First-principles calculations of x-ray absorption spectra (XAS) and the related x-ray magnetic circular dichroism (XMCD) are presented for ultrathin Fe layers on a BaTiO₃ (BTO) single-crystal surface within the framework of density functional theory.We have investigated the dependence of XAS and XMCD of Fe L_2,3 edges as a function of Fe layer thickness (1-3 ML) and on polarization direction of BTO. The calculations give a detailed insight concerning the relation between structural, electronic, and magnetic properties at the multiferroic interface Fe/BTO. In dependence on the Fe layer thickness we find characteristic features in the related XMCD, which depend strongly on the interface structure. The critical temperature of the ultrathin Fe layer is calculated to be between 170 to 230 K.