A U.S. expat residing in Spain who owns or participates in a U.S. LLC—whether it’s a sole proprietorship, partnership, or S-Corp—may be required to register as an autónomo (self-employed) in Spain due to several legal and tax reasons.
Worldwide Taxation Principle
Spain taxes its residents on their global income, regardless of where the income is generated. If you’re a tax resident in Spain (typically by spending more than 183 days per year in the country), you must declare all income, including that from a U.S. LLC.
Substance Over Form Doctrine
If the substance of your activity shows that you’re effectively running the business from Spain, Spanish tax authorities may treat the income as Spanish-source or as income earned through self-employment, regardless of the LLC’s legal form in the U.S.
Spanish tax authorities assess where the effective management of the LLC occurs. If the business decisions and operations are managed from Spain, the LLC is considered to be effectively operated from Spain, making its income taxable there.
Spanish Classification of U.S. LLCs
Spain often treats U.S. LLCs as transparent entities (similar to partnerships), meaning the income is attributed directly to the individual owner. This is especially true if the LLC has no real presence (e.g., office, staff) in the U.S. Under Spanish law, income from such entities is taxed under the IRPF (Impuesto sobre la Renta de las Personas Físicas), and must be reported as personal income as Attribution of Income (Régimen de Atribución de Rentas). This can result in high tax rates (up to 50%).
Spain generally treats U.S. LLCs as fiscally transparent (pass-through) entities, similar to Spanish partnerships or economic interest groups. This means that the income is directly attributed to the individual owner(s), not the entity itself (Income Attribution); Spanish tax residents must report the LLC’s income on their personal income tax return (IRPF), even if the income is not distributed; this income is taxed at progressive personal rates, which can exceed 50% and if the LLC is used to carry out business activity from Spain, the owner is considered to be self-employed and must register as autónomo. [US Tax Consultants]
Spain uses three criteria to classify a foreign entity as transparent when the entity is not a taxpayer in its country of incorporation, when income is attributed to the members under the laws of that country and when the income retains its original nature when attributed to the members.
In contrast, a U.S. C-Corp is treated as a corporate taxpayer in the U.S., and Spain recognizes it as a distinct legal entity. This has several tax implications, that the C-Corp pays U.S. corporate tax on its profits, also Spanish residents who receive dividends from a C-Corp must declare them as investment income, taxed under the savings tax regime (19%–28%). [US Tax Consultants], and as passive ownership of a C-Corp it is not require the registration as autónomo in Spain. Taxpayer must remember that ownership must still be declared if the value exceeds €50,000.
| Feature | U.S. LLC | U.S. C-Corp |
| Spanish Tax Treatment | Transparent (pass-through) | Separate legal entity |
| Taxation | Personal IRPF (up to 50%) | Dividend income (19–28%) |
| Autónomo Required? | Yes, if business activity is conducted | No, if passive investor |
| Tax return | IRPF. Direct to owner as income attribution | IS. Retained by corporation |
| Reporting | Modelo 720 if > €50,000 | Same |
Why you need to be registered as Autónomo?
Because of the Legal Compliance for Business Activity, if you’re actively earning income through services or business activities—even remotely via your U.S. LLC—you are considered to be conducting economic activity in Spain. Spanish law requires individuals conducting such activity to register as autónomo.
Autónomos must contribute to the Spanish social security system, which is mandatory if you’re working independently. This also grants access to healthcare and pension benefits.
Operating without registering as autónomo while earning income can lead to penalties, audits, and back taxes. Spain has increased scrutiny on foreign business owners and undeclared income.
Then, any resident in Spain is required to file: Modelo 100, annual income tax return, Modelo 720, Reporting of foreign assets over €50,000 and the Modelo 714, Wealth tax return (if applicable).
