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
No state income tax (but capital gains tax from 2023: 7% above $262,000)
Washington state income tax
Washington State has no income tax on wages but in 2022 enacted a 7% capital gains tax on gains above $262,000 (affirmed by WA Supreme Court). Seattle's Amazon, Microsoft, and aerospace (Boeing) sectors generate enormous equity compensation. Washington expats moving to Spain face the unique challenge of coordinating WA's new capital gains tax with Spanish IRPF or Beckham Law treatment of capital gains. Jacob Salama advises professionals and business owners from Washington 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 Seattle, Spokane, Tacoma, Bellevue, Redmond, 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 Washington 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 Washington 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 Washington 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.
Washington state income tax (No state income tax (but capital gains tax from 2023: 7% above $262,000)) ceases to apply once you properly establish non-residency in Washington. 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 Washington after departure; and (4) spending fewer than the statutory number of days in Washington 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.
Washington State has no income tax on wages — but introduced a 7% state capital gains tax in 2021 on long-term capital gains above $250,000, which was upheld by the Washington Supreme Court in 2023. The Washington Department of Revenue administers the capital gains tax. Washington's standard domicile exit procedures apply for state income tax purposes, though the capital gains tax may still apply to gains realised on Washington-source assets after departure in the year of transition.
Washington State is home to Amazon (Seattle headquarters), Microsoft (Redmond headquarters), Boeing (Renton manufacturing), Starbucks, Costco, Nordstrom, Paccar, and hundreds of technology startups in the Seattle-Bellevue tech corridor. The state also has a major aerospace manufacturing sector, agriculture (Yakima Valley is a premier apple and hop-producing region), forestry, and a large military presence (Joint Base Lewis-McChord). Washington expats moving to Spain are predominantly tech executives and engineers from Amazon, Microsoft, and the broader Seattle ecosystem, often holding substantial stock positions.
For professionals relocating from Washington 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 Washington rates can approach ~44%, making the Beckham Law's 24% flat rate particularly attractive.
| Scenario | Top Effective Rate | Approx. Tax on $180k Income |
|---|---|---|
| US — Federal (37%) + WA (7% (CGT only)) | ~44% | ~$79,200 |
| Spain — Beckham Law (employment income) | 24% flat | ~€43,200 |
| Spain — Standard IRPF (no Beckham) | Up to 47% | ~€68,400+ |
Washington has no state income tax, so all retirement income — Social Security, 401(k), IRA distributions, pensions — has been completely state-tax-free for Washington residents. The capital gains tax does apply to large gains on stock sales. Moving to Spain creates the transition from near-zero state taxation (only the capital gains tax for large gains) to full Spanish IRPF treatment of retirement income and the Spanish CGT scale on investment gains.
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 Washington resident (paying only federal tax, with no Washington state tax on retirement income in many cases) can significantly reduce lifetime tax costs.
Key planning point for Washington expats: Amazon and Microsoft employees in Seattle face one of the most complex pre-departure equity planning situations of any US expat demographic. Both companies have quarterly and annual RSU vesting schedules. For Washington employees with large unvested positions, the Washington 7% capital gains tax on gains above $250k creates an additional layer of pre-departure planning: realising gains while still a Washington resident adds the 7% state CGT on top of federal (vs Spanish CGT of 19-28% but no US state tax after Spain residency begins). Detailed modelling is essential.
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 Washington 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 Washington 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 Washington: 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 Seattle and Bellevue in the technology sector are exploring remote work arrangements that allow them to live in Spain while continuing to work for their WA-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 Washington residents preparing to move to Spain include:
Why specialist advice matters: Moving from Washington to Spain involves simultaneous US federal, WA state, and Spanish tax obligations. General advisors typically lack the cross-border expertise to optimise all three at once. Jacob Salama advises Washington nationals moving to Spain on the complete picture — from pre-departure planning through the first Spanish IRPF return and beyond.
Moving from Washington 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.