2025 Edition
The economic and social future of Spain does not look good, and I am not the only one who says so. Just take a look at the current situation:
🔸Middle class destroyed: Living has become synonymous with surviving.
🔸Growing inequalityThe gap between rich and poor is getting bigger and bigger.
🔸Widespread corruption: No need to remember names… “M. Rajoy”, does that ring a bell? 😉
🔸Soaring inflation: You can't afford it any longer.
🔸Low birth rate: The future of pensions, in danger.
🔸Uncertain retirement: If you arrive, what awaits you will be misery.
🔸Unbearable tax pressure: From January to July, you work only to pay taxes.
🔸Abusive self-employed fee: Pay to work from day one!
Look, I'll quickly tell you the case of Carlos, web designer freelance. Just a year ago, Carlos was paying more taxes than rent. Today, after setting up a LLC in the USA, has managed to reduce his tax burden to 70%* and, most importantly, has regained control of his money (and his life). 😎 *As always, it depends on each case and on doing it right, but the results can be surprising.
That's why we created this The Ultimate Guide to LLCs in Spain: to help you pay less taxes and ensure a solid financial future.
Yes, there you live!
You have the opportunity to save yourself, we warn you 30 years in advance so you can prepare.
🕒 This guide is not for rushing through. It will take you between 1 and 2 hours to read it in its entirety, but each section is designed to be read separately and applied at the moment. Read it at your own pace.
[Last updated: May 20, 2025]
Let's start by clarifying that LLC means Limited Liability Company, or “Limited Liability Company” in Spanish. These are very popular and flexible legal business structures for many digital business either freelance. Because? Because they offer the best of both worlds: limited liability (typical of a corporation) and flexible management and taxation (similar to those of a company or a self-employed person), but without so many formalities. 🙌
LLCs are entities pass-through or transparent, which means that the profits they generate at the end of the year pass directly to their owner. That is, they must be taxed and cannot be accumulated without paying taxes. Therefore, LLCs are designed to check in, spend and tax. 💸
In addition, LLCs do not need to have a board of directors or hold annual meetings, which greatly simplifies their management. This feature is especially attractive for small businesses or individual entrepreneurs. 👍
One of the most important benefits of LLCs is “pass-through taxation.” This means that the company's profits and losses are reflected directly on the members' personal tax returns, thus avoiding double taxation to which corporations are subject. 🙌
Limited Liability Company
(Limited Liability Company) Only exists in the United States
The double taxation This is when a company pays taxes on its profits, and then its owners pay taxes again on the dividends they receive in their country of tax residence. This can represent a very high tax burden for entrepreneurs. Therefore, LLCs are an attractive option to avoid this problem.
Passthrough Entity
Profits flow to you automatically at the end of the tax year (The LLC will not “store” money)
The term "pass-through" means that LLCs do not pay corporate taxes; rather, the profits generated go directly into the owners' pockets. For tax purposes, it's as if the company were "transparent." The Treasury considers that these earnings are yours personally from the very beginning.. 💸
This is very different from what happens with traditional companies (for example, limited companies or limited companies in Spain), which pay taxes first on their profits, and then the partners pay taxes again when they receive that money as dividends or payroll. In short, you pay taxes twice on the same amount! 😅
With a "Pass-through" LLC you avoid that double taxation, since the money flows directly to your Personal Income Tax, (Yotax on the Rincome of the Ppeople Fphysical), simplifying your taxation and, in many cases, optimizing your business's tax situation. 🚀
To calculate your exact income tax rate, you must know the applicable tax brackets based on your annual income. In Spain, these brackets typically range from 19% to 47%, depending on your annual income. That's why it's essential to do the math right and maximize every euro! 📈
A quick example: Imagine that your LLC generates €50,000 in profitsAs a "Pass-through" entity, those €50,000 are added directly to your personal tax base. Therefore, you must declare the full amount on your personal income tax return, applying the corresponding bracket according to the scale established by the Treasury each year.
This is how the Pass-through is translated visually:
American LLC (in the USA)
│
▼
Annual benefits (billing – deductible expenses)
│
▼
Personal Income Tax in Spain (Income Attribution Regime)
│
▼
Tax return in Spain (Form 100 – IRPF)
Imagine that this year your LLC has a turnover of €60,000 and you have had €15,000 in deductible expenses. The result is €45,000 in profits that automatically go to you, its sole member.
This means that you must declare those €45,000 in Spain directly in your personal income tax, in the section “Régimen de Atribución de Rentas”. The LLC itself will not pay taxes, it only reports to the IRS through Form 5472 and 1120.
In summary, your LLC:
Does NOT pay taxes in the USA. (just informs)
YEAH You must pay taxes on these profits in Spain, directly in your personal income tax as income from economic activities, according to the corresponding brackets.
⚠️ Important note: Even if you don't withdraw money from the LLC, the annual profits must still be reported.
Checklist to comply without errors:
✅ Keep all receipts for your deductible expenses.
✅ Prepare Form 5472 (informative) for the USA.
✅ Declare your profits in the Spanish Personal Income Tax (Form 100).
✅ Rely on a manager to make sure everything is correct.
To calculate the Personal income tax to pay if you have an LLC, you must apply the established sections according to the income level. These sections vary depending on the CCAA in which the owner of the LLC resides in Spain, so it is important to consult the regulations of each one. 📋
Let's see an example with the sections of Spain in 2025 in CataloniaLet's say you have a turnover of €50,000 and €10,000 in deductible expenses. You then have €40,000 in profit at the end of the year, and you'll pay tax on that amount. To do this, we'll apply the brackets in the following table:
| Personal income tax sections 2024 | State type | Autonomous type | Total type |
|---|---|---|---|
| Up to €12,450 | 9,5 % | 12 % | 21,5 % |
| From €12,450 to €20,200 | 12 % | 14 % | 26 % |
| From €20,200 to €35,200 | 15 % | 18,5 % | 33,5 % |
| From €35,200 to €60,000 | 18,5 % | 21,5 % | 40 % |
| From €60,000 to €300,000 | 22,5 % | 23,5 % | 46 % |
| More than €300,000 | 24,5 % | 25,5 % | 50 % |
Another example, of the total of Income tax to pay of €40,000 in profits, applying the IRPF 2025 sections:
First stretch: Until 12.450 euros, HE applies a 21,5%. This it turns out in a total to pay of 12,450 ×21.5% =2,676.75 euros.
Second stretch: Between 12.450 and 20.200 euros, HE applies a 26%. He stretch covers 7.750 euros (20,200 −12.450), resulting in 7,750 ×26% =2.015 euros.
Third stretch: Of 20.200 to 35.200 euros, he guy is of the 33,5%. This stretch understands 15.000 euros (35,200 −20,200), with a total of 15,000 ×33.5% =5.025 euros.
