Live in Spain and own a U.S. LLC or other foreign company? Learn how Spain taxes foreign business income and what to report in 2025 to avoid penalties.
Spain Taxes Worldwide Income for Residents
If you are a tax resident in Spain, which typically means spending more than 183 days in the country during a calendar year, then you are required to declare your worldwide income to the Spanish tax authorities.
Many residents wrongly assume that income earned through a foreign company, such as a U.S. LLC, is protected from Spanish taxation. In reality, Spain treats many foreign companies as “transparent entities”, meaning the income is attributed directly to the individual, regardless of where the company is incorporated.
Spain’s Approach to U.S. LLCs and Foreign Structures
Unlike the U.S. where an LLC may be taxed separately or treated as a pass-through entity, Spain may disregard the corporate veil if the company is managed from Spain or if the owner resides in Spain. Spanish tax law applies substance over form, and will look at where the economic activity and decision-making take place.
If the owner is a Spanish resident and effectively manages the foreign company from within Spain, Spanish tax obligations will apply to that income.
What You Are Required to Declare
Spanish residents must file the following if they have foreign business interests or assets:
- Modelo 100: The annual personal income tax return, including worldwide income
- Modelo 720: Declaration of foreign assets over €50,000, such as business shares, bank accounts, or real estate
- Modelo 714: The Wealth Tax return, if net global assets exceed the national or regional thresholds
2025 Update: Increased Tax Scrutiny
AEAT, Agencia Tributaria (Tax Agency) has announced an increase in audits of residents with foreign company interests. This includes a focus on:
- U.S. LLCs and other non-EU entities held by Spanish residents
- Income earned but not declared due to misuse of tax residency rules
- Individuals who improperly claim non-resident status while clearly residing in Spain
How Suárez de Vivero Helps
Our legal team supports international clients with:
- Analysis of tax residency and exposure
- Legal structuring of foreign entities to comply with Spanish law
- Strategic filing of Modelo 100, 720, and 714
- Coordination with tax advisors and immigration attorneys for full compliance
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Do not wait until an audit begins. Review your structure now to avoid penalties. Contact Suárez de Vivero to stay protected and fully compliant.