The Spanish always carry their national identity card (Documento National de Identidad, also called DNI). Members of the European Union should carry their national identity card or their passport.
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If you are in Spain (no matter what country you are from), you must carry a valid ID card or passport at all times, and failure to do so could see the police detain you temporarily whilst they ascertain your identity, and furthermore, it is within their rights to issue a fine.
The penalty of imprisonment of six months to one year and a fine of three to six months will be imposed on the person who knowingly uses a false identity document.
Although in most European countries there are no passport border checks, companies can refuse to board you if you do not have a travelling passport (or some other ID proving that you are in Europe legally).
An expired passport is invalid. If you are traveling back to the United States on a direct flight, you can fly with an expired passport. However, this only applies if you get the go-ahead from the relevant embassy. However, you cannot fly out of the country with an expired passport.
You will not be allowed to enter the security checkpoint if your identity cannot be confirmed, you choose to not provide proper identification or you decline to cooperate with the identity verification process.