I wrote this in response to a couple folks asking us about our experience moving to Barcelona. It's a complicated process, but the main challenges are getting a residence permit and paying taxes. TL;DR: engage an attorney or firm for both, preferably a local who's in the city you want to move to.
Residence
Taxes
We were not quite ready to move right after buying the apartment, so we rented it out with the aid of our real estate lawyer's firm. This required us to pay taxes on the income, reasonable enough. We also have to pay "Impuesto sobre Bienes Inmuebles" (IBI), a property tax, every year; also, not a big surprise.
We have now been living here for over 183 days, so have become tax residents. There is a tax treaty between Spain and the US which avoids most "double taxation" but it's complicated. Our immigration attorney recommended a tax law firm, and we wouldn't attempt filing without them. The tax deadline in Spain is after the US April 15 deadline, but you can get an automatic 2 month extension. File your taxes in Spain, then get your Spanish tax person to send those documents to your US CPA to file in the US. The US should credit you for taxes paid to Spain; Spain's tax rates are generally higher than the US, so it's likely there won't be any US taxes due, but there will probably be state taxes. You have to file in the US, every year, for the rest of your life, and incur the related expenses. Our tax lawyer had us ask our CPA to do a draft of the US taxes, which she then used to fill in the Spanish forms, and we then sent a summary of those to our CPA for final filing by the US deadline of June 15.
Spain requires filing Modelo 100 "Declaración de la Renta" (Personal Income Tax), Modelo 714 "Impuesto sobre el Patrimonio" (Wealth Tax), and Model 720 "Declaración informativa sobre bienes y derechos situados en el extranjero" (declaration of all assets outside of Spain). These are all filed on an individual basis, not jointly. The M-100 income tax isn't surprising. The M-720 is unexpected: you have to declare all your assets: bank account balances, retirement funds, real estate, car, etc, etc; this is purely informational, but if you fail to file, there are huge penalties. This real estate site claims the EU struck down Spain's M-720, but I had to file for 2023. The M-714 wealth tax was the most surprising and painful for us: we are taxed on the value of the house we still own in the US, and all our US account balances -- including all the funds we've accumulated over the years to retire on; this is totally separate from taking payments from requirement accounts, which is filed as the income tax. Our retirement savings are not tax deferred like they are in the US. The wealth tax is on a progressive scale and there are some complex exemptions and limits but this unexpected yearly expense is something we need to budget for. Our tax attorney should be able to help us plan.
Each of Spain's autonomous regions has a different wealth tax scale, but Madrid and Andalucia gave full credit for the national wealth tax. Spain then instituted a "solidarity tax" to force these regions to collect what is basically the same amount, but they then set a 3M€ minimum threshold. This cat-n-mouse seems to be ongoing but may persuade you to chose one region over another. I'm OK paying taxes here: we get great services, transit, healthcare, and other quality-of-life benefits; we just didn't know about it until we were committed to living here so had not budgeted for it.
Financial Planning, Investments
The US has imposed onerous reporting requirements on US financial institutions, as well as on foreign institutions. The former has resulted in many US institutions summarily closing the accounts of the clients who move overseas. Vanguard terminated our decades-long relation with their financial planner when we changed our address to Barcelona, but allowed us to keep the accounts; it's unclear whether we could have created new accounts there subsequently. US requirements on foreign institutions are allegedly to avoid money laundering but they impact even small timers like ourselves: many banks don't want to deal with US clients. Others, however, are courting expat clients, so that shouldn't be a problem.
Initially, we changed our address to my parents' US address but that's not really legitimate and they'll likely close your account if they find out. It helps to have a friend or relative to forward mail through, at least for a while. We both had Google Voice numbers and changed various website login verification phones to those, or email if they allowed; unfortunately, you cannot forward your Voice number to a non-US phone number, but you can receive calls and texts with the app; some sites (e.g., PayPal) won't accept VOIP numbers. There were numerous organizations we forgot about and it was a chore to recover accounts, including our state and county tax websites.
There are lots of organizations whose business is to help folks move overseas, and I've sat in on quite a few eye-opening free presentations. The folks behind Spain Revealed (based in Madrid) have some free guides and a paid class on moving to Spain, as well as recommended immigration and financial partners. Other firms publish guides and blog posts, and I found Walkner Condon's international team's blog and podcasts to be very helpful (based in Wisconsin). We've met with the folks behind both IAM Advisors (San Francisco) and EuroAmerican Financial Advisors (Sevilla) who have also offered webinars, and sometimes organize seminars advertised in Barcelona Metropolitan. After interviewing both and comparing fee structures we made a choice to go with one of them, but you'll have to make your own decision.
After consultation with them, we moved our assets from Vanguard to Schwab International, which is one of a tiny handful of financial institutions that accept US citizens living abroad. However, expats cannot buy ETF and other diversified funds as individuals like we could when we lived in the US; instead, we buy through our financial advisors who are partners with Schwab. They (and others) also advised keeping our assets in the US, since the US stock market is huge, competitive, and files the right paperwork with the IRS. Purchasing the European equivalents of some assets can incur "punitive" taxes and incredibly burdensome reporting requirements.
We've been using the multi-currency "neobank" Wise (formerly TransferWise) to transfer dollars from our US accounts, convert to euros, then transfer to our Spanish bank to pay bills, taxes, and daily expenses. The app is good, and you can get a debit card to pay for purchases. While I think Wise is fine for general USD, EUR, and GBP spending, in Spain bills are direct debited and the government scoops out taxes you owe on the payment dates -- so I think you pretty much have to maintain a Spanish bank account. Unlike conventional banks, Wise has actual daily market rates and low conversion fees they publish at tranfer time. If you use this Wise referral link, you'll get your first transfer free, up to £500. I've also opened an account at competitor Revolut but had to have separate country-based accounts so I don't use them. A friend recently moved to France and "used Lumon because they locked in the best exchange rate".
The US requires citizens to pay taxes regardless of where they live. You may be able to avoid paying US State taxes by becoming a resident of one of the nine states that have no income tax before moving abroad. This may not be easy; states including Virginia are considered "sticky".
Other Considerations
Will you miss anything from or about the US? Besides our friends, I miss fireflies and haven't had a good crispy chicken wing since we've been here, but otherwise we're pretty comfortable with what we have and our quality of life.
Expat Insider just published their 2024 report; interestingly it claims Spain has the best quality of life, for the third year in a row. Perhaps they have guides to residency, taxation, etc. You can find lots of opinions and firms on Facebook (search "expat") but the signal-to-noise ratio is very low.