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As the 2025 Spanish tax season unfolds, many taxpayers are revisiting decisions taken months ago. While, at this stage, it is no longer possible to plan or correct what occurred during 2025, it is an appropriate moment to ensure that the tax consequences of those decisions are properly and accurately reported — and to reassess their impact for future years.
As a general principle, caution is advisable when considering “standardized” or widely marketed structures promoted as simple solutions to reduce tax burdens. Among these, it is not uncommon for Spanish self‑employed individuals (autónomos) to contemplate setting up a U.S. limited liability company (LLC) as a way to minimize, or even eliminate, taxation in Spain.
However, while an LLC can certainly be a useful corporate vehicle for commercial or operational purposes, its Spanish tax treatment is often significantly less advantageous than expected. Broadly speaking, this is due to two fundamental reasons:
(i) profits may be taxable in Spain when the member is a Spanish tax resident, and
(ii) the income attributable to the individual must be determined under Spanish tax rules, not under U.S. accounting or tax principles.
Income generated through an LLC may be taxable in Spain
The decision to incorporate a U.S. LLC is frequently based on the assumption (often vague or incomplete) that the LLC operates in a manner comparable to a Spanish limited liability company, allowing income invoiced through the entity to fall outside Spanish taxation. Alternatively, there is sometimes an expectation that U.S. tax rules used to compute the LLC’s taxable income can be directly transferred to the Spanish tax position of the self‑employed member.
In most LLC structures, unless an election has been made in the United States to treat the entity as a corporation, the LLC is regarded as a fiscally transparent, look‑through entity. This means that income is not taxed at the LLC level as a separate taxpayer but is instead directly attributed to its member(s).
Accordingly, where a self‑employed individual provides services (such as consulting, development, marketing or advisory services) and invoices through an LLC, the relevant tax analysis is carried out primarily in Spain — the professional’s country of tax residence — and in accordance with Spanish tax regulations. The key questions are how the structure is characterised for Spanish tax purposes and what income is deemed to have been obtained by the individual taxpayer.
From a Spanish perspective, the look‑through nature of the LLC generally results in its classification as an entity subject to the income attribution regime (régimen de atribución de rentas). Under this regime, income is not taxed at the entity level but attributed directly to the partners or members in proportion to their ownership interests (in a single‑member LLC, typically 100%). The Resolution of the Directorate General of Taxes of 6 February 2020, addressing foreign entities subject to income attribution, is explicit on this point.
As a result, a Spanish‑resident individual may be required to pay Spanish tax on income generated through the LLC regardless of whether profits are actually distributed.
Classification and quantification of attributed income in Spain
Once it is established that taxation falls on the individual member, the next issue concerns the nature of the income and how it must be calculated. In both respects, the applicable reference framework is the Spanish Personal Income Tax Law (“Ley del IRPF”).
Regarding classification, attributed income retains the character of its source. Thus, income derived from the provision of services will normally qualify as income from economic activities; interest or dividends will be treated as investment income (“rendimientos de capital mobiliario”); and income arising from the disposal of assets will be characterised as capital gains or losses.
Consequently, where an LLC is used as the vehicle through which professional services are invoiced, the Spanish‑resident member will generally be required to declare business income (rendimientos de actividades económicas”) in their personal income tax return.
The final step is quantification, and this is where the second common misconception arises. Attributable income is not calculated using U.S. accounting or tax rules. For income from economic activities, Spanish personal income tax legislation establishes, as a general rule, that net income is determined in accordance with Corporate Income Tax rules, subject to the specific adjustments applicable under personal income tax. In practical terms, this means applying Spanish (not U.S.) accounting and tax criteria.
Accordingly, even where financial statements are prepared under U.S. GAAP by a CPA and U.S. tax information is available (typically through Schedule K‑1), it remains necessary to recompute the results using Spanish rules. This process frequently results in differences, as certain expenses may be deductible under U.S. rules but non‑deductible, limited or allocated differently under Spanish law. Common areas of friction include expenses related to the use of the home for professional activities, depreciation methods and periods, and the treatment of impairments or provisions.
While U.S. financial statements may serve as a supporting documentary basis, it is usually essential to prepare a reconciliation in order to arrive at a properly “Spanishised” net taxable result that would not diverge from the result of business income should the LLC not exist.
Conclusion
Before adopting structures based on supposed tax advantages, it is worth revisiting two assumptions that are frequently repeated and often lead to errors:
(i) that income is “not taxed in Spain” simply because it is invoiced through a U.S. LLC, and
(ii) that attributable income can be calculated by applying U.S. rules and benefits.
In most cases, the use of a fiscally transparent entity should not substantially alter the taxation of a self‑employed individual (autónomo) who is tax‑resident in Spain. What will remain decisive is the proper classification and determination of income in accordance with Spanish tax regulations, together with compliance with the corresponding reporting and formal obligations.
If your company needs tax advice, our lawyers will be happy to assist you.
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