The Expat Tax Guide: Moving Abroad in 2026

Why Taxes Should Be Part of Your Relocation Decision

Moving abroad is one of the biggest financial decisions you can make, and taxes play a central role in determining whether the move improves or worsens your financial position. A six-figure salary in London might leave you with less take-home pay than a similar role in Austin, Texas — or it might leave you with more once you factor in free healthcare and no student loan payments. The devil is in the details.

This guide covers the key tax considerations for anyone thinking about moving between the US, UK, Germany, France, and Spain in 2026. We will cover tax residency rules, double taxation treaties, social contribution obligations, and practical comparisons at several income levels.

Tax Residency: The First Question

Before anything else, you need to understand where you will be considered a tax resident. This determines which country has the primary right to tax your worldwide income.

General Rules by Country

• United States: The US taxes based on citizenship, not residence. US citizens and green card holders owe US tax on worldwide income regardless of where they live. This makes the US unique among developed nations.
• United Kingdom: You become UK tax resident if you spend 183 or more days in the UK in a tax year, or if you meet the Statutory Residence Test's automatic UK ties test. The UK tax year runs from April 6 to April 5.
• Germany: You are tax resident if you have a permanent home (Wohnsitz) or habitual abode (gewöhnlicher Aufenthalt — generally 183+ days) in Germany.
• France: Tax residence is established if France is your principal home, place of professional activity, or center of economic interests. The 183-day rule also applies.
• Spain: You become tax resident if you spend more than 183 days in Spain during a calendar year, or if Spain is the base of your economic activities or interests.

The US Citizen Abroad: A Special Case

If you are a US citizen moving to Europe, you face a unique challenge: you must file US taxes and pay taxes to your new country of residence. Two key mechanisms prevent full double taxation:

Foreign Earned Income Exclusion (FEIE)

In 2026, US citizens abroad can exclude up to $130,000 of foreign earned income from US taxation if they meet either the bona fide residence test or the physical presence test (330 days outside the US in a 12-month period). This means if you earn $120,000 in Germany, you may owe zero US federal income tax — but you still owe German taxes in full.

Foreign Tax Credit (FTC)

Alternatively, you can claim a dollar-for-dollar credit against your US tax liability for income taxes paid to a foreign country. For most expats in high-tax European countries, the FTC eliminates any remaining US tax liability. However, you must still file a US return every year.

Double Taxation Treaties

The US, UK, Germany, France, and Spain all have bilateral tax treaties with each other that prevent the same income from being taxed twice. These treaties establish which country has primary taxing rights on different types of income (employment, dividends, pensions, etc.) and provide mechanisms for relief when both countries claim jurisdiction.

Key treaty provisions generally cover:

• Employment income: Taxed primarily in the country where work is performed.
• Pensions: Rules vary by treaty — some assign taxing rights to the source country, others to the residence country.
• Interest and dividends: Usually taxed in both countries but with reduced withholding rates (typically 10-15% instead of the domestic rate).
• Capital gains: Generally taxed in the country of residence, with exceptions for real property.

EU Freedom of Movement

If you are moving within the EU (e.g., France to Spain, or Germany to France), EU freedom of movement means you have an automatic right to live and work in any member state. You will generally pay taxes and social contributions only in the country where you work. The EU's social security coordination rules ensure you do not lose pension rights or healthcare coverage when moving between member states.

The UK, post-Brexit, is no longer part of this system. Moving to or from the UK now requires a visa and does not come with automatic social security coordination (though bilateral agreements partially fill the gap).

Comparing Tax Burdens Across Countries

Here is how the total tax and social contribution burden compares for a single filer at common expat salary levels. Use these as a starting point — your exact situation depends on deductions, filing status, and local rules.

At $75,000 Gross Income

• US: ~$6,700 income tax + $5,738 FICA = ~$12,438 total (~16.6%). See breakdown →
• UK: ~£9,432 income tax + £4,098 NI = ~£13,530 total (~22.7%). See breakdown →
• Germany: ~€14,200 income tax + €15,375 social = ~€29,575 total (~42.4%). See breakdown →
• France: ~€7,700 income tax + €16,200 social = ~€23,900 total (~34.7%). See breakdown →
• Spain: ~€14,800 income tax + €4,613 social = ~€19,413 total (~28.2%). See breakdown →

At $150,000 Gross Income

• US: ~$24,600 income tax + $11,475 FICA = ~$36,075 total (~24.1%).
• UK: ~£35,432 income tax + £6,536 NI = ~£41,968 total (~35.2%).
• Germany: ~€40,500 income tax + €23,500 social = ~€64,000 total (~46.0%).
• France: ~€30,200 income tax + €32,400 social = ~€62,600 total (~45.0%).
• Spain: ~€46,200 income tax + €6,350 social (capped) = ~€52,550 total (~37.8%).

For a detailed head-to-head, use our comparison tool or explore the best places for your salary.

Social Security Totalization Agreements

When you move abroad, you generally stop contributing to your home country's social security system and start contributing to the destination country's. Totalization agreements ensure that:

• You do not pay social security taxes to both countries simultaneously for the same work.
• Years of contributions in one country can count toward qualifying for benefits in another.

The US has totalization agreements with the UK, Germany, France, and Spain. If your employer sends you abroad temporarily (typically up to 5 years), you may remain in your home country's social security system under a Certificate of Coverage.

Practical Considerations Beyond Tax

Cost of Living

A lower tax burden does not always mean more purchasing power. London and Paris are significantly more expensive than most US cities in terms of rent and dining. Berlin and Madrid offer lower costs of living that can offset their higher tax rates.

Healthcare

Moving to any of these European countries means healthcare is bundled into your social contributions. As a US expat, you can potentially cancel your US health insurance, saving $6,000–$24,000 per year depending on your plan.

Currency Risk

If you save in euros or pounds but plan to eventually return to the US, your savings are subject to exchange rate fluctuations. A strengthening dollar could erode the value of European savings.

Retirement Planning

Contributing to a foreign pension plan while living abroad is generally mandatory, but those contributions may not be tax-deductible on your US return. Conversely, contributions to a US 401(k) or IRA are not recognized by European tax systems. Coordinating retirement savings across borders requires careful planning.

Steps to Take Before You Move

1. Model your taxes in both countries using FiscalFold's comparison tool to understand the financial impact.
2. Consult a cross-border tax advisor who specializes in your origin and destination countries.
3. Review applicable tax treaties to understand which country will tax which income.
4. Check totalization agreements to understand your social security obligations.
5. Plan your departure date carefully — tax residency can be triggered by specific day counts.
6. Set up compliant bank accounts and reporting — US citizens abroad must file FBAR (FinCEN 114) and FATCA Form 8938 if foreign accounts exceed thresholds.

Key Takeaways

• US citizens are taxed on worldwide income regardless of residence — plan for the FEIE or FTC.
• Tax residency is usually established at 183 days, but each country has nuances.
• Double taxation treaties and totalization agreements provide relief but require active compliance.
• The total financial picture includes healthcare, education, pension, and cost of living — not just taxes.
• Model your move with our Best Places Explorer to find the optimal destination for your income.

Disclaimer: This article is for informational purposes only and does not constitute tax, legal, or immigration advice. Tax laws and treaty provisions are complex and change frequently. Always consult qualified professionals before making relocation decisions. Data reflects 2026 tax year parameters from the IRS, HMRC, and OECD.