Ok...I know that there are several board members who are US citizens living in Spain with their own business, or who have done so in the past...

Maybe you can help me with this question :

What US tax liabilities would I have if I start my own business here in Spain? I am a US citizen with a Spanish husband and Spanish (EU) residency. This year, I filed my taxes in the USA (for 2001) but intend to file in Spain for 2002 and forward. (I´ll continue to file in the states, but all financial claims and taxes to be paid will be done so in Spain).

We are planning to launch our business in the fall, but it will be in my name since my husband cannot be the "titular" while is employed by another company.

I vaguely recall reading that American citizens who have businesses overseas get hit hard with taxes...but don´t know if this applies to those who reside overseas as well. Or maybe I am just confusing a bunch of tax jargon that I read somewhere!

Can anyone shed some light on this topic for me? I would appreciate any insight you could give on this matter!! Thanks!

There is an exclusion from income for the foreign earned income of American citizens residing abroad of up to 80,000 but there are a lot of restrictions and tests you need to meet. In the case of a trade or business I think the maximum you can exclude is 30% and you can't be in the United States for more than 35 days out of the calendar year. Also, the US has an income tax treaty with Spain. All in all you shouldn't be hit too terribly hard. The international tax laws and the treaties intend to eliminate the problem of income being taxed by 2 different countries at the same time. This stuff gets very complicated though and you really need to consult a lawyer or an accountant to make sure that you are doing it properly.

Thanks for the quick response jensdog! My accountant in the USA is up to speed on my activities and is also looking into the matters for me!

Saludos!