If you want to tax an LLC in Spain as a resident, you likely hear conflicting advice. Some say you can pay 0% tax. However, if you live in Spain for more than 183 days a year, the Spanish Tax Agency (AEAT) will track your activity.
At Resitax, we specialize in international taxation. We help digital entrepreneurs structure their businesses legally. Our goal is simple: you enjoy U.S. benefits without Hacienda claiming you are hiding foreign income.
Why is it complex to tax an LLC in Spain as a resident?
The conflict stems from the “disregarded entity” concept. The U.S. IRS views an LLC as fiscally transparent, so income flows directly to the partner. Conversely, the Spanish AEAT often treats it as a commercial corporation with its own legal personality. They see it as an opaque entity.
The risk of permanent establishment
Do you make strategic decisions from your home in Mallorca? If so, the Tax Agency may declare that the company has its place of effective management in Spain. This forces the LLC to pay Corporate Income Tax here. It also leads to heavy fines if you did not manage the structure correctly from the start.
The danger of B2B invoices between you and your LLC
Many “experts” suggest a risky move. They tell the partner to register as an autónomo in Spain and invoice their own LLC for “Management Fees.”
This is a critical mistake. These are related-party transactions. Therefore, you must value them at market price (arm’s length) and document them perfectly. If the AEAT finds the structure artificial, they will deem the LLC a Spanish tax resident. You would then owe retroactive taxes and penalties.
The transparency strategy: How to declare your income
Tax transparency is the safest way to tax an LLC in Spain as a resident. Under this model, you declare the LLC’s earnings directly as part of your personal taxable income.
Taxation through Personal Income Tax (IRPF)
Most of our clients register as autónomos. They declare the total LLC profit on their Personal Income Tax return (IRPF). This approach offers three benefits:
- The Tax Agency receives the correct taxes.
- You avoid “shell company” accusations.
- You keep the legal “shield” of the U.S. LLC.
The correct invoicing procedure
Your invoices must follow Spanish law. Even with an American brand logo, the legal issuer must be your Spanish Tax ID (NIF). You back this with a mandate agreement. This document specifies that the LLC acts as a collection agent for the Spanish owner.
Additional tax obligations for residents
You must do more than just declare annual profits. The Spanish Treasury closely monitors foreign structures through specific forms.
Form 720 and U.S. bank accounts
Do you use Mercury or Wise? If your balance exceeds €50,000, you must file Form 720 (Modelo 720). This applies to year-end balances or the last quarter’s average. Failing to file can lead to penalties.
Form 179 and other controls
High business volumes may require other informative returns. Proper accounting in Spain must reflect your LLC’s activity faithfully. This is the only way to ensure peace of mind.
Conclusion: Tax security for your international business
A U.S. structure provides a huge competitive edge. However, taxing an LLC in Spain requires deep technical knowledge to avoid audits. Do not rely on internet tutorials. Spanish law is very strict regarding where a company is actually managed.
Do you have questions about your invoices or this quarter’s profits?
Contact Resitax today. We will analyze your structure to ensure you scale your business legally.