Room stretch: Finally, of 35.200 to 40.000 euros, HE taxes to the 40%. This HE applies about 4.800 euros (40,000 −35,200), generating 4,800 ×40% =1920 euros.
Adding the values of each stretch, he total of the Income Tax to pay I would be 2,676.75 +2.015 +5.025 +1,920 =11.636,75 euros.
By it so much, with 40.000 euros of benefits in 2025, he total to pay of Income Tax would ascend to 11.636,75 euros (a 29,1% of the total).
Do you think taxes in Spain are being used fairly? Click here and draw your own conclusions.
An LLC Disregarded Single-Member A single-member partnership is a corporation that, for U.S. tax purposes, is considered a "disregarded" separate entity. This means it doesn't file taxes as a business, but rather all profits, losses, and expenses are attributed directly to the owner, who reports them on his or her personal tax return. This is a very useful structure for those seeking tax simplicity and liability protection without having to comply with the formalities of a corporation.
Main characteristics of a Disregarded Single-Member LLC:
Pass-through Taxation:
LLC profits or losses are not taxed at the corporate level; they are passed directly to the owner's personal tax return. This simplifies taxation by avoiding double corporate and personal taxation. 💸
Limited Liability:
Protects the owner's personal assets from potential debts, obligations, or liabilities arising from the LLC's activities. 😊
Fewer corporate formalities:
Unlike a traditional corporation, it is not required to hold annual meetings, keep detailed minutes, or comply with certain strict formal requirements.
Customizable operating agreements:
You can freely define the internal rules for the operation and management of the LLC through an Operating Agreement tailored to your specific needs. 🙌
Without permanent establishment in Spain:
To maintain its tax advantages, the LLC cannot have offices, real estate, or directly hired salaried employees in Spain, although it can work with freelancers. 🤔
No permanent establishment
No offices/properties or salaried workers in the name of the LLC in Spain
Limitations to take into account:
Despite its advantages, this structure has certain restrictions:
It does not allow partners or shareholders, limiting possible avenues for financing or growth.
You must comply with tax obligations in both the US and Spain, which can add some administrative complexity.
Therefore, before choosing a Disregarded Single-Member LLC, it is important to carefully evaluate whether this structure fits your business and personal goals.
Limited Liability
Protection of your personal assets
This type of limited liability implies that the owner of the LLC and his personal assets are protected from problems financial or legal that may arise in different situations. This burden falls on the company, as the LLC is a legal person, similar to an SL.
In this case, the risk would only affect the company assets and not to those of their owners. Unlike if you act as a self-employed person, where you and your business are the same for legal purposes and your personal assets may be affected.
But be careful: if the owner offers personal guarantees for a loan of the company, it could also be personally responsible of that debt. 😮
As you can see, the limited liability It is a great advantage of LLCs, but it is not absoluteThere are certain circumstances in which you may lose the protection of your personal assets and be liable for damages from your assets. Therefore, it is important that you are prudent and responsible when managing your LLC, and that you do not incur in illegal, fraudulent or negligent activities that could compromise your safety.
One of the most common myths among those who manage an LLC Disregarded is to think that bank accounts must be left empty at the end of the fiscal year to avoid paying taxes.
❌ Nothing could be further from the truth.
What really matters it is not the balance of the bank account, but the net profit: the difference between income and expenses during the year. That is:
bnet profit = Yoincome – Gastos deductibles*
*Deductible expenses: “Any expense related to your economic activity”
The rule is simple: You can only deduct expenses that are directly related to the activity of your LLC.
📌 Yes you can deduct:
🚫 You can't deduce:
💡 AdviceIf you're unsure whether an expense is deductible, ask yourself, "Is this expense essential for the LLC to operate and generate income?" If the answer is no or ambiguous, it's best not to deduct it.
Why might it be worth leaving net profit at 0?
🧾 Practical example:
Imagine that your LLC has invoiced 30,000 $ in 2025. During that same year, you have had the following expenses:
10,000 $ in outsourced services
8,000 $ in software, tools, and subscriptions
7,000 $ in advertising campaigns
5,000 $ in legal advice and corporate maintenance
Total expenses: 30,000 $
Net profit: 0 $
Result: You don't pay any income tax, since no taxable income has been generated. But be careful: you should keep invoices, receipts, and contracts in case the Treasury asks you to justify these expenses.
If you're an entrepreneur in Spain (or outside of Europe) and you're involved in digital businesses with a global clientele, you might be interested to know that there's a legal structure that can offer you many advantages: the LLC. 🙌
The LLC is a limited liability company that is created in the United States and that allows you to save taxes, protect your assets and simplify your management. 💸
But not all activities are suitable for an LLC. There are some profiles that can benefit more from this option than others. These are:
Basically this
If this is your routine, the LLC is your best friend.
There are some profiles of digital entrepreneurs who can benefit from opening an LLC in the USA. However, this It does not mean that it is a valid option for all cases.Before deciding on this legal structure, you should carefully evaluate your situation, your business, your clientele, and your goals. You should also inform yourself about the tax, legal, and administrative obligations involved in having an LLC, both in the United States and in Spain. Therefore, I advise you to consult with us so we can guide you through the advantages and disadvantages of this option and help you create and maintain your LLC legally and securely.
An LLC is not for everyone
If you are on this list... we are very sorry 🙁
Although LLCs offer a flexible and beneficial tax structure for many digital entrepreneurs, Not all business models are compatible with it If you are a tax resident in Spain or want to avoid problems with the Treasury.
Within the legal framework of Spain and the United States, Only certain types of activities really benefit from this vehicleThe key is not to generate permanent establishment in Spain nor be considered ETBUS (Engaged in Trade or Business in the US) in the United States.
| Type of business / activity | Compatible with an LLC? | Main reason |
|---|---|---|
| 100% Digital Services (consulting, marketing, online training) | ✅ Yes | There is no physical presence or EP in Spain, outsourceable |
| Sale of digital products (ebooks, courses, software, etc.) | ✅ Yes | Automatable, without direct intervention of the tax resident |
| Ecommerce with outsourced logistics (Amazon FBA, dropshipping) | ✅ Yes | Without warehouses or employees of its own in Spain |
| Clinical psychology, medicine, physiotherapy, etc. | ❌ No | Highly personal professions, which cannot be delegated, imply EP |
| Electrician, carpenter, locksmith, plumber, etc. | ❌ No | On-site and non-transferable work in Spanish territory |
| Restaurant, cafeteria, bar, hair salon, spa, gym | ❌ No | Local open to the public, guaranteed EP |
| Physical store in Spain | ❌ No | Fixed presence, employees, physical inventory |
| Photographer who works in events or in-person sessions | ❌ No | In-person service, not outsourceable |
| Online coach or therapist (unregulated) | ⚠️ It depends | It may be viable if it does not require membership and is 100% online and delegable. |
| Influencer or digital content creator | ✅ Yes | Digital model, without employees or office in Spain |
| Online training (academies, memberships, courses) | ✅ Yes | Externalizable, 100% digital, without EP |
🛠 What alternative do you have?
