spanish tax attributable to the US income, under Article 24(1)(a). On the US side, section 86 of the Internal Revenue Code brings up to 85 percent of benefits into gross income once income passes the adjusted base amount of 34,000 dollars, or 44,000 dollars on a joint return; the base amounts beneath which nothing is included are 25,000 and 32,000 dollars.
Provision 15 of the 1990 Protocol extends that treatment to pensions from publicly administered funds for non-governmental services, such as Railroad Retirement.
What the Beckham regime does to the answer
It either takes the distribution outside Spanish tax or sweeps it in at 24 percent, and the statute does not say which. Article 93 of Ley 35/2006 lets a new arrival elect to be taxed under the non-resident income tax rules for the year of the move and the five following periods, at 24 percent up to 600,000 euros and 47 percent above.
Those rules reach only income obtained in Spanish territory — except that Article 93.2(b) deems the whole of the employment income obtained during the regime to arise there. Read with Article 17.2.a, which treats pension-plan benefits as employment income, that leaves a US retirement distribution either outside the Spanish charge altogether or inside it at 24 percent, on a characterisation the law declines to make.
What this means on the US return
The foreign earned income exclusion does nothing here. The IRS lists pension or annuity payments, including social security benefits, among the amounts that are not foreign earned income, so it cannot be applied to a 401(k) or IRA distribution however long the taxpayer has lived abroad.
The relief is the foreign tax credit instead, claimed on Form 1116 for income tax paid or accrued to Spain. Article 24(3) is what makes it usable here: without that resourcing rule a distribution from a US plan would be US-source income against which no foreign credit could be taken. Where a treaty position overrides or modifies an Internal Revenue Code provision, section 6114 requires it to be disclosed, which Form 8833 does.
Residence has to be settled first
None of this applies until Spain is the country of residence. Article 9 of Ley 35/2006 makes a person resident on spending more than 183 days of the calendar year in Spanish territory, counting sporadic absences unless tax residence elsewhere is proved, or on having the main nucleus or base of their activities or economic interests in Spain.
A rebuttable presumption adds a third route: residence is assumed where a spouse who is not legally separated and dependent minor children habitually reside in Spain. Where both countries claim the same person, Article 4 of the convention breaks the tie. The filings that follow Spanish residence, Modelo 720 alongside the FBAR and Form 8938, are a separate question from the one answered here.
Sources
- Internal Revenue Service — Convention between the United States and the Kingdom of Spain, 22 February 1990, Articles 1, 20, 21, 23 and 24 — https://www.irs.gov/pub/irs-trty/spain.pdf — checked 7 October 2026
- Internal Revenue Service — Technical Explanation of the Convention with Spain, Article 20 — https://www.irs.gov/pub/irs-trty/spain-te-1990.pdf — checked 7 October 2026
- US Department of the Treasury — Protocol Amending the Convention with Spain, signed at Madrid 14 January 2013, Articles II and X — https://home.treasury.gov/system/files/131/Treaty-Spain-Protocol-1-14-2013.pdf — checked 7 October 2026
- US Department of the Treasury — Technical Explanation of the Protocol Amending the Convention with Spain, 19 June 2014 — https://home.treasury.gov/system/files/131/Treaty-Spain-Protocol-TE-6-19-2014.pdf — checked 7 October 2026
- US Department of State — Spain (19-1127), Amendment of Double Taxation Agreement of 22 February 1990, entered into force 27 November 2019 — https://www.state.gov/spain-19-1127/ — checked 7 October 2026
- Agencia Estatal Boletín Oficial del Estado — Ley 35/2006, Impuesto sobre la Renta de las Personas Físicas, articles 9, 17, 63, 66, 74, 76 and 93 — https://www.boe.es/buscar/act.php?id=BOE-A-2006-20764 — checked 7 October 2026
- Internal Revenue Service — Publication 590-B, Distributions from Individual Retirement Arrangements — https://www.irs.gov/publications/p590b — checked 7 October 2026
- US Government Publishing Office — 26 U.S.C. 86, Social security and tier 1 railroad retirement benefits — https://www.govinfo.gov/content/pkg/USCODE-2023-title26/html/USCODE-2023-title26-subtitleA-chap1-subchapB-partII-sec86.htm — checked 7 October 2026
- Internal Revenue Service — Publication 915, Social Security and Equivalent Railroad Retirement Benefits — https://www.irs.gov/publications/p915 — checked 7 October 2026
- Internal Revenue Service — Foreign Earned Income Exclusion, what is foreign earned income — https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion-what-is-foreign-earned-income — checked 7 October 2026
- Internal Revenue Service — Foreign Tax Credit — https://www.irs.gov/individuals/international-taxpayers/foreign-tax-credit — checked 7 October 2026
- Internal Revenue Service — About Form 8833, Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b) — https://www.irs.gov/forms-pubs/about-form-8833 — checked 7 October 2026
Common questions
- Is my Roth IRA still tax free if I move to Spain?
