If you need to tax an LLC in Spain as a resident, you have probably come across conflicting advice about whether it is possible to pay 0% tax. If you live in Spain for more than 183 days a year, the reality is that the Spanish Tax Agency (AEAT) is likely already paying attention to your situation.
At Resitax, as specialists in international taxation, we help digital entrepreneurs structure their businesses legally. The goal is for you to benefit from the advantages of the U.S. system without the Spanish tax authorities considering that you are hiding foreign income.
Why is taxing an LLC in Spain as a resident so complex?
The main conflict stems from the concept of a disregarded entity. While the U.S. IRS treats the LLC as fiscally transparent — meaning the income flows directly to the member — the Spanish Tax Agency tends to treat it as a corporate entity with its own legal personality (an opaque entity). This mismatch creates specific obligations that must be managed correctly.
The risk of permanent establishment
If you, as the owner of the company, make strategic decisions from your office or home in Spain, the tax authorities may determine that the company’s place of effective management is located in Spanish territory. This would cause the LLC to become subject to Spanish Corporate Income Tax, which may lead to additional obligations and, where applicable, significant penalties if the structure has not been managed properly from the outset.
The mistake of issuing self-employed invoices to your own LLC
Many so-called experts recommend that the member, registered as self-employed in Spain, issue invoices to their own LLC for services such as “Management Fees” in order to transfer profits to Spain.
This is a critical mistake for several reasons:
Because it is a related-party transaction, these operations must be valued at arm’s length and properly documented under Spain’s transfer pricing rules (Article 18 of the Corporate Income Tax Law).
Under the tax transparency regime — which generally applies to most single-member LLCs with no real substance in the U.S. — profits are already attributed directly to the member for Personal Income Tax (IRPF) purposes. Invoicing yourself is simply unnecessary and artificial.
If the Spanish Tax Agency determines that the structure is artificial or that the effective management of the LLC is in Spain, it may consider the LLC to be a Spanish tax resident company, demanding retroactive Corporate Income Tax and imposing penalties.
The transparency strategy: how to declare your income
The safest way to tax an LLC in Spain as a resident is through tax transparency. This means that even though the LLC generates the income, you declare it directly in your personal taxable base as income from an economic activity.
Taxation through Personal Income Tax (IRPF)
Most of our clients choose to register as self-employed in Spain and declare the full profit of the LLC in their Personal Income Tax return (IRPF). By doing so:
The tax authorities receive the taxes due on the actual net profit.
The risk of being accused of using a “shell company” is eliminated.
You still maintain the legal protection (the limited liability shield) provided by the LLC in the United States.
Transfers of funds from the LLC’s bank account to your personal account in Spain are simply movements of your own funds — they do not create any additional taxable event, since you have already paid tax on those profits.
Correct invoicing operations: two issuers, two legal frameworks
This is one of the points that creates the most confusion, and it is important to be very precise here. When you operate with an LLC for U.S. clients and as a self-employed individual for clients in Spain, two completely independent invoicing systems coexist:
LLC invoices for U.S. clients
LLC invoices are American commercial documents issued by an American entity. They must not include the member’s Spanish tax identification number, nor do they need to comply with the Spanish invoicing regulations (Royal Decree 1619/2012). They do not include VAT or IRPF withholding. They are issued in English, in U.S. dollars, and with the LLC’s EIN.
Recommended content: LLC name, registered address in the state of incorporation, EIN, client details, sequential invoice number, date, description of services, amount in USD, and payment terms.
Self-employed invoices for clients in Spain
These invoices are subject to Royal Decree 1619/2012. They must include the Spanish tax identification number, VAT (21%), IRPF withholding (7% during the first three tax years, and 15% thereafter) when the client is a business or professional, and the full details of both issuer and recipient.
The following table summarizes the key differences:
| Concept | LLC Invoice (U.S.) | Self-Employed Invoice (Spain) |
|---|---|---|
| Issuer | LLC (EIN) | Individual (NIF) |
| Legal framework | U.S. commercial practice / IRS | RD 1619/2012 |
| Spanish tax ID | NO — never include it | YES — mandatory |
| VAT | Not subject (Art. 69 VAT Law) | 21% (itemized) |
| IRPF withholding | Not applicable | 7% / 15% |
| Currency | USD | EUR |
| Language | English | Spanish |
| Numbering | INV-… series | F-… series |
Key invoicing point
Tax attribution under the transparency regime operates exclusively on the tax level (income tax return), without changing the legal and commercial reality of who issues each document. There is no mandate agreement or collection agency mechanism between the self-employed individual and their LLC: they are two legal realities operating in parallel, each under its own regulatory framework.
Additional tax obligations for residents
In addition to declaring your annual profits through Personal Income Tax, there are several information returns that the Spanish tax authorities monitor very closely when you own structures abroad.
Form 720 and U.S. bank accounts
If the balance of the bank accounts linked to your LLC (such as Mercury or Wise) exceeds €50,000 at year-end or as an average balance during the last quarter of the year, you are required to file this form. Failing to do so may result in penalties, although the disproportionate fines were annulled by the Court of Justice of the European Union in 2022, and the current penalties are applied under the Spanish General Tax Law (minimum €150 per data item).
Form 184 and other reporting obligations
LLCs treated as entities under the income attribution regime — which is the usual treatment under tax transparency — are subject to Form 184, an annual informative return that must be filed in February. Depending on your level of business activity and whether you have clients in other EU countries, additional obligations may also arise under Form 303 (quarterly VAT return), Form 130 (advance IRPF payments), and, where applicable, Form 369 (OSS one-stop shop for B2C sales within the EU).
Conclusion: tax security for your international business
Having a U.S. structure is a major competitive advantage, but taxing an LLC in Spain as a resident requires technical knowledge that helps you avoid unnecessary audits and inspections. The most common mistakes — issuing invoices between the self-employed individual and the LLC, confusing informative tax forms, or mixing the invoicing rules of both countries — can end up costing far more than the tax savings you were trying to achieve.
Do not take risks by relying on internet tutorials. Spanish tax rules are strict when it comes to the effective management of companies, and the Spanish Tax Agency has increasingly sophisticated mechanisms to detect poorly planned structures.
Do you have doubts about how to issue your billing documents or how to declare this quarter’s profits? Contact us today and at Resitax we will analyze your structure so that you stay compliant with the law while scaling your business.
