Owning a US LLC as a resident in Spain

No. In the United States, a 1-member LLC is usually treated as an entity disregarded as separate from its owner. It pays no federal tax and the income is attributed to the partner. That box checked with the IRS is an option under American legislation and does not bind the Spanish Tax Agency.

Spain classifies the foreign entity by its legal nature, not its tax label. The Directorate-General for Taxes has repeatedly stated in its binding rulings that an LLC is a commercial company with full legal personality distinct from its partners, with the capacity to own assets and with limited liability. It resembles a Spanish limited company, not a joint ownership, so it does not fall under the income attribution regime.

The practical consequence is what almost nobody expects: for Spain, your LLC is a non-resident company and you are its partner. The income does not reach your tax return through the soft door of attribution, but through the international tax transparency regime, which is considerably harsher.

For the purposes of the treaty with the United States, there is an important nuance: the Acuerdo Amistoso (Mutual Agreement) of 2006 agreed to consider the income of an LLC that is not treated there as an entity distinct from its partners as income of a US resident only to the extent that it is subject to taxation in the United States as the income of a resident. If the sole partner lives in Spain, that extent is 0 and the LLC cannot invoke the treaty on its own.

Yes, in most cases. The international tax transparency regime under article 91 of the ley del IRPF (Personal Income Tax Law) is triggered when 2 conditions are met simultaneously: your participation is equal to or greater than 50% in the capital, equity, results or voting rights, alone or together with relatives up to the 2nd degree or linked entities, and the tax of an identical or analogous nature to Corporate Income Tax paid by the LLC is less than 75% of what would have been due in Spain. An LLC that pays no federal tax easily meets the second requirement.

Here comes the rule that confuses everyone: when the non-resident entity does not have the corresponding organisation of material and human resources to obtain its income, the total income is imputed, not just passive income, and even if the operations are recurring. An LLC with a registered agent address, no office, no employees and no structure other than your computer is a textbook case.

There are 2 ways out and both must be proven, it is not enough to just claim them: that the operations are carried out with the material and human resources of another non-resident entity of the same group, or that the incorporation and operation of the LLC respond to valid economic reasons.

If the LLC does have real resources, the regime does not disappear: the passive income from the legal list is imputed (real estate not allocated to activities, dividends and interest, industrial and intellectual property, image rights, insurance and capitalisation, derivatives, credit and financial activities, and operations with linked entities of low added value).

Timing matters: the income is imputed in the financial year in which the LLC closes its tax year. If the LLC uses the calendar year, like almost all of them, the 2026 profit goes into your 2026 tax return, which is submitted in 2027.

At your salary rate. The income composition chart in the Tax Agency manual places imputations for international tax transparency in the general income base, alongside income from work and economic activities. They do not go to the savings base.

The difference is hard cash. The savings base is taxed in 2025 at 19% up to €6,000, at 21% up to €50,000, at 23% up to €200,000, at 27% up to €300,000 and at 30% above that figure, which is the result of adding the 15% state rate and the 15% regional rate included in the 2025 scale. The general base is taxed with the state scale plus the scale of your autonomous community, and your marginal rate in the high brackets is well above those percentages. The same profit, through this route, costs considerably more.

To correct double taxation, there are 2 mechanisms. The tax actually paid abroad for that income is deducted, up to the limit of what you would have paid in Spain for it. And the dividends that the LLC distributes later are not integrated again in the part corresponding to already imputed income, so the same profit is not taxed 2 times.

Beware of the illusion: if the LLC paid no federal tax in the United States, there is nothing to deduct. The deduction is not a lump sum, it is the tax that was actually paid and must be justified.

And a territorial warning: in the Basque Country and Navarre, personal income tax is governed by their own regional regulations, with their own rules and forms, not by state law. The Canary Islands do have their own regional scale and deductions, like any common regime community. Ceuta and Melilla do not: lacking legislative power in tax matters, they do not have their own regional scale, the complementary state scale applies to them and they have a 60% state tax credit for income obtained in those cities. Do not transfer a figure from one territory to another.

In Spain, the core is your tax return, form 100, where the imputed income is recorded. The regime adds a formal obligation that almost nobody fulfils: along with the tax return, you must provide the name or company name and registered office of the LLC, the list of directors and their tax address, the balance sheet, the profit and loss account and the annual report, the amount of the positive imputed income and the justification of the taxes paid. It is submitted through the electronic registry of the Tax Agency.

