The suspect was detained in the popular tourist destination of Puerto de la Cruz in Tenerife in a joint operation carried out by Spanish National Police and the FBI liaison of the US Embassy in Madrid.
The man — the subject of an international arrest warrant — had set up a tax-refund scam with the help of accomplices.
The group used the identities of deceased people along with their social security numbers to obtain fraudulent tax refunds, police said in a statement.
Between January and July 2013, the suspect based in Salt Lake City allegedly defrauded the US government of more than $1.8 million.
The U.S. citizen, whose identity has not been revealed, is accused of no less than 19 fraud charges.