If you need to tax an LLC in Spain as a resident, you've probably received conflicting advice about whether it's 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) has you on its radar.
At Resitax, as international tax specialists, we help digital entrepreneurs structure their businesses legally. The goal is for you to take advantage of US tax benefits without the IRS considering that you are hiding income abroad.
Why is it complex to tax an LLC in Spain as a resident?
The major conflict stems from the concept of a disregarded entity. While the US IRS considers LLCs fiscally transparent—income flows directly to the partner—the Spanish Tax Agency (AEAT) tends to treat them as commercial companies with their own legal personality (an opaque entity). This discrepancy creates specific obligations that must be managed correctly.
The risk of permanent establishment
If you, as the company owner, make strategic decisions from your office or home in Spain, the Spanish Tax Agency (Hacienda) may declare that the company has its effective management headquarters in Spanish territory. This would subject the LLC to Corporation Tax in Spain, which entails additional obligations and, potentially, substantial penalties if not properly managed from the outset.
The mistake of issuing self-employed invoices to your own LLC
Many so-called experts recommend that the partner, registered as self-employed in Spain, issue invoices to their own LLC for services ("Management Fees") to transfer the profits to Spain.
This is a critical error for several reasons:
If the Spanish Tax Agency (AEAT) determines that the structure is artificial or that the effective address of the LLC is in Spain, it could consider the LLC to be a Spanish tax resident, demanding retroactive Corporate Income Tax and penalties.
Since it is a related-party transaction, these transactions must be valued at market price and be fully documented under the related-party transaction regime (art. 18 LIS).
Under the tax transparency regime—which applies to most single-member LLCs without substance in the US—profits are already directly attributed to the member for personal income tax purposes. Issuing invoices to oneself is simply unnecessary and artificial.
The transparency strategy: How to declare your income
The safest way to pay taxes on an LLC in Spain as a resident is through tax transparency. This means that, even though the money is generated by the LLC, you declare it directly in your personal tax return as income from business activity.
Taxation through Personal Income Tax (IRPF)
Most of our clients choose to register as self-employed and declare the full profit from the LLC in their income tax return (IRPF). This way:
- The Treasury receives its corresponding taxes on the actual net income.
- The risk of being accused of using a "shell company" is eliminated.
- The legal protection (the limited liability shield) provided by the LLC in the U.S. remains in place.
- Transfers of funds from the LLC account to your personal account in Spain are simply movements of your own funds — they do not generate any additional taxable event, since you have already paid taxes on those profits.
The correct billing procedure: two issuers, two sets of regulations
This is one of the most confusing points, and where it's important to be very precise. When you operate with an LLC for clients in the US and as a self-employed individual for clients in Spain, two completely independent invoicing systems coexist:
LLC invoices to customers in the U.S.
LLC invoices are American business documents issued by a US entity. They should not include the Spanish tax identification number (NIF) of the partner nor comply with Spanish invoicing regulations (RD 1619/2012). They do not include VAT or personal income tax withholding. They are issued in English, in US dollars, with the LLC's EIN.
Recommended content: LLC name, registered address in the state, EIN, customer details, sequential invoice number, date, description of services, amount in USD, and payment terms.
Invoices as a self-employed individual to clients in Spain
These are subject to Royal Decree 1619/2012. They must include the Spanish tax identification number (NIF), VAT (21%), personal income tax withholding (7% for the first three years, 15% thereafter) when the client is a businessperson or professional, and the complete details of the issuer and the recipient.
The following table summarizes the key differences:
| Concept | Invoice LLC (USA) | Self-employed invoice (Spain) |
| Transmitter | LLC (EIN) | Natural person (NIF) |
| Regulations | US/IRS Commercial Practice | RD 1619/2012 |
| Spanish NIF | NO — never include | YES — mandatory |
| VAT | Not subject to VAT (art. 69 LIVA) | 21% (broken down) |
| Income Tax Withholding | Not applicable | 7% / 15% |
| Currency | USD | EUR |
| Language | English | Castilian |
| Numeration | INV-… Series | F-Series… |
Key point regarding invoicing: Tax imputation for transparency purposes operates exclusively within the tax sphere (income tax return), without altering the legal and commercial reality of the issuer of each document. There is no agency agreement or collection agency mechanism between the self-employed individual and their LLC: they are two legal entities operating in parallel, each under its own regulations.
Additional tax obligations for residents
In addition to declaring your annual profits, there are information forms that the Tax Office closely monitors for owners of structures abroad.
Form 720 and accounts in the U.S.
If the balance of bank accounts linked to your LLC (such as Mercury or Wise) exceeds €50,000 at year-end or as the average balance for the last quarter, you are required to file this form. Failure to do so may result in penalties, although disproportionate fines were struck down by the CJEU in 2022, and current penalties are applied according to the General Tax Law (minimum €150 per item).
Model 184 and other reporting obligations
LLCs treated as entities under the income attribution regime—which is the standard treatment under tax transparency—are subject to Form 184, the annual information return that must be filed in February. Depending on your turnover and whether you have clients in other EU countries, you may also have obligations under Form 303 (quarterly VAT return), Form 130 (income tax installment payment), and, where applicable, Form 369 (OSS single window for B2C sales in the EU).
Conclusion: Tax security for your international business
Having a US-based structure is a huge competitive advantage, but taxing an LLC in Spain as a resident requires technical expertise to avoid unnecessary audits. Common mistakes—such as issuing invoices between the self-employed individual and the LLC, confusing reporting forms, or mixing the invoicing regulations of both countries—can end up costing more than the intended savings.
Don't take chances with internet tutorials. Spanish regulations are strict regarding the effective management of companies, and the Spanish Tax Agency (AEAT) has increasingly sophisticated mechanisms to detect poorly planned structures.
Do you have questions about how to issue your invoices or how to report this quarter's profits? Contact us today and at Resitax we'll analyze your structure to ensure you comply with the law while scaling your business.