US LLC Spain tax in Spain: The key facts
- You can legally own a US LLC while living in Spain, but the way Spain taxes it is very different from the way the United States does.
- The US generally treats a single-member LLC as a disregarded entity (pass-through), but Spain does not automatically accept that classification.
- Spain assesses each foreign LLC on its characteristics and may treat it as tax-transparent (attributing income directly to you) or as an opaque company, with very different consequences.
- If you manage the LLC from Spain, the income is generally taxable in Spain under IRPF, and you may be required to register as autónomo.
- A US LLC held by a Spanish tax resident commonly triggers Modelo 720 foreign asset reporting obligations.
- Setting up a US LLC purely for tax reasons, without genuine economic substance, is likely to be challenged by the Spanish tax authority (AEAT).
- Our Valencia tax team advises Spanish residents on the correct US LLC Spain tax treatment and on whether the structure makes sense for them.
Owning a US LLC while living in Spain
One of the most common questions we receive from international clients relocating to Spain, particularly remote workers, consultants and online entrepreneurs, is whether they can continue to run their business through a US LLC after they move.
The short answer is yes, you can own a US LLC while living in Spain.
The important answer is that US LLC Spain tax obligations are widely misunderstood, and that getting the treatment wrong can be expensive.
This guide explains how Spain actually treats a US LLC, the difference between transparent and opaque classification, and why the popular online advice to “just set up an LLC” is often wrong for someone living in Spain.
Is it legal to own a US LLC as a Spanish resident?
Yes.
There is no Spanish law that prohibits a Spanish resident from owning a foreign company, including a US Limited Liability Company.
Owning the LLC is not the issue.
The issue is how the income that flows through that LLC is taxed once you are a Spanish tax resident, and what reporting obligations the ownership creates.
You become a Spanish tax resident once you spend more than 183 days in Spain in a calendar year, or once Spain becomes your centre of economic interests.
From that point, your worldwide income falls within the scope of Spanish taxation, and the US LLC Spain tax question becomes immediately relevant.
The core problem: the US and Spain classify an LLC differently
This is the heart of the matter, and it is where most of the confusion around US LLC Spain tax treatment arises.
In the United States, a single-member LLC is generally treated as a disregarded entity.
This means the IRS looks through the company and taxes the income directly in the hands of the owner, as though the company did not exist for tax purposes.
Many people assume Spain will do the same.
It does not automatically do so.
Spain does not simply adopt the US tax label.
Instead, the Spanish tax authority examines the actual characteristics of the LLC and decides for itself how to classify it under Spanish law.
Transparent versus opaque: the two possible US LLC Spain tax outcomes
| Classification | How Spain taxes it | When it tends to apply |
|---|---|---|
| Transparent (attribution regime) | Income attributed directly to you and taxed under IRPF whether or not distributed | LLC behaves like a partnership, profits flow to members, flexible contractual structure |
| Opaque (company) | Treated as a separate company; you are taxed on distributions, and CFC rules may apply | LLC accumulates profits at entity level and behaves like a corporation |
If your LLC is treated as transparent, you are taxed in Spain on the LLC’s profits as they arise, at your personal IRPF rates, which can exceed 45%, regardless of whether you have taken the money out of the company.
If your LLC is treated as opaque, it is regarded as a distinct company, and Spain’s Controlled Foreign Corporation (CFC) rules may attribute its income to you in any case if it is located in a low-tax jurisdiction and you control it.
Either way, the assumption that income escapes Spanish tax because the company is American is incorrect.
Understanding which classification applies to your situation is the first step in managing your US LLC Spain tax position correctly.
The autónomo question
If you actively run your business from Spain, providing services and performing the work while physically present in Spain, the Spanish tax authority will generally consider that you are carrying out an economic activity in Spain.
In that case, you are likely to be required to register as autónomo (self-employed) and pay Spanish social security contributions, even though you invoice through a US LLC.
Invoicing through a foreign company does not remove the obligation to register as self-employed in Spain if that is where the work is actually performed.
This is one of the most commonly overlooked aspects of US LLC Spain tax compliance for remote workers and digital entrepreneurs.
Our guide to autónomo rights in Spain explains the self-employment framework in detail.
Reporting obligations: Modelo 720 and beyond
A US LLC owned by a Spanish tax resident is a foreign asset.
If the value of your foreign assets, including the LLC interest and associated bank accounts, exceeds €50,000 in any reporting category, you must declare them via Modelo 720.
This is an informational declaration, but failure to file it correctly carries penalties.
You must also report the LLC’s income on your annual IRPF return, and depending on the structure, additional reporting may apply.
Modelo 720 is a separate obligation from your income tax return and is one of the most penalised areas of US LLC Spain tax non-compliance.
Why “just set up an LLC” is usually wrong advice for Spain residents
A great deal of online content promotes the US LLC as a tax-efficient structure for digital nomads and online entrepreneurs.
Much of that advice is written for people who are not tax resident anywhere, or who are resident in low-tax or territorial-tax jurisdictions.
It does not apply to someone who is tax resident in Spain.
For most Spanish tax residents, a US LLC Spain tax analysis quickly shows that the structure delivers no tax saving and frequently creates a higher administrative burden, additional reporting, and a real risk of misclassification penalties.
The Spanish tax authority actively scrutinises arrangements that lack genuine economic substance, and a structure created purely for tax reasons, with no real business presence in the US, is precisely the type of arrangement it targets.
When a US LLC can make sense
There are legitimate situations where a US LLC is appropriate for a Spanish resident:
- Where the LLC has genuine substance in the US, with employees, premises or real operations there.
- Where there is a real commercial reason to operate from the US, such as access to the US market, US clients or US investors.
- Where the structure is part of a properly designed international arrangement that has been analysed for both US and Spanish tax consequences.
The key point is that the decision must be made on the basis of genuine business need and a full US LLC Spain tax analysis, not based on generic online advice.
Speak to our tax team about your foreign company structure
Our Valencia tax team advises Spanish residents on the correct treatment of US and other foreign LLCs, the autónomo and Modelo 720 implications, and whether the structure is right for your situation.
Email: felix.delaguia@delaguialuzon.com
Phone: +34 963 74 16 57
Address: Avinguda Regne de Valencia, 6, 1º–2º, 46005 Valencia, Spain
FAQs
If my US LLC pays no US tax, do I still owe tax in Spain?
Very likely yes.
If you are a Spanish tax resident and you manage the LLC from Spain, the income is generally taxable in Spain regardless of whether any US tax is due.
The absence of US tax does not create an absence of Spanish tax.
This is one of the most misunderstood aspects of US LLC Spain tax obligations.
Do I have to register as autónomo if I invoice through a US LLC?
If you perform the work in Spain, the Spanish authorities will generally consider that you are carrying out an economic activity in Spain and require you to register as autónomo and pay social security, even though the invoices are issued by a foreign company.
Will my US LLC trigger Modelo 720 reporting?
If your foreign assets, including the LLC interest and related accounts, exceed €50,000 in a reporting category, you must declare them via Modelo 720.
This is an annual informational obligation with penalties for non-compliance.
Is it ever worth keeping a US LLC after moving to Spain?
It can be, where there is genuine business substance or a real commercial reason to operate from the US.
For most Spanish residents whose work is actually performed in Spain, however, a US LLC offers no tax advantage and adds complexity.
A full US LLC Spain tax analysis of both tax systems is essential before deciding.