- No. The Roth enters the treaty only as a pension fund, which shields the growth inside it. Nothing in the convention exempts the payment, and Ley 35/2006 carries no category mirroring the US exemption. A qualified Roth distribution costs nothing in the United States, so there is no US tax to credit and the Spanish charge becomes the whole cost.
- Does Spain tax my 401(k) every year even if I take nothing out?
- No. Article 20(5), in force since 27 November 2019, lets income earned by a pension fund be taxed as a participant’s income only when, and to the extent that, it is paid to that individual. The Treasury Technical Explanation says plainly that paragraph 5 prevents Spain from taxing currently a plan’s earnings and accretions.
- Which US retirement accounts does the treaty cover?
- The Memorandum of Understanding accompanying the 2013 Protocol names them: section 401(a) plans including 401(k) plans, section 403(a) and 403(b) plans, section 408 individual retirement accounts, section 408A Roth individual retirement accounts, section 408(p) SIMPLE accounts, section 408(k) simplified employee pensions, section 457(b) plans and the Thrift Savings Fund.
- If Spain taxes my 401(k) withdrawal, do I still report it to the IRS?
- Yes. Article 1(3) lets the United States tax its own citizens as if the convention had never come into effect, so the distribution stays on the US return. Article 24(3) then deems that income to arise in Spain so far as is needed to avoid double taxation, which is what allows the Spanish tax to be credited against the US bill.
- What rate does Spain charge on a 401(k) distribution?
- Two very different rates are possible, because no Spanish statute names a US account. The savings base starts at 19 percent on the first 6,000 euros and reaches 30 percent once it passes 300,000. Employment income goes on the general base instead, where the state scale alone runs to 24.5 percent and each autonomous community adds its own scale.
- Does Spain tax my US Social Security?
- It may, and the United States taxes it as well. Article 20(1)(b) lets the paying country tax social security benefits, and the Technical Explanation is explicit that the paragraph confers no exclusive right. Spain then allows a credit for the US income tax actually paid, capped at the part of the Spanish tax attributable to that income.
- I am on the Beckham regime — does it cover my 401(k)?
- The statute does not say. Article 93 taxes an electing new arrival under the non-resident rules at 24 percent up to 600,000 euros, and those rules reach only income obtained in Spanish territory. Yet Article 93.2(b) deems all employment income obtained during the regime to arise there, and whether a US distribution is employment income is unresolved.
- Can the foreign earned income exclusion cover a pension or IRA withdrawal?
- No. The IRS lists pension or annuity payments, including social security benefits, among the amounts that are not foreign earned income, so the exclusion cannot reach them however long someone has lived abroad. The foreign tax credit on Form 1116 is the relief that applies to Spanish income tax paid on the same money.
- Is there a form for claiming a treaty position?
- Section 6114 requires a treaty position that overrides or modifies an Internal Revenue Code provision to be disclosed, and Form 8833 is that disclosure. The foreign tax credit is a separate claim, made on Form 1116 for income tax paid or accrued to Spain on the same income.
- How many days in Spain make me a Spanish tax resident?
- More than 183 in the calendar year, under Article 9 of Ley 35/2006, with sporadic absences counted unless tax residence in another country is proved. Residence also follows from having the main nucleus or base of activities or economic interests in Spain, and a spouse and dependent minor children living there raise a rebuttable presumption.
- Is a federal civil service or military pension treated the same way?
- No. Article 21(2) keeps a government pension with the paying country, so the United States taxes it, unless the recipient is both resident in and a national of Spain. Spain may still take the exempt amount into account under Article 24(1)(c) when working out the tax on the rest of the income.
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