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

The time to prepare your U.S. finances before moving to Spain is while you still live in the United States, because several doors close the day an institution learns you have moved. A broker can stop selling you mutual funds, a 529 plan can stop taking contributions, and a Spanish bank will ask whether you are a U.S. person before it opens anything. None of this is a reason to hide the move. It is a reason to work in order: U.S. decisions first, the Spanish account second, the reporting calendar third. 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?

Your accounts do not disappear when you move, but what you can do with them changes, and the change is set by each institution’s written policy, not by U.S. law. Fidelity’s policy for investors who reside outside the United States is published in full, and it shows the pattern. Fidelity does not open accounts for new customers residing outside the United States. A customer who moves abroad keeps the account, but discretionary management stops, representatives limit themselves to administrative help and do not 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. Dividend and capital gain reinvestment continues, and existing funds are not liquidated.

The country matters as well. Fidelity states that customers in certain countries may be limited to selling their holdings and withdrawing the proceeds, with no deposits and no new purchases, while elsewhere the limits are lighter, such as no margin lending or no options. Its summary does not say which list Spain is on, which is exactly the question to put to the broker in writing before the address changes.

Other firms have built a service around the move. Schwab runs an international arm for U.S. citizens living abroad that offers dollar accounts and U.S. tax reporting from abroad, with the caveat, on the same page, that not all products and services are available in all countries. The practical conclusion is the same at both: anything that needs you to live in the United States, from opening a new account to a 529 contribution, has to happen before you tell the institution you have moved. What happens to the portfolio itself, and why a European fund is a costly substitute, is covered in the guide to your U.S. brokerage account after moving to Spain.

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

Most of the preparation fits in five lines. Read the columns from left to right: that is the order of the work.

The two right-hand columns carry the surprise. The accounts you keep in the United States never appear on the U.S. foreign-account forms, and the accounts you open in Spain never appear on the Spanish one. Each country reports the accounts the other one holds.

The U.S. address question

A U.S. mailing address is useful to keep. Statements, tax forms and a replacement debit card have to arrive somewhere, and a relative’s address or a mail service handles that. What it does not do is change where you live, and Fidelity’s policy turns on where a customer resides, not on where the mail goes. Keep the mailing address for mail, and give each institution the residence it asks for once its written answer for Spain is in hand.

The IRS needs your new address too. Its guidance on changing your address points to Form 8822, or to a signed letter giving your full name, your old and new addresses and your Social Security number; on a joint return, both spouses provide the information and sign. Telling the IRS is not telling your state, and a state’s residency rules have nothing to do with where your mail goes. They are set out in how to break state residency when moving to Spain.

Opening a Spanish account as a U.S. person

The FATCA question at the counter is not a sign of trouble. It is paperwork the bank owes the Spanish tax agency. Under the agreement Spain and the United States signed in Madrid on May 14, 2013, Spanish financial institutions report the accounts of certain U.S. persons every year to the Agencia Tributaria on Modelo 290, a return that exists for the exchange of information between the two tax administrations. To file it, the bank has to know whether you are a U.S. person, so expect the account-opening file to ask about citizenship and U.S. tax status, and answer accurately: the report follows the account, not the conversation.

When a branch is reluctant, 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, at a maximum fee of 3 euros a month. It covers opening and closing the account, deposits, cash withdrawals and 120 payment operations a year in the EU, including direct debits, card payments and transfers. It is open to anyone legally resident in the EU, as well as asylum seekers and people who cannot be expelled, on one condition: no other current account at another entity in Spain. It is free for people in a vulnerable situation.

The access requirements the Banco de España lists are about residence and about not holding another account, not about nationality, although a bank can still refuse in other cases, for example when the documentation is incomplete. Two consequences follow for timing. Before you legally reside in the EU, the right does not exist, so an account opened from the United States is a commercial decision for the bank. And because the basic account is ruled out once you hold another account in Spain, it is a route to a first account, not a second one.

What the first Spanish balance starts on both sides

The first transfer into a Spanish account starts two reporting systems that look at the same money from opposite ends. On the U.S. side, according to the IRS, an FBAR is required when accounts held at financial institutions located outside the United States together exceed $10,000 at any time in the calendar year. It is filed with FinCEN, not with your return, by April 15, with an automatic extension to October 15. Form 8938 sits 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. Neither form covers a U.S. checking or brokerage account.

On the Spanish side, the direction reverses. Once you are a Spanish tax resident, your U.S. accounts are the ones abroad, and Modelo 720 asks about them when a block exceeds 50,000 euros. For accounts, the Agencia Tributaria tests the balance on December 31 and the average balance of the fourth quarter, not the peak: in its own example, an account that reached 67,000 euros in April but held 45,650 euros at year end, with a fourth-quarter average of 46,200 euros, is not reported.

After a first filing, the return is due again only when a block rises by more than 20,000 euros over the value that triggered the last one, or when an asset reported before is sold or closed, under the frequency rules. Dollar balances are converted at the December 31 exchange rate, and the valuation answers confirm that exchange-rate moves count toward that 20,000-euro rise. A stronger dollar can bring the return back without a single deposit. How a large transfer lands in both systems at once is worked through in moving money from the US to Spain, and the penalties for missing either side in the mistakes Americans make when moving to Spain.

Before you change a single address

The next action is a letter, not a transfer: ask each U.S. broker and plan administrator, in writing, what your account can and cannot do once you reside in Spain, and finish everything that needs a U.S. residence before that answer takes effect. Then open the Spanish account, move money into it, and put the FBAR and Modelo 720 dates in your calendar.

Most people can do this alone. A checking account, a brokerage account whose policy for Spain is clear, and a Spanish account below the thresholds make a list, not a problem. A professional earns the fee when the broker’s answer is sell only, when a Spanish bank offers its own investment funds as the replacement, when a 529 plan or an HSA is part of the plan, or when accounts on both sides are large enough for Form 8938 and Modelo 720 in the same year.

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