If you are in any of these cases, an LLC on its own is not the solution. But you can consider:
Using an SL in Spain for those physical activities.
Supplement it with an LLC for digital tasks, marketing, international expansion, etc.
This way, you can separate risks, optimize your taxes, and comply with the regulations of both countries. 💡
ETBUS (ANDngaged in Trade or business in the ORnited Yestates) is the label the IRS applies to decide whether a foreign entity—including your LLC—is doing “real business” in the U.S. and therefore if you have to pay taxes there.
Even if your LLC is a disregarded entity (taxes in your name, not in the company's name), can be considered ETBUS if it meets certain criteria, which would generate federal tax obligations.
When is an LLC considered an ETBUS?
It is looked at on a case-by-case basis, but the most common scenarios are:
Physical presence in the US
If you have an office, employees, warehouses, etc.
👉 This isn't usually applied in digital structures like yours, so you can ignore this point.
Income from US sources
E.g.: rents, interest from American banks, royalties, etc.
👉 If you sell services from abroad to clients in the US, there may be nuances here. It's not always considered "effectively connected," but If the activity is regular, directed to the US and you have many American clients, the IRS may consider you ETBUS.
Significant economic activity within the U.S.
There's no official "$1M" threshold. What matters is whether your business consistently and substantially sells to US customers.
👉 If you only have occasional sales or your American revenue is small, it's unlikely you'll be considered an ETBUS. But if your business is growing significantly there, it's best to consult with a specialized tax advisor before taking the plunge.
What if I'm ETBUS?
So, does ETBUS affect me?
👉 If you sell digital services and are outside the US, you are most likely NOT ETBUS.
👉 As long as you have no physical presence or income from specifically US sources, you have no tax obligations in the US. beyond certain information forms (such as 5472).
The ETBUS concept is not the only one that affects the taxation of foreign companies in the US. There are other factors that can influence the tax burden of your business, such as the type of entity, the tax treaty between your country and the US. ., and the deductions and credits available. Before starting or expanding your activity in the US, consult with a tax advisor specialized in the US market. 😊
Create an LLC (Limited Liability Company) can be a good option for entrepreneurs and digital companies who want to enjoy a series of both fiscal and operational benefits. These are some of the reasons to consider this legal form: 😍
LLCs have their origins in common law and are not recognized in many countries in the European Union. Before creating an LLC, be well informed about the legal and tax implications it entails. You can also consult with an expert in international taxation to help you choose the best option for your business.
To avoid the obligation to register and manage VAT in multiple European countries, you can use a Merchant of Record (MoR) such as Hotmar, Paddle, or Lemon Squeezy. These platforms act as the official seller for the end customer and are responsible for:
This solution is ideal for those who sell B2C in Europe and want to avoid the administrative burden of VAT, especially for digital businesses such as subscriptions, software, or information products.
However, for B2B sales, it is not necessary to resort to these services, since the reverse charge already allows operations without VAT in most cases.
I'll explain to you myself the problem with LLCs and European VAT if you sell to B2C (individuals) and exceed €10k.
A Anonymous LLC It is a company registered in states such as New Mexico, Delaware or Wyoming, where the owner's name is not published in public records. This level of privacy can be useful in certain sectors, such as cryptocurrencies, the computer security or brand protection, where strategic anonymity is an added value.
But beware: Registration anonymity does not exempt you from your tax obligations. As a resident of Spain. This is where many people get confused… 😬
Which YEAH makes anonymity:
Which NO makes anonymity (and here comes the important part):
❌ It does not eliminate your obligation to report LLC income. in personal income tax if you are a Spanish tax resident.
❌ It does not allow you to deduct personal expenses as if they were business related (Mercadona, rentals, holiday trips… you know).
❌ It does not protect you from the Treasury if you make transactions without justification. between LLC accounts and personal accounts in Spain.
So, is it good for anything?
Yeah, It serves to protect your privacy, not to hide income. A well-used anonymous LLC:
But whenever correctly declare your income and fulfill your tax obligations as a Spanish taxpayer.
Anonymity can be a commercial shield, but it is not a tax shield. Complying with the Treasury is not optional, but how you structure your business is. The key is to optimize without crossing the line. 😊
⚠️ The information contained herein is for informational purposes only and does not constitute legal or tax advice. The objective is to help the reader understand the risks of acting outside the legal framework; it is not to recommend illegal practices, but rather to prevent the consequences of ignoring them.
Let's get this straight from the start: We do not recommend you evade taxes or hide structures. It's not worth it. But I'm not going to pretend that no one does either. So, if you decide walk a tightropeThe least you can do is know where you are stepping.
Making a mistake out of ignorance isn't the same as making a mistake out of pride. And here, what you don't know can really hurt.
🔐 Precautions (if you decide to ignore this guide 😅)
Without promoting anything illegal, this is what many who go “on their own” usually take into account:
🙌 But let's get back to what's recommended:
If you can structure your life and business in a legal, optimized manner and without unnecessary risks, do it.
An LLC used correctly already offers many advantages without having to cross the red line.
Because in the end, the game is not about “hide and seek”, but about do things intelligently and in advance.
We know that the idea of having a Anonymous LLC It sounds tempting to "disappear" from the IRS's radar. But... what happens if you decide not to declare the LLC and get caught?
🔍 How could the IRS catch you?
Even if it seems like you are out of the system, The Treasury is not stupid and has more and more tools to connect the dots. Here are the most common ways:
💥 What happens if you get caught?
It depends on what you hid and how much:
| Infraction or situation | Main tax consequence |
|---|---|
| ❌ Failure to declare LLC income | Regularization + fine from 50% to 150% of the defrauded fee |
| ❌ Hide foreign accounts (CRS / undeclared) | Proportional fine under the General Tax Law |
| ❌ Failure to file Form 720 (when required) | Proportional fine (fixed fines of €5,000/data and minimums of €10,000 no longer apply) |
| ❌ Exceed €120,000 in defrauded personal income tax | It is considered a tax crime: fine + criminal record + possibility of jail time |
| ⚠️ Have a permanent establishment (PE) in Spain | The Treasury may consider the LLC to be resident in Spain and apply IS + VAT. |
| ❌ Do not charge VAT on digital services to EU customers | Proportional fine + regularization + interest (especially with MOSS/OSS) |
| ⚠️ Have salaried workers in Spain | Automatic consideration of EP + surcharges for unpaid contributions |
| ❌ Do not pay self-employed fees if you operate as such in Spain | The Treasury may understand that you are acting as a self-employed person and demand registration + back dues. |
| ❌ Deduct personal expenses as if they were business expenses | Regularization + proportional penalties for non-deductible expenses |
| ❌ Make opaque transfers LLC → personal account | If they are not justified, they can be attributed as donations or capital gains. |
⚠️ Important: If everything you do stays for under €120,000 of defrauded quota, it is not a crime, is economic sanction. Still, it can hurt quite a bit if the IRS believes you were intentionally concealing your information.
