Residuals, royalties, RSUs and CA Franchise Tax Board issues — the complete tax guide for LA entertainment and tech professionals moving to Spain.
Key Issues
Writers, directors and performers receiving residuals from SAG-AFTRA, WGA or DGA continue receiving US-source income after moving to Spain. Under the Spain-US treaty, royalty income is generally taxed primarily in the residence country (Spain), but attribution analysis is required for residuals that straddle residency changes.
California's Franchise Tax Board aggressively taxes RSU income earned during California residency, even after you leave. If your RSUs were granted while CA-resident, California claims a portion of the vesting gain based on the California-work period. Moving to Spain doesn't eliminate this CA obligation — it must be separately managed.
Many LA couples involve two high earners in different industries — one in entertainment, one in tech. Combined Spanish IRPF for married couples filing jointly can be complex. Beckham Law eligibility must be assessed separately for each spouse, as only one may qualify.
Key Tax Topics
Breaking CA domicile properly before establishing Spanish residency. The FTB's safe harbour rules and how to document your departure effectively.
Royalty and residual income treatment under the Spain-US treaty Article 12. Sourcing rules for entertainment income performed partially in Spain.
FBAR and FATCA reporting for US accounts retained after the move. California non-resident return obligations for CA-source income that continues post-move.
Beckham Law at 24% for entertainment professionals with Spanish employer relationships. Timing of RSU exercise and residual income recognition relative to residency change.
Jacob Salama has advised US clients from Los Angeles and across the United States on their Spanish tax position.
Every move from Los Angeles to Spain has unique dimensions — residuals, CA FTB exit, RSU timing. Book a free 30-minute consultation to discuss your specific tax position.
Book via CalendlyWhen a Los Angeles resident establishes tax residency in Spain, they simultaneously exit a US state tax regime and enter Spain's IRPF system — which taxes worldwide income at rates up to 47% for general residents, or at a flat 24% for those qualifying under the Beckham Law (Article 93 LIRPF, expanded by the 2022 Startup Law). California's FTB is the most aggressive state tax authority in the US. Los Angeles residents must plan the departure date carefully, terminate all California domicile indicators before the move, and expect aggressive FTB scrutiny of the transition year return. California source income — particularly entertainment royalties and stock options sourced to California — will continue to be taxable in California after departure.
Unlike most countries, the United States imposes worldwide income tax on its citizens regardless of where they reside. The US-Spain Double Taxation Agreement (1990, amended by the 2013 Protocol) contains a Saving Clause under Article 1(4) that preserves this right. A US national from Los Angeles who moves to Spain and becomes a Spanish tax resident therefore remains fully subject to US federal income tax on worldwide income alongside their Spanish IRPF obligations.
The foreign tax credit mechanism under Article 24 of the DTA and IRC §901 is the primary tool for avoiding economic double taxation. Its correct application requires careful sequencing between the two systems — errors in credit ordering frequently result in avoidable double taxation or wasted credit carryforwards that cannot be reclaimed.
The tax issues that arise for professionals moving from Los Angeles to Spain depend heavily on income type and asset structure. The following profiles reflect the situations Jacob Salama most frequently advises on from this metropolitan area:
| Tax | In Los Angeles, California | In Spain (Spanish resident) |
|---|---|---|
| California state income tax | 1%–13.3% progressive; Franchise Tax Board (FTB) + 1.1% SDI | Eliminated on departure |
| US federal income tax | 10%–37% | Still applies (Saving Clause, Art. 1(4)) |
| Spanish IRPF — employment income | N/A | 24% (Beckham) / up to 47% (general scale) |
| Spanish IRPF — savings / investment | N/A | 19%–28% (savings base rate) |
| Spanish wealth tax (IP) | N/A | 0%–3.5% depending on region and net worth |
| Foreign asset reporting | FBAR + FATCA (Form 8938) | Modelo 720 + FBAR + FATCA |
One of the most complex planning areas for Los Angeles professionals relocating to Spain is the treatment of US retirement accounts under both the DTA and Spanish domestic law.
Traditional 401(k) and IRA distributions fall under DTA Article 17 (private pensions). Spain has the primary taxing right once the recipient is a Spanish tax resident. Contributions made on a pre-tax basis in the US — and the accumulated growth — are subject to Spanish IRPF on withdrawal at rates up to 47% under the general scale or 24% under the Beckham regime.
Roth IRA distributions present a well-documented double-taxation trap. The IRS treats qualified Roth distributions as tax-free because contributions were made on an after-tax basis. Spain does not recognise this exemption under domestic law or the DTA. The AEAT treats Roth IRA distributions as taxable investment income under IRPF — meaning a Los Angeles expat who moves to Spain and later takes Roth distributions may pay Spanish income tax on amounts already subject to US tax, with no DTA mechanism to prevent this outcome.
Pre-departure planning for retirement accounts should include: timing of Roth conversions before establishing Spanish residency; consideration of accelerated distributions while still a US resident; evaluation of rollover strategies that simplify Spanish reporting; and Modelo 720 planning, which requires Spanish residents to declare foreign pension accounts above €50,000 per category annually.
Many US nationals who have been living in Spain for months or years without filing Spanish returns, or without disclosing US accounts to the AEAT via Modelo 720, find themselves in a position of historical non-compliance. Jacob Salama regularly assists clients in regularising their position across both jurisdictions before the relevant authorities identify the gaps.
On the US side, the IRS Streamlined Procedures (Streamlined Foreign Offshore Procedure for bona fide foreign residents, or Streamlined Domestic Offshore for US-based filers) provide a reduced-penalty path for non-wilful failures to file FBARs, Form 8938, and delinquent income tax returns. Eligibility requires that the failure was non-wilful — meaning it resulted from a lack of understanding of the obligations rather than a deliberate decision to conceal assets.
On the Spanish side, voluntary disclosure of previously unreported foreign assets and income prior to an AEAT investigation significantly reduces penalties and eliminates the risk of criminal referral. The 2022 reforms to Modelo 720 — following the ECJ C-127/12 ruling — removed the most disproportionate penalties, but late filing remains subject to standard tax surcharges under the Ley General Tributaria.