So…
Even if your income is technically earned through a U.S. LLC, if you’re residing in Spain and managing that business from Spain, you’re likely required to: declare the income in Spain, pay Spanish taxes on it and register as autónomo to comply with local laws. If you have any questions, please contact us at US Tax Consultants
We become Spanish tax residents Jan 1, 2026. On Dec 31, 2024, we dissolved our US S Corp and run it as a Schedule C sole proprietorship. In 2025, expenses will exceed revenues, though both are in small amounts (<$100k). Assuming 2026 is similar is this sufficient to require registration as autonomo or is there a de minimis exception?
I think that a different question has been answered to Jesus in this same post.. on Nov. 13. but the answer should be the same.
In Spain, the obligation to register with Social Security as self-employed is primarily regulated by:
– Law 20/2007, of July 11, on the Statute of Self-Employed Workers.
– Decree 2530/1970, of August 20, which regulates the Special Regime for Self-Employed Workers (RETA).
According to these regulations, any worker who habitually, personally, and directly carries out a for-profit economic activity, without being subject to an employment contract, must register with the RETA. Habituality is the key criterion, not the income earned. This means that even if income is low, registration is still mandatory if the activity is regular. Furthermore, the General Treasury of Social Security indicates that registration must be requested before starting the activity, and that the self-employed worker is directly responsible for fulfilling this obligation.
Could you please clarify the statement that “If the substance of your activity shows that you’re effectively running the business from Spain, Spanish tax authorities may treat the income as Spanish-source or as income earned through self-employment, regardless of the LLC’s legal form in the U.S.” Does this also apply to US C-Corps where the owner is residing in Spain and providing direction?
The statement refers to the concept of “place of effective management” and substance-over-form principles in international taxation. Here’s what it means:
Legal Form vs. Actual Management: Even if you set up a U.S. LLC, tax authorities look beyond the legal form to see where the business is actually managed and controlled. If you make all strategic decisions, manage operations, and run the business from Spain, then:
For Spanish tax purposes, the income may be treated as Spanish-source or as income from self-employment, because the business is effectively managed in Spain. Remember that Spain will consider the LLC as a transparent entity (look-through approach) and tax you personally on its profits under the “atribución de rentas”
Many countries, including Spain, apply substance-over-form rules and anti-abuse provisions to prevent tax avoidance.
The OECD Model Tax Convention and Spanish domestic law often use the place of effective management to determine residency for companies and if the LLC is effectively managed in Spain, Spain may treat the LLC as disregard LLC and tax you as if you earned the income directly, as “autónomo”.
So, you might owe Spanish income tax on the LLC’s profits, even if the LLC pays U.S. taxes and you may also need to file Modelo 720 (foreign asset declaration) and comply with Spanish reporting rules.
Antonio
Could you please address S-Corps as well?
Thanks, C-Corps are part of a secon poast… it will come.
Antonio
This is a very helpful and detailed explanation — thank you for clarifying how Spain treats income from U.S. LLCs for residents. I have one question regarding the interaction with “social security bilateral agreements” between the U.S. and Spain.
If a U.S. expat residing in Spain continues to contribute to the U.S. Social Security system — for example, by maintaining self-employment contributions in the U.S. — how would that affect the requirement to register as an *autónomo* in Spain and contribute to the Spanish Social Security system?
In other words, would the Totalization Agreement allow a self-employed person temporarily working from Spain to remain covered under the U.S. system (and exempt from Spanish autónomo contributions), as it does for other temporary postings? Or does Spanish Social Security generally require autónomo registration regardless, when the person is managing the business activity from Spain? I’m particularly referencing TA.300 application model which seem to pertain to this exeption.
In Spain, the obligation to register with Social Security as self-employed is primarily regulated by:
– Law 20/2007, of July 11, on the Statute of Self-Employed Workers.
– Decree 2530/1970, of August 20, which regulates the Special Regime for Self-Employed Workers (RETA).
According to these regulations, any worker who habitually, personally, and directly carries out a for-profit economic activity, without being subject to an employment contract, must register with the RETA. Habituality is the key criterion, not the income earned. This means that even if income is low, registration is still mandatory if the activity is regular. Furthermore, the General Treasury of Social Security indicates that registration must be requested before starting the activity, and that the self-employed worker is directly responsible for fulfilling this obligation.