🧠 So… what’s next?
There is no need to give up anonymity.
What we must avoid is mixing anonymity with evasion..
The smart strategy is:
→ To be invisible to the world,
→ But visible to the Treasury when appropriate,
→ And do it in such a way that never have to give more explanations than necessary.
Start a business in the United States is much more simple and digitized compared to other countries, where procedures are usually in person and more complex. So cheer up, these requirements will be included in our service! 🙌 To open an LLC in the US, these requirements must be met, if you meet them the process will be fast and 100% online:
The requirements for opening an LLC in the US may vary depending on the state where you register it. Some states have stricter or more flexible rules than others, which can affect the protection, taxation and management of your business. Before choosing a state for your LLC, compare the advantages and disadvantages of each and choose the one that best suits your needs. 😊
USA It is a very destination attractive for entrepreneurs who want establish an LLC (Limited Liability Company). The process is economical, fast and simple, and offers a series of both fiscal and operational benefits. 
The LLC is a legal form that was created in the United States to provide a legal solution to the self-employed who had a business with a moderate level of income. However, over time, the LLC has gone evolving and has become a very popular option for all types of companies, even those that manage million dollar transactions. Additionally, the LLC allows non-resident foreigners They can create and manage a company in the United States without having to travel to the country. 😎
But the United States is not the only country that offers facilities to create a company from abroad. There are other options that may also be interesting, depending on your goals and needs. For example:
There are other countries that also offer options to create a company from abroad, such as Singapore, Hong Kong or Cyprus. Before deciding on one country or another, compare the advantages and disadvantages of each, and consult with an expert in international taxation to help you choose the best option for your business.
Have a company in the United States means having to comply with two tax administrations different: the Spanish and the American.
There is an agreement between Spain and the United States to avoid double taxation. This agreement allows you to deduct the taxes you have paid in the United States from those you have to pay in Spain, as long as you present Form 1040-NR with the ITIN. Before filing your tax return, consult with a tax advisor specialized in the US market.
Institute Revenue Service
There you only inform, information is power.
The IRS (Internal Revenue Service) is the United States tax agency, and has different rules for LLCs depending on the number of members and the tax options they choose.
We will help you create a Sole Proprietorship LLC in your name, since these are the ones They will not pay taxes in the US., only in your country of tax residence, as long as you meet certain requirements, such as not having employees or offices in the US 😊
The IRS has an agreement with the Spanish Tax Agency to exchange information on the activities of foreign companies in the US. This means that you must comply with your tax obligations in both countries and avoid any type of fraud or tax evasion.
Spain and the United States They have an agreement so that citizens and companies that make money in both countries do not have to pay taxes twice for the same. The objective is to put clear rules about where and how much they should pay, and so on promote trade and investment between the two nations. 🤝
Think that you are from one country and earn money in another. This agreement tells you that you may not have to pay taxes in the country where you earned that money. For example, if you are Spanish and earn something in the United States, you may not have to share your earnings with the US government.
But if you already paid taxes in the United States, this agreement helps you not hurt as much in Spain. Can deduct what you paid in the United States than what you have to pay in Spain for that same money. This prevents your pocket from suffering from paying taxes twice for the same thing in two different places. 💶
If you want more details, you can consult the “Double taxation agreement signed by Spain with the US” which came into force on February 22, 1990. 📄
This agreement also includes other advantages, such as the elimination of double taxation on dividends, interest and royalties, or the reduction of withholding at source. Before doing business between Spain and the United States, be well informed about the conditions and benefits of this agreement. You can also count on a tax advisor specialized in the US market.
Entities in the income attribution regime (RAR) They are those that do not pay taxes as an entity, but rather their income is distributed among its members, who declare it on their personal taxes. 📋
Also applies to some foreign entities, such as American Single Member Disregarded LLCs, which operate in Spain and pay taxes in an equivalent manner. 🌐
The objective of this regime is to avoid double taxation of income, both at the entity and partner level, and follow the principle of tax transparency.
📌 Query:
A Spanish tax resident is the sole owner (100%) of a American LLC "disregarded" (that is to say, fiscally transparent in the US), which offers online services and does not have EP in Spain.
Ask if you should report the profits of the LLC on the model 100 (IRPF), in the section E. Income attribution regime, although the model program only allows up to 99% to be included, and he has 100%.
✅ Administration Response:
Yes, you must declare the profits of the LLC on Form 100., in it Section E (Special regimes | Income allocation regime).
The LLC meets the requirements to be treated as an entity under the income attribution regime in Spain (according to the resolution of 6/2/2020).
Although the model only allows up to 99%, This does not exempt you from declaring the 100% on your income.The important thing is that you pay taxes on everything you generate.
The returns must pay taxes as an economic activity in the income of the resident partner (form 100).
The LLC, having a sole partner resident in Spain, cannot benefit from the Double Taxation Agreement (DTA) between Spain and the USA
(I'll show you how to file taxes with your LLC in the Personal Income Tax in this video.)
When are you going to declare these returns:
The model It asks you for the percentage of participation in the entity.
But It only lets you put up to 99%, even if you are the sole partner (100%).
The model automatically calculates the yield to be declared as:
👉 Total return of the entity × % of participation
🛑 Result: If you enter 99%, the model will only declare 99% of the actual profit, and you will be leaving money untaxed (even if it is unintentional).
✅ The solution (accepted by the Treasury)
The Treasury has acknowledged in an official response that this limit of 99% is a technical error in the program, but that's it does not exempt you from declaring the 100% of the attributed income.
Therefore, the solution is:
💡 Adjust the total performance so that the 99% equals the actual 100%.
🧮 Practical formula
If the actual profit of your LLC is, for example, 100,000 €, you must:
Divide it by 0.99:
100,000 / 0.99 = €101,010.10
Introduce:
Participation percentage: 99% (because it doesn't let you anymore)
Total performance of the entity: €101,010.10
The model will calculate:
99% of €101,010.10 = exactly €100,000 → ✅ Correct
🚫 What NOT to do
Do not enter the actual profit (€100,000) and then the 99%, because only €99,000 would be entered.
Do not adjust the % participation (it is not possible except with management software or with TaxDown).
Don't forget to declare your total performance, even if the software doesn't make it easy for you.
