How does the Tax Equalization Treaty with Spain work for self-employment taxes?

U.S. Citizens or Resident Aliens Living Outside the United States

If you are a self-employed U.S. citizen or resident alien living outside the United States, in most cases you must pay self-employement (SE) tax. Foreign earnings from self-employment can’t be reduced by your foreign earned income exclusion when computing SE tax.

Exception:

The United States has social security agreements with many countries to eliminate dual taxes under two social security systems. Under these agreements, you must generally pay social security and Medicare taxes only to the country in which you live.

The United States now has social security agreements with the following countries: Australia, Austria, Belgium, Brazil, Canada, Chile, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Luxembourg, the Netherlands, Norway, Poland, Portugal, the Slovak Republic, Slovenia, South Korea, Spain, Sweden, Switzerland, the United Kingdom, and Uruguay.

For questions about international social security agreements, you can go to the SSA’s International Programs website at SSA.gov/international.

If your self-employment income is exempt from SE tax, you should get a statement from the appropriate foreign agency verifying that your self-employment income is subject to social security coverage in that country.

If the foreign country won’t issue the statement, check out SSA International Programs Online Certificate of Coverage Service. Don’t complete Schedule SE! Instead, attach a copy of the statement to Form 1040, 1040-SR, or 1040-NR, and enter “Exempt, see attached statement” on Schedule 2 (Form 1040), line 4.

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