Do I Report my Spain Pension in US?

Do I Report my Spain Pension in US?

Reporting Spain Pension in the U.S.

Is Spain Pension Reportable in US: It is very common for U.S. persons who previously worked for a Spanish Company to have accrued benefits in a Spanish Pension. The IRS reporting of a pension from Spain is different than the taxation rules.

Common foreign pension reporting forms include:

  • FBAR
  • FATCA Form 8938
  • Form 3520/3520A 
  • Form 8833

Since the US and Spain have entered into several tax treaties such as the Double Tax Treaty, FATCA Agreement, and Totalization Agreement there are complex rules involving which country can tax the pension – usually based on residency and which Pillar is at play.

With the IRS taking an aggressive position on matters involving foreign accounts compliance and unreported offshore income — it is important to stay compliant with the Internal Revenue Service rules and requirements.

We will summarize whether Spain Pension is Reportable and which form you may have to file: FBAR, 8938, 3520 & 8833.

Spain Pension & FBAR

The FBAR Is used to report foreign bank and financial accounts.

While the Pillar 1 (Social Security) may not be considered FBAR reportable since it is equivalent to U.S. Social Security and not technically an account, the same cannot be said for other pillars.

Whether, it is a Pillar 2 (Occupation) or Pillar 3 (Private), these are generally reported on the FBAR.


Because these are segregated accounts for each person who contributes, and the accounts have a separate identifier and value based on the contribution amounts.

FATCA Form 8938 & Spain Pension

FATCA Form 8938 is the form U.S. Taxpayers use to report certain specified foreign financial assets.

FATCA is the Foreign Account Tax Compliance Act.

Foreign Pension & Retirement is considered a foreign asset for FATCA purposes and therefore would be reportable on a Form 8938.

Generally, the same rules would apply as for the FBAR, insofar as Pillar 1 may escape reporting, but Pillars 2 and 3 are reportable.

Form 3520/3520-A & Spain Pension Reporting

Form 3520-A/3520 is used to report Foreign Trusts. At its most basic, a pension such as a Spain Pension is foreign trust:

  • Government Trustor (Pillar 1),
  • Employer Trustor (Pillar 2)
  • Investor/Employee (Pillar 3)

And, each trust has an Administrator, along with the employee beneficiary.

Thus, technically, the Spain Pensions are a Trust.

Pillar 1: 3520-A

Pillar 1 is State mandated (Spanish Government) which most resembles U.S. social security. It has no identifiable segregated balance, and the beneficiary (employee) is not the owner of the trust.

Presumably, the trust would not be reportable on Forms 3520/3520-A.

Pillar 2: 3520-A

As to Pillar 2, it is also mandated through the Spanish Government, but functions through the employer for employees who earn sufficient income.

Generally, unless the employee has contributed more to the pension plan than the employer has, it is not reported on Forms 3520, since the beneficiary is not the owner of the trust during the years the beneficiary is employed and funding the pension.

In addition, it may qualify for a Revenue Procedure exception under Rev. Proc. 2020-17, depending on the person’s salary, age (determines percentage contributions), voluntary vs. mandatory, and employed vs. self-employed.

Pillar 3: 3520-A

Spain Pillar 3 is completely optional and voluntary.

Therefore, chances are this is a foreign trust which would be subject to Form 3520-A Reporting (Rev. Proc. 2020-17 may exempt reporting)

In addition, some clients will take the position that it is still a form of pension vs. pure investment, and therefore while it is in the growth phase, and deductions are not being taken, it is can escape reporting.

Form 8833

Form 8833 is used by Taxpayers who want to take a Treaty Position on issues involving the applicability of tax rules when it involves the pension (and other tax related matters).

Form 8621

Form 8621 is used to report PFIC (Passive Foreign Investment Companies). It also includes Foreign Mutual Funds. Generally, Pillar 1 is not reportable, but Pillars 2 and 3 would be. 

With PFIC, the main question will become whether the PFIC requirement (presuming the investments have funds in them), are reportable during the growth period (pre-distribution), or only once the pension becomes active/accessible.

That is a strategy issue each person should discuss with their counsel.

Unreported Spain Foreign Pension

If you have not properly reported your Spanish Foreign Pension in the U.S. for tax, FBAR, FATCA, PFIC (8621) or other reporting, you may be out of compliance and possibly subject to fines and penalties.

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