[Remember that eYou are responsible for ensuring that all the information you provide is correct and truthful. This means that if there are any errors or inaccuracies in your statement, you will be solely responsible.
It is highly recommended that you consult with a tax manager or professional before submitting your return to the tax authorities. This is important to ensure that you are complying with all tax rules and regulations, and to avoid potential fines or penalties.]
Alternatively, if you do not want to do it yourself or your return is more complex because you have other income and special considerations, we strongly recommend using professional services such as TaxDown (plan FULL) to ensure that your tax return is handled correctly and efficiently.
Additionally, it is important that you have the following documents prepared or on hand in case they are later required by the Treasury:
Having these documents will facilitate the filing process and ensure that you are prepared for any requests for additional information from the tax authorities.
When operating with a LLC in the USA and not be registered as self-employed in Spain, you do not contribute to the Spanish Social Security system. This implies that you lose the right to a public pension already generate days for unemployment benefits. 😢
However, this It doesn't mean you can't have a secure retirement.. The key is in Turn that tax savings into an investment for your future.
💡 How much could you save with an LLC?
Yes with the LLC You save 5,000 euros a year in Social Security contributions, in In 10 years you will have accumulated 50,000 euros, in 20 years, 100,000 euros, and in 30 years, 150,000 euros. 💰
But the key is not just to save, but invest those funds wisely. If instead of leaving them in a bank account you put them in Investment vehicles with an average annual return of 71%3T, the numbers change dramatically:
🔹 10 years → You could have more than 70.000€ 📈
🔹 20 years → You would overcome the 210.000€ 🚀
🔹 30 years → You would accumulate more than 500.000€ 🔥
This strategy It would allow you to generate passive income for your retirement, ensuring a flow of money from the 67 to 90 years or older.
Options for building your “private pension”
If you decide reinvest your savings in an alternative pension system, you have several options:
1️⃣ Private pension plans
They are similar to the public pension, but managed by private entities. They allow you to contribute money regularly and withdraw it in retirement.
✅ Advantage: Tax relief in some countries.
❌ Disadvantage: They usually have high commissions and liquidity limitations.
2️⃣ Index funds or accumulation ETFs
They are one of the best strategies for long-term investment. They are diversified portfolios of shares that replicate the market.
✅ Advantage: Historically they offer returns of between 6% and 10% annually.
❌ Disadvantage: The invested capital may fluctuate in the short term.
3️⃣ Real estate investment
Buying properties to rent out can be a strategy to generate passive income in the future.
✅ Advantage: Recurring income and revaluation of the property.
❌ Disadvantage: You need high initial capital and active management.
4️⃣ Life annuity
It is a financial product where you invest a capital and the insurer pays you a monthly amount for life.
✅ Advantage: Complete passive income security.
❌ Disadvantage: Low profitability compared to other options.
What should you consider before choosing?
Before choosing a strategy, it is essential to analyze these factors:
✔️ Liquidity: When and how can you withdraw money?
✔️ Taxation: What taxes do you pay when contributing and withdrawing?
✔️ Expected profitability: How much could you earn annually?
✔️ Commissions: Some financial products have hidden costs.
If you are not sure which option is best for you, consult with a financial advisor can help you define the optimal strategy for your future.
A LLC (Limited Liability Company) It is an entity governed by the legislation of the US state where it is created (Delaware, New Mexico, Wyoming, etc.).
This means that it is subject to US regulations, even if you operate 100% online and live in Spain or Europe. 
Now then, What makes the tax difference is not where the LLC was created, but how and from where it actually operates.
⚠️ The key point: do you have Permanent Establishment in Spain?
The concept of Permanent Establishment (PE) This is what determines whether the Treasury can treat your LLC as a as a Spanish company for tax purposes (and therefore require VAT, IS, etc.).
According to the Article 5 of the OECD Model Convention and the Article 6 of the Non-Resident Tax Law:
A foreign entity has a PE in Spain if:
✅ If you DO NOT have an EP, the LLC does not pay taxes in Spain as a company.
Yeah:
Your business is 100% digital
You don't have a physical office or warehouse in Spain.
You do not hire salaried employees in Spain on behalf of the LLC
You are not acting on behalf of the LLC as a dependent representative from Spain (for example, signing contracts in person, negotiating regularly with clients, or performing direct commercial functions in Spanish territory)
➡️ Then there is no EP, and therefore the LLC does not pay taxes as an entity in Spain
Instead, the benefits are attributed to the owner, who pays personal income tax as a natural person under the Income Attribution Regime.
Then:
If your LLC is a disregarded entity (fiscally transparent),
And you are a resident in Spain,
➡️ You only pay personal income tax as an individual for the profits of the LLC (distributed or not).
No Corporate Tax.
No obligation to apply VAT on behalf of the LLC.
Without the company being considered a tax resident in Spain.
💸 And yes: This can lead to considerable tax savings if everything is properly set up and managed.
Did you know there are over 2 million LLCs registered in the US? LLCs are very popular among American entrepreneurs because they offer them great flexibility and protection.
Leaving Spain completely changes the tax treatment of your LLC. You no longer pay Spanish personal income tax, nor do tax transparency rules or Forms 720 or 100 apply.
But Each country has its own way of looking at an American LLC, and what in Spain is a transparent entity (passthrough), In others it may be irrelevant, or even considered opaque and subject to CFC rules.
🧠 The CFC Rules (Ccontrolled Foreign CCorporate Rules) are rules that some countries apply to prevent their residents from parking profits in foreign companies with lower taxes. (Basically, they're trying to prevent you from setting up a company abroad just to defer or avoid taxes, when in reality you control it and it has no real structure.)
So before choosing a country of residence, it's important to be clear about three things for each country:
Do you see the LLC as transparent or as a separate entity (opaque)?
There is CFC rules that affect whether you are sole proprietor of an LLC?
Are they taxed? undistributed earningss (the case of Spain🇪🇸), or just what you receive as dividends?
If you've already escaped Spanish tax hell (or are about to), chances are you're looking at one of these destinations. They're not the only ones, but These five countries stand out for what they offer in terms of taxation, banking and operational freedom.:
| Category | Grouped countries | General treatment |
|---|---|---|
| Non-Dom | 🇨🇾 Cyprus, 🇲🇹 Malta, 🇦🇩 Andorra | Dividends are not taxed if there is no PE, without CFC in simple structures |
| Land rent 🔝 | 🇵🇦 Panama, 🇵🇾 Paraguay, 🇸🇻 El Salvador, 🇨🇷 Costa Rica | Only locally generated income is taxed, without CFC or ISD |
| Aggressive residence (with CFC) | 🇵🇹 Portugal (NOT recommended) | Opaque LLC + possible CFCs + taxation on retained earnings |
| Favorable residence but requires caution | 🇮🇩 Indonesia, 🇬🇪 Georgia | They do not pay taxes if there are no remittances, but the regulations are unclear or unstable. |
| Total exemption (without personal income tax) | 🇦🇪 United Arab Emirates | Without personal income tax, IS at 9% only with EP, without CFC, ideal for clean dividends |
Permanent Establishment = Permanent Establishment | Inheritance and Gift Tax = Inheritance and Gift Tax | Controlled Foreign Company = Controlled Foreign Company | Corporate Tax = Corporate Income Tax | Personal Income Tax = Personal Income Tax
You LLC may still be valid and useful wherever you live.