Form 720 is submitted between 1 January and 31 March of the following year if any of the blocks exceeds €50,000: the participation in the LLC falls into the securities and rights block, and the bank accounts of which you are the holder, authorised person, representative or beneficial owner fall into the accounts block. The Directorate-General for Taxes confirmed in 2025 that the participation in the LLC is declared as securities or rights representing participation in a legal entity, even if the only asset of the LLC is a property in the United States.

If the LLC or you through it hold virtual currencies abroad, form 721 also appears, with the same deadline from January to March.

Outside of Hacienda, there is a procedure that is almost always forgotten: incorporating or acquiring an LLC is a Spanish investment abroad and must be declared to the Foreign Investment Registry of the Ministry of Economy, Trade and Enterprise using form D-5A, within 1 month following the operation.

And in the United States, a 1-member LLC with a foreign owner has been obliged since 2017 to submit a pro forma Form 1120 every year with Form 5472 attached, even if it does not have 1 single American client: the incorporation itself, contributions and distributions are already reportable operations. To submit it, an EIN is required.

Yes, and it is the most expensive risk of all. The ley del Impuesto sobre Sociedades (Corporate Income Tax Law) considers an entity to be resident in Spanish territory if it has its place of effective management here, and specifies that it has it when the management and control of all its activities are located in Spain. If you decide everything from your home in Spain, negotiate and sign here, and there is no one else on the other side, the place of effective management is in Spain no matter how much the certificate of incorporation says Delaware, Florida or Wyoming.

If that happens, the LLC ceases to be a problem for your personal income tax and becomes a taxpayer of Spanish Corporate Income Tax on its worldwide income: a Spanish NIF (tax identification number), accounting in accordance with the Plan General Contable (General Accounting Plan), form 200 within the 25 calendar days following the 6 months after the close of the financial year (from 1 to 25 July if it uses the calendar year), instalment payments and withholding obligations.

If the 2 countries consider it resident at the same time, you do not resolve the conflict: the 2 administrations resolve it by mutual agreement in accordance with the treaty. It is a long procedure, and meanwhile the debt keeps running.

The way to defend yourself is to document the reality from the beginning: who manages, where decisions are made, what resources exist and what is invoiced. Managora prepares this analysis and puts it in writing before the requirement arrives, not afterwards.

Everything changes, and that is why it is the 1st point to settle. You are a tax resident in Spain if you stay more than 183 days in Spanish territory during the calendar year, counting sporadic absences unless you prove your tax residence in another country, or if the main core or base of your activities or economic interests is located in Spain, directly or indirectly. Furthermore, it is presumed, unless proven otherwise, when your legally non-separated spouse and minor children dependent on you habitually reside here.

Residence is determined by full calendar years: there is no half-residence or dividing the year by months.

A non-resident does not impute the income of their LLC in Spain nor do they submit form 720 for it. They only pay tax here on Spanish-source income. What changes the game is the moment you settle in Spain with the LLC already set up, because that same financial year the profit starts to be imputed.

If there is a conflict because the 2 countries consider you a resident, it is resolved using the treaty criteria (permanent home available to you, centre of vital interests and the following ones), and for this you will need a tax residence certificate from the other country issued for treaty purposes, not an empadronamiento (town hall registration) certificate or an electricity bill.

Managora analyses your tax residence with your real data, determines it and leaves it documented with the evidence that supports it, so that you can prove it if it is ever disputed. You can see the exact scope of this work and the updated amount in the tax residence analysis file. A subsequent verification, inspection or appeal are different actions, with their own power of attorney and their own assignment, and we handle them too.

You are still in time to regularise it on your own, and it is much cheaper. If you submit late without a prior requirement from the Administration, the surcharge is 1% plus an additional 1% for each full month of delay, and if more than 12 months have passed, 15% plus late payment interest from that moment. Through this route there is no penalty.

If the requirement arrives first, the path is no longer the surcharge, it is the penalty proceeding and, for undeclared income from previous years, the discussion on unjustified capital gains.

For form 720, since the 2022 reform that followed the ruling of the Court of Justice of the European Union of 27 January 2022, the general penalty regime of articles 198 and 199 of the ley general tributaria (General Tax Law) applies. The disproportionate specific fines disappeared, but the infringement still exists and each of the 3 information blocks is penalised independently.

And do not forget the American side: failing to submit Form 5472 is $25,000, and another $25,000 is added for each 30-day period, or fraction thereof, that the non-compliance continues once 90 days have passed since the IRS notification.

Managora reviews the open years, calculates what is due, prepares the regularisation and submits it for you, in Spain and with the American calendar in mind.