How to Prepare Your U.S. Finances Before Moving to Spain

Prepare your U.S. finances before moving to Spain while you still live in the United States. Why then? Several doors shut the day an institution learns you’ve moved. A broker can stop selling you mutual funds. A 529 plan can stop taking contributions. And a Spanish bank will ask if you’re a U.S. person before it opens anything. That’s no reason to hide the move, just a reason to work in order: U.S. decisions, then the Spanish account, then the reporting calendar. This article is for informational purposes only and is not immigration, tax or medical advice; verify current requirements with the relevant Spanish authority or a licensed professional.

What closes when your U.S. broker learns you live in Spain?

Moving doesn’t make your accounts vanish. It changes what you can do with them, and each institution’s written policy sets that change, not U.S. law. Fidelity publishes its policy for investors who reside outside the United States in full, and it shows the pattern well. New customers residing outside the United States can’t open accounts at all. Existing customers who move abroad keep theirs, with a long list of limits: discretionary management stops, representatives stick to administrative help and won’t discuss asset allocation or portfolio composition, mutual fund purchases have been blocked since August 1, 2014, and 529 savings plans and health savings accounts can no longer be opened or funded. Two things carry on: dividend and capital gain reinvestment continues, and existing funds aren’t liquidated.

Where you move matters too. Fidelity says customers in certain countries may be limited to selling their holdings and withdrawing the proceeds, with no deposits and no new purchases. Elsewhere the limits are lighter, such as no margin lending or no options. Which list is Spain on? The summary doesn’t say, and that’s the exact question to put to the broker in writing before your address changes.

Some firms have built a whole service around the move. Schwab runs an international arm for U.S. citizens living abroad with dollar accounts and U.S. tax reporting from abroad, though the same page warns that not all products and services are available in all countries. At both firms, the takeaway is the same: anything that requires you to live in the United States, from a new account to a 529 contribution, has to happen before you tell the institution you’ve moved. For the portfolio itself, and why a European fund is a pricey substitute, see the guide to your U.S. brokerage account after moving to Spain.

The account-by-account plan: keep, open, update, report

Five lines cover most of the preparation. The columns run left to right in the order you’ll do the work.

The surprise sits in the two right-hand columns. Your U.S. accounts never show up on the U.S. foreign-account forms, and your Spanish accounts never show up on the Spanish one. Each country’s form covers the accounts held in the other.

The U.S. address question

Keep a U.S. mailing address; it’s useful. Statements, tax forms and a replacement debit card have to land somewhere, and a relative’s address or a mail service covers that. It doesn’t change where you live, though, and Fidelity’s policy looks at where a customer resides, not where the mail goes. So use the mailing address for mail, and give each institution the residence it asks for once you have its written answer for Spain. Parcels forwarded to Spain usually owe import VAT, while a gift from a private person worth up to 45 euros comes in tax free; the guide to mail and packages from the U.S. has the details.

The IRS wants your new address too. Its page on changing your address points to Form 8822, or to a signed letter with your full name, your old and new addresses and your Social Security number; on a joint return, both spouses give the information and sign. Telling the IRS isn’t telling your state, and where your mail goes has nothing to do with a state’s residency rules. Those are in how to break state residency when moving to Spain.

Opening a Spanish account as a U.S. person

When the bank asks the FATCA question, nothing’s wrong. It’s paperwork the bank owes the Spanish tax agency. Spain and the United States signed an agreement in Madrid on May 14, 2013, and under it Spanish financial institutions report certain U.S. persons’ accounts to the Agencia Tributaria every year on Modelo 290, a return built for the exchange of information between the two tax administrations. The bank can’t file it without knowing whether you’re a U.S. person. So expect the opening file to ask about citizenship and U.S. tax status, and answer accurately, because the report follows the account, not the chat at the counter. The guide to opening a bank account in Spain as an American covers what the self-certification asks and why living in Spain doesn’t change your answer.

Branch dragging its feet? A legal resident has a floor. The Banco de España describes the basic payment account (cuenta de pago básica) as an unremunerated current account in euros that banks must offer without tying it to other products, for a fee of 3 euros a month at most. That buys opening and closing the account, deposits, cash withdrawals and 120 payment operations a year in the EU, direct debits, card payments and transfers included. Anyone legally resident in the EU qualifies, as do asylum seekers and people who can’t be expelled, on one condition: no other current account at another entity in Spain. People in a vulnerable situation pay nothing.

The access requirements the Banco de España lists come down to residence and not holding another account. Nationality isn’t among them, though a bank can still refuse in other cases, for instance over incomplete documentation. That shapes the timing in two ways. Before you legally reside in the EU, there’s no right at all, so an account opened from the United States is the bank’s commercial call. And since holding another account in Spain rules the basic one out, it’s a route to your first account, never your second.

What the first Spanish balance starts on both sides

Your first transfer into a Spanish account switches on two reporting systems, each looking at the same money from the opposite end. On the U.S. side, the IRS says an FBAR is required when accounts at financial institutions located outside the United States together exceed $10,000 at any time in the calendar year. It goes to FinCEN, not with your return, by April 15, with an automatic extension to October 15. Form 8938 sets the bar higher for people living abroad: more than $200,000 on the last day of the year or $300,000 at any time for a single filer, and $400,000 or $600,000 on a joint return. A U.S. checking or brokerage account appears on neither.

Spain flips the direction. Once you’re a Spanish tax resident, your U.S. accounts are the foreign ones, and Modelo 720 wants them when a block exceeds 50,000 euros. For accounts, the Agencia Tributaria checks the December 31 balance and the fourth-quarter average balance, never the peak. Its own example: an account that hit 67,000 euros in April but held 45,650 euros at year end, with a fourth-quarter average of 46,200 euros, isn’t reported.

After a first filing, you file again only when a block rises by more than 20,000 euros over the value that triggered the last return, or when an asset reported before is sold or closed; those are the frequency rules. Dollar balances convert at the December 31 exchange rate, and the valuation answers confirm that currency moves count toward that 20,000-euro rise. In plain terms, a stronger dollar can drag you back to the form without a single deposit. Moving money from the US to Spain shows how a large transfer lands in both systems at once, and the Modelo 720 guide covers the Spanish penalties for a missed return.

Before you change a single address

Your next move is a letter, not a transfer. Ask each U.S. broker and plan administrator, in writing, what your account can and can’t do once you reside in Spain, and wrap up everything that needs a U.S. residence before that answer kicks in. Then open the Spanish account, fund it, and put the FBAR and Modelo 720 dates on your calendar.

Most people manage this without help. A checking account, a brokerage account with a clear policy for Spain, and a Spanish account below the thresholds add up to a list, not a problem. I’d pay a professional in four cases: the broker’s answer is sell only, a Spanish bank pitches its own investment funds as the replacement, a 529 plan or an HSA is in the mix, or accounts on both sides are big enough for Form 8938 and Modelo 720 in the same year.

The sequence that keeps this painless, U.S. decisions first, then the Spanish account, then the reporting dates, is laid out in the Spain Navigator, the app that puts every step of your move to Spain in order, from visa to settling in.