But what matters is not where you registered it, but from where you pay taxes.
📌 If the country:
📌 Yes, instead:
So, before you move and think "everything's done," make sure you understand how your new country views your structure.
A good tax move isn't just about setting up an LLC; it's about choosing the setting where that move shines.
Even if your LLC is registered in the US and does not have permanent establishment in Spain, there is still another front where the Treasury could try nationalize your company: the effective direction.
The entire LLC operation may be in the US, but if you are the one making all the important decisions from Spain, the Treasury could argue that the headquarters of management and control It is also in Spanish territory.
And so Yeah which gives them room to declare it as tax resident in Spain.
🧾 What does the law say? According to the Article 8.1.c) of Law 27/2014:
"An entity is considered to have tax residence in Spain when has its effective management headquarters in Spanish territory. It will be understood that there is an effective address when the address is located in Spain. direction and control of all its activities."
That is, even if the LLC:
❌ It was not incorporated under Spanish law
❌ It does not have a registered office in Spain
✅ But You manage everything from home, the Treasury could say that YEAH has Spanish tax residency.
🛡️ How can we protect ourselves against this risk?
One way to reduce this risk is formally delegate effective management in an external figure: the manager.
The manager is a American legal entity that:
Assumes the administrative and legal operational management from the LLC from the USA
Make structural decisions on your behalf
File forms and returns (IRS, FinCEN, BEA, etc.)
Acts as an intermediary with the registered agent
Documentary evidence that executive management is carried out from the USA.
You are still in charge, but you are no longer the one only person listed as the visible brain of the company.
🤔 And that's enough?
This doesn't make you invulnerable, but it does make you much more defensible in case of inspection, because the Treasury can interpret it as it pleases if it wants to screw you, but it is a extra tax shield.
For legal and documentary purposes, Your LLC no longer appears to be managed exclusively from Spain., and so makes a big difference in case of inspection.
In addition, under the income allocation regime, the LLC is an entity without its own legal personality, so technically the concept of tax residence of entities should not be applied.
But let's be realistic: The Treasury is capricious, and if he wants to tickle you, he will. will do.
That's why, It is better to have a well-constructed story and a manager who serves as a shield. 🚀
However, because the interpretation and application of tax regulations can be complex and subject to change, it is advisable to consult with a certified tax professional for specific and up-to-date advice.
As managers, we act as external figure of effective management, providing documentary evidence that the strategic management of your LLC is carried out from the US. This does not mean that you lose control: you make the key decisions, and we formally channel them as operational managers to third parties.
📝 All this is formalized through a service provision contract between your LLC and us, a US entity (US person) with operational headquarters in the US, which reinforces that the effective headquarters of management is outside of Spain.
This contract may be presented in case of inspection as evidence of the operational framework.
🛠️ Creation and maintenance of the LLC
We take care of setting up your LLC, processing your EIN, and ensuring you comply with all required legal and corporate obligations in the U.S.
📋 Basic operational management
We oversee the legal and tax status of the entity, keep records up to date, and process the necessary forms to ensure everything is in order.
🧾 Tax and regulatory compliance
We handle annual tax returns with the IRS (Form 5472, 1120), FinCEN, BEA (BE-13, if applicable), as well as renewing your registered agent and any other federal or state requirements.
🤝 Decision support and validation
We don't make decisions for you, but we do advise you, support you, and formally ratify the decisions you make, reinforcing the idea that your LLC is not run exclusively from Spain.
💬 Communication and ongoing support
We are available to answer questions, coordinate arrangements, and assist you with any request or inspection.
🎯 In short:
We are committed to managing your LLC legally, efficiently, and transparently, acting on your behalf to protect your interests and ensure that, in the eyes of the Treasury and the IRS, your company is properly structured and managed from the US.
He Agreement (OA) is the internal document that regulates the operation of your LLC. Although it is not mandatory in many US states, if you live in Spain (or have recently done so), it is a piece of paper. essential to shield you.
It's not just a procedure, it's your legal and tax shield If the Treasury decides to put you under scrutiny. 🔥
What is OA for?
The OA establishes:
✅ The rules of operation of the LLC. It defines how decisions are made, profits are distributed and the company is managed.
✅ The role of the owner and the manager. In a single-member LLC (single-member), the owner can manage it directly or delegate administration to a third party.
✅ That the effective management of the company is in the USA. This is key to prevent the Treasury from considering the LLC as a tax resident in Spain.
✅ The protection of limited liability. Ensures that the company's debts and obligations do not affect the owner's personal assets.
Your LLC's OA if you use a US manager.
Yeah You want to protect the LLC from the Treasury and prevent it from being considered a cover., the OA must make it clear that You are not the one who manages the company on a day-to-day basis, but rather a manager in the US.
A well-structured OA should include the following:
Delegation of administrative management to the manager
📌 The manager, which in this case is DEVIL MARKETING LLC, is responsible for certain administrative and tax compliance functions in the USA
📌 The owner is still a «passive owner» (passive owner), without intervening in the daily management of the company.
📌 The manager acts as official representative in the US, ensuring that the LLC complies with its legal obligations.
The owner still has financial control
🚨 The manager does not have access to the bank accounts.
✔️ Control of the money remains the exclusive power of the LLC owner.
✔️ The owner can monitor and approve payments, but without participating in daily operations.
✔️ Prevents the Treasury from arguing that the LLC is a front if the owner manages all the activity from Spain.
The manager as a figure of compliance
The OA must indicate that the manager takes care of specific functions related to the LLC in the US, such as:
✔️ Comply with tax and regulatory obligations to the IRS and other entities.
✔️ Act as registered agent to receive official notifications.
✔️ Submit the forms required by U.S. law.
📌 The manager does not participate in the operation of the business, but in the fulfillment of his formal obligations.
Legal protection of the manager
The OA must specify that the manager cannot be held responsible for losses if you act in good faith and comply with the law. In addition, the LLC must indemnify you in the event of lawsuits.
Profit distribution rules
The AO must define how and when profits are distributed. If you are the only member, you can decide whether to distribute profits regularly or keep them in the LLC.
