Jacob Salama · International Tax Lawyer · Colegiado nº 11.294 ICAMálaga
24%
Beckham Law flat rate on employment income
6 yrs
Duration of Beckham Law regime
2.5% flat
North-Dakota state income tax
North Dakota has one of the lowest state income taxes in the US (2.5% flat). Its energy sector generates significant income, particularly for oil and gas executives, whose equity compensation may include production payments and carried interests with complex sourcing. Jacob Salama advises professionals and business owners from North-Dakota who are relocating to Spain on the full spectrum of US-Spain tax compliance: pre-departure asset planning, Beckham Law applications, FATCA, FBAR and Modelo 720 obligations, and ongoing dual-filing coordination. Whether you are based in Fargo, Bismarck, Grand Forks, Minot, the planning principles are consistent — but the details depend on your specific circumstances and asset mix.
The 1990 US-Spain DTA (as amended by the 2013 Protocol) governs the allocation of taxing rights between the two countries. For US citizens — unlike nationals of any other country — the treaty's Saving Clause (Article 1(4)) preserves the United States' right to tax its citizens on worldwide income regardless of Spanish residence. A US national from North-Dakota who becomes a Spanish tax resident remains fully subject to US federal income tax. The foreign tax credit mechanism under Article 24 of the DTA is the primary tool for avoiding economic double taxation, but its application requires careful sequencing with Spanish IRPF or Beckham Law calculations.
The Beckham Law (Article 93 LIRPF), as expanded by Spain's 2022 Startup Law, allows qualifying individuals becoming Spanish tax residents for the first time to be taxed at a flat 24% on Spanish-source employment income up to €600,000, rather than the progressive general IRPF rate (up to 47%). Most foreign-source income is excluded from Spanish IRPF during the Beckham period. For professionals from North-Dakota earning in dollars from a US employer, this means: the Spanish salary is taxed at 24%, while dividends, rental income, and capital gains from US assets may be entirely outside Spanish IRPF. The application is made via Modelo 149 within six months of Spanish social security registration.
US nationals who move from North-Dakota to Spain and become Spanish tax residents face three overlapping foreign asset reporting obligations. First, the FinCEN 114 (FBAR) requires disclosure of all foreign financial accounts exceeding $10,000 in aggregate at any point during the calendar year. Second, FATCA (Form 8938) requires separate disclosure of foreign financial assets above the applicable threshold. Third, Modelo 720 requires Spanish tax residents to declare foreign bank accounts, securities and real estate above €50,000 per category. Jacob coordinates all three streams to ensure full compliance and to identify voluntary disclosure opportunities where historical non-compliance exists.
North-Dakota state income tax (2.5% flat) ceases to apply once you properly establish non-residency in North-Dakota. The key steps involve: (1) establishing a new domicile in Spain (or another state before Spain); (2) filing a part-year resident return for the year of departure; (3) ensuring you do not maintain a permanent place of abode in North-Dakota after departure; and (4) spending fewer than the statutory number of days in North-Dakota in future years. The exact rules vary by state and some states (notably California, New York, and New Jersey) are particularly aggressive in asserting continued residency. Jacob advises on the state-level exit process as part of the integrated US-Spain move planning.
North Dakota introduced a flat 2.5% income tax rate in 2023, replacing its previous graduated scale with rates up to 2.9%. North Dakota's residency exit is among the simplest in the US — standard domicile procedures apply, and the state does not aggressively challenge post-departure claims.
North Dakota's economy is heavily resource-based: oil and gas production (Williston Basin/Bakken Formation is one of the largest oil fields in the US), agriculture (wheat, sunflowers, soybeans, cattle), coal, and federal government activities. North Dakota also has a growing technology sector in Fargo. Expats from North Dakota are often oil and gas industry professionals (drillers, engineers, service company owners), agricultural business owners, and Fargo-based technology workers.