Company address and documents
The OA must reflect that the LLC is based in the US and that important documents (accounting, contracts, tax records) They stay there.
Why does this help you on a tax level?
👉 The Treasury could try to claim that you are the one who actually runs the company from Spain.
👉 A well-written OA, with a knowledgeable manager, weakens that argument.
👉 It serves as proof that your structure follows US standards and should not pay taxes as a Spanish resident company.
Even in case of inspection, Having a detailed OA allows you to present a solid and coherent story, very difficult to dismantle.
The OA isn't a dead letter. It's the legal backbone of your LLC.
It serves to show that everything is in order and that you You're not secretly running an American company from your living room in Spain..
An LLC without an OA is an easy target. An LLC with a well-defined OA and manager is much harder to crack.
If you receive a notice from the IRS informing you of an inspection or investigation related to your LLC in the US, take a deep breath and follow these practical steps to get through the process successfully:
1️⃣ Stay calm
An inspection does not necessarily mean that there is something wrong. Many inspections are just routine checks.
2️⃣ Prepare these essential documents immediately:
Agreement (operating agreement) of the LLC.
Signed contract with your American manager.
Bank statements and simple accounting records of your LLC.
Tax forms Americans (Form 1120 and Form 5472).
Justifications of deducted expenses.
3️⃣ Anticipate the typical arguments of the Treasury
The Treasury could question aspects such as:
Effective direction: Document that your LLC has an effective address in the US, supported by contract, administrative procedures, delivery of forms, technical consultancies, etc.
Permanent Establishment: Clearly show that you do not have an office or salaried employees in Spain; only freelancers.
Economic motive of the LLC: Have a solid justification ready for choosing an American LLC over a Spanish SL: international access, cost reduction, operational simplicity, etc.
Self-Employed Fee: Remember that your LLC operates from the U.S., generating no obligation to pay self-employed fees.
VAT: It will depend on the type and location of your client.
4️⃣ Be brief and clear in your answers
Do not give more information than necessary. Limit yourself strictly to answering what the Treasury asks.
If you have any doubts about any question, ask for advice before answering.
5️⃣ Avoid contradictions and maintain coherence
All information provided must be internally consistent. Make sure all previous documents, statements and communications are aligned.
6️⃣ Seek specialized support
If you have any questions or complications, consult a tax advisor specialising in international taxation. It is essential to receive specific professional advice before responding formally.
📌 Finally:
Always keep your documentation in order and solid. By following this guide you will have strong arguments against any tax questioning by the Treasury.
Good luck, you've got it all under control! 💪🚀
The IRS is the invisible partner you never wanted to have 👻. It doesn't invest with you, it doesn't take risks, and it's never by your side when tough times come ⚠️📉. But when you finally achieve success after a lot of effort, sacrifice, and uncertainty, it shows up to claim its share of the pie 🍰. An ever-growing share that doesn't add value or boost your growth 📈.
In Spain, the system is designed to punish those who generate wealth, rewarding mediocrity and demotivating entrepreneurs who struggle to get ahead 🙅♂️. The Treasury is an expert in subtracting, never in adding.
You take risks, you create jobs, you innovate and you generate value. And the Treasury simply plunders you.
Did you know that the first LLC (Limited Liability Company) was created in Wyoming in 1977? It was an innovative idea that soon spread throughout USA, since it offered many benefits for entrepreneurs. 🚀
By the 1990s, almost all states had adopted this legal figure, which combined the best of partnerships and corporations. Thus, a consistent legal framework was created so that entrepreneurs could choose this flexible and protective business form. 🙌
Today, LLCs remain very popular, especially in the context of digital commerce and global entrepreneurship. This is because they offer an optimal balance between the protection of a corporation and the simplicity of a personal partnership. In addition, they are characterized by their efficient organizational structure, simplified regulatory requirements and the elimination of double taxation typical of traditional corporations. With these factors, LLCs have positioned themselves as a preferred option for businesses seeking to expand internationally and for digital startups that value speed and the reduction of bureaucracy. 🌎
Are there some states that are more advantageous than others for creating an LLC? For example, Delaware, Wyoming, and New Mexico are some of the most popular, as they have very business-friendly laws, very low taxes, and high confidentiality. If you want to create an LLC in the US, we will always recommend New Mexico.
If you want to create a LLC (Limited Liability Company) in USA, you have to choose carefully the state where you are going to register it. Not all states offer the same conditions and benefits for LLCs. There are some that stand out for their tax, legal and administrative advantages.
Among the most favorable states for LLCs, there are three that stand out: New Mexico, Wyoming and Delaware. These states offer various advantages that may be attractive to Spanish entrepreneurs, depending on their specific needs and objectives. 🙌
New Mexico, Wyoming, and Delaware are the only three U.S. states that allow the formation of anonymous LLCs. This means they don't have to reveal the identity of their owners or managers to the state, giving them significant privacy and protection. This feature is highly valued by entrepreneurs who want to maintain their anonymity and avoid potential issues with tax or legal authorities.
While opening an LLC in New Mexico offers unbeatable advantages, such as low costs and complete anonymity, there is a little-known detail that may catch you off guard: the problem of Sales Tax on digital services. 😮
What exactly is happening? New Mexico applies Sales Tax fairly widely, including on digital services. This means that, for example, if you use the bank card associated with your LLC to purchase services like ChatGPT Plus, Google Workspace, or any online subscription, you could be surprised by an additional charge corresponding to the Sales Tax percentage.
Should you really pay this tax? In reality, a Disregarded Single-Member LLC (transparent to the IRS), without a permanent establishment in the U.S. (even less so in New Mexico), should not be subject to paying Sales Tax. However, most digital providers don't bother checking on a case-by-case basis and opt for the solution "coffee for everyone«: Automatically apply Sales Tax based on the address of the LLC's registration state.
Legal 100% solution? In theory, you could contact each supplier and request a special invoice exempt from Sales Tax, providing a form like the one W8-BEN, to demonstrate your status as a foreign entity with no tax liability in the U.S. Spoiler: For most of us, they will neither answer you nor process it (unless you are a top customer).
What do people do in practice? Here comes the gray area: some people put the LLC address in a state without digital Sales Tax (Wyoming, Delaware, Oregon, Montana, New Hampshire).
Is it legal? It is not tax fraud (the tax does not affect you), but it is “force the systema”, as the address data does not reflect your actual registration status.
Real risk: Almost none in the short term (you are not that relevant to Google), but if one day they detect that the address does not match, they can cancel your account or require you to update your details.
The best Sales Tax-free states for digital services are:
By using these addresses, you'll avoid paying a tax that isn't actually your responsibility.
Additional tip: If you prefer to maintain complete consistency and avoid this "gray area," you can always consider initially registering your LLC in Wyoming instead of New Mexico, although this will entail paying a small additional annual fee.