For professionals relocating from North Dakota to Spain, the Beckham Law (Article 93 LIRPF) — a flat 24% rate on Spanish-source employment income up to €600,000 for the first six years — can represent a substantial reduction in effective tax. Combined federal and North Dakota rates can approach ~39.5%, making the Beckham Law's 24% flat rate particularly attractive.
| Scenario | Top Effective Rate | Approx. Tax on $180k Income |
|---|---|---|
| US — Federal (37%) + ND (2.5%) | ~39.5% | ~$71,100 |
| Spain — Beckham Law (employment income) | 24% flat | ~€43,200 |
| Spain — Standard IRPF (no Beckham) | Up to 47% | ~€68,400+ |
North Dakota taxes most retirement income at its flat 2.5% rate. Social Security is exempt. The combination of very low income tax and a resource-based economy means most North Dakota residents have relatively modest retirement income compared to high-income states. Moving to Spain replaces the 2.5% state rate with Spanish IRPF.
Under the US-Spain Double Taxation Agreement, private pension and 401(k) distributions are taxable in Spain once you are a Spanish tax resident. The US may withhold at source, but this is creditable against Spanish IRPF. The Roth IRA creates a double-taxation risk — Spain does not recognise its US tax-exempt status. Pre-departure drawdown planning while still a North Dakota resident (paying only federal tax, with no North Dakota state tax on retirement income in many cases) can significantly reduce lifetime tax costs.
Key planning point for North Dakota expats: Oil and gas professionals from the Bakken Formation often hold working interests (fractional ownership of oil wells) that generate ongoing royalty and net profit income. When a North Dakota resident moves to Spain, these royalty payments from US oil wells remain US-source income under the US-Spain DTA. Spain taxes this royalty income under Article 12 of the DTA (5%/7% WHT applies in the US) — the withholding is creditable against Spanish IRPF.
Spanish wealth tax (Impuesto sobre el Patrimonio) applies to tax residents on their worldwide assets exceeding the personal allowance (€700,000 for residents, plus an additional €300,000 for the primary residence). For expats from North Dakota with significant investment portfolios, property, or business interests, wealth tax is an important planning consideration. The rates range from 0.2% on the first tier to 3.5% on the highest. The choice of Spanish region of residence significantly affects wealth tax exposure: residents of Madrid enjoy a 100% bonificación (effectively zero wealth tax), while Andalucía has a 99% bonificación. In contrast, Cataluña and Comunitat Valenciana apply wealth tax in full. For high-net-worth individuals from North Dakota with substantial assets, the choice of Spanish region of residence can result in wealth tax differences of tens of thousands of euros per year.
Under the Beckham Law special regime (Article 93 LIRPF), Spanish wealth tax applies only to Spanish-located assets — not worldwide assets — for the duration of the regime. This is an additional major advantage of the Beckham Law for wealthy expats from North Dakota: for the first six years of Spanish residence, your US brokerage portfolio, IRA, 401(k), US real estate, and other US-located assets are entirely outside the Spanish wealth tax base. Once the Beckham period ends and you transition to the standard IRPF regime, worldwide wealth becomes assessable.
Many professionals from Fargo and Bismarck in the energy and agricultural sector are exploring remote work arrangements that allow them to live in Spain while continuing to work for their ND-based employer. This arrangement raises specific tax and compliance questions that must be addressed before the move.
A well-structured pre-departure process can significantly reduce your total tax burden and avoid costly compliance failures. Key steps for North Dakota residents preparing to move to Spain include:
Why specialist advice matters: Moving from North Dakota to Spain involves simultaneous US federal, ND state, and Spanish tax obligations. General advisors typically lack the cross-border expertise to optimise all three at once. Jacob Salama advises North Dakota nationals moving to Spain on the complete picture — from pre-departure planning through the first Spanish IRPF return and beyond.
Moving from North-Dakota to Spain involves complex US-Spain tax interactions that general advisors miss. Jacob handles every private client case personally.
The content on this page is for general informational and educational purposes only. It does not constitute legal or tax advice and does not create a lawyer-client relationship. Tax laws change frequently and their application depends on individual circumstances. Always obtain specific professional advice before taking any action. Jacob Salama — Salama Legal SLP — is a registered Spanish lawyer (Colegiado nº 11.294, ICAMálaga) and is not authorised to provide US or UK legal advice.