Now you know this peculiarity. Stay alert and save money wisely! 🚀
If you are a Spanish resident and want to create a company in USA, one of the best options is LLC (Limited Liability Company). It is a legal form that allows you to own a foreign company without legal or tax problems. 🇺🇸
One of the advantages of LLCs is that they are pass-through companies, that is, they do not pay taxes at the entity level, but rather their owners declare them on their personal taxes. Furthermore, by not having a permanent establishment in Spain, they do not have to follow the rules or taxation of a Spanish company. 😎
This makes LLCs ideal for businesses that want to operate globally, without being limited by geographic restrictions that might affect other forms of business. Thus, you can have a diversified customer base and take advantage of the opportunities of the digital market. 🌎
Another advantage of LLCs is that they can be anonymous, which gives you more privacy and protection. However, keep in mind that this may raise suspicions among the tax authorities, especially if you do not have justified reasons to open a company abroad. 😓
Therefore, it is important that you maintain transparency and comply with all tax obligations in both Spain and the United States. So, you will avoid problems with the Treasury and you can enjoy the benefits of having an LLC. 🙌
LLCs must file an information return with the U.S. IRS (Internal Revenue Service) each year. This is form 5472, which is used to report transactions between the LLC and its foreign owners or partners. This form is required for LLCs that have at least one foreign-owned 25%, and failure to comply may result in fines of up to $25,000. We will take care of submitting the forms on your behalf each year, don't worry.
The Treasury will tell you that the "normal" thing to do is to be self-employed or set up a limited company. But the "normal" thing isn't always the most profitable. And certainly not the smartest thing to do.
You may be concerned that the IRS will claim that an LLC doesn't make economic sense, arguing that you should have set up a limited company or become self-employed to bill your clients. However, this couldn't be further from the truth. By opting for an LLC, you can take advantage of several benefits not available with other business structures, ensuring that your choice not only makes economic sense but also positions you for the success and growth of your digital business. Here are some of the key advantages of establishing an LLC in the United States:
🔄 Flexibility in management and structure
A single-member disregarded entity (SME) LLC allows you complete control over business operations without partners or complex structures. You can adapt to the digital market quickly and with less bureaucracy.
🧠 Tax and legal advantages: Beyond the savings, a well-designed LLC gives you structure, legal protection, and peace of mind if you live in Spain.
💳 Operational advantages: Tools, hard currency, global payments… Having an LLC opens doors that an SL can't touch.
🌐 Strategic advantages: Gain a foothold in the U.S. without living there, build a global reputation, and scale your business more easily.
Establishing an LLC in the United States for your digital business can provide you with numerous advantages, from better access to banking services and the stability of the dollar, to the ease of using Stripe USA and the possibility of internationalizing your company. Plus, you'll enjoy limited protection, greater privacy, and simpler accounting, allowing you to focus on the growth and success of your business. 🌟📈
If you have decided to open a LLC (Limited Liability Company) in USA, you should know that there are several responsibilities and obligations that you must fulfill. It is not enough to create the company, but you must also keep it up to date with the legal and tax requirements of both countries.
Among the responsibilities that you must take into account are the following:
Regarding tax obligations, you must take into account the following:
As the owner of an LLC in the US, you must also comply with certain reporting obligations, which are as follows:
In addition to these obligations in the US, you must also comply with some reporting tax obligations in Spain, which are as follows:
Did you know that there are some differences between LLCs in different US states? For example, some states require LLCs to file an annual report, which is a document that summarizes the LLC's activity and data. Other states do not require it, which simplifies management and reduces costs. Therefore, I recommend that you compare the characteristics of each state before choosing where to register your LLC.
You are not going to pay anything there
(Inform only)
If you have one LLC (Limited Liability Company) in USA, you may be wondering if you can pay the 0% tax. The answer is yes, but only if you meet certain conditions. Not all LLCs have the same tax treatment, but it depends on several factors.
Among the conditions that you must meet are the following:
If you meet these three conditions, then your LLC will not have to pay taxes in the US. But be careful, that does not mean that you do not have to declare them. Even if your LLC is passthrough, that is, it does not pay taxes at the entity level, but rather its owners declare them on their personal taxes, you must still file an information return with the IRS (Internal Revenue Service), which is the tax agency of USA 📄
There are some states that do not have state corporate or personal income taxes. These states are Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. If you are going to be ETBUS and create an LLC in one of these states, you will be able to save even more taxes, as long as you meet the conditions that I have explained to you. Therefore, I recommend that you compare the tax advantages of each state before choosing where to register your LLC.
If you want to open a commercial bank account for your business, the first thing you should do is form a LLC (Limited Liability Company) in USA. Banks will ask you for a series of documents that you can only obtain when creating the LLC.
Among the documents you will need are the following:
These documents prove the legal existence of your business and are essential to comply with banking requirements. Without them, you will not be able to open a business bank account for your LLC at a NeoBank. 😓
Not all banks accept foreign LLCs. Some banks only work with businesses that have a physical presence in the US, such as an office or warehouse. Other banks will require you to travel to the US to open the account in person. Therefore, we will recommend banks that offer facilities and advantages for your LLC.
The chart shows the average wait time (in weeks) to obtain an EIN depending on the month in which it is applied for.
🔴 In January and December The wait can last until 10 weeks.
🟡 From March to November, the time is more reasonable, between 4 and 6 weeks.
🟢 And the best time to request it is April to July, with only 3 weeks waiting.
👉 If you're thinking about setting up your LLC and need an EIN quickly, you already know which months to avoid 😉
(Holiday periods seriously affect waiting times.)
CP 575, the long-awaited letter with your EIN number
If you have one LLC (Limited Liability Company) in USA, you will surely want to have a commercial bank account that offers you facilities and advantages for your business. But not all banks are the same, and some can put obstacles in your way or charge you abusive fees. Therefore, we recommend that you opt for neobanks, which are digital banks that operate online and that offer you modern solutions adapted to your needs. 🚀
Among the most prominent neobanks for LLCs, there are two that stand out: Payoneer, mercury and Wise. These neobanks are characterized by their compatibility with the cross-border and digital needs of LLCs. 🌎
Payoneer: It is a neobank of American origin that operates in euros (€) and American dollars ($). It allows you to open a multi-currency account with which you can send, receive and convert money in more than 50 currencies, with the real exchange rate and without hidden fees. In addition, it offers you a virtual and physical debit card, with which you can pay online anywhere in the world.
mercury: It is an American neobank that offers its services in American dollars ($). It allows you to open a business account with which you can manage your business online, with tools such as invoicing, accounting, integrations with platforms such as Stripe or Shopify, and access to financing programs. In addition, it offers you a physical debit card and a virtual one, with which you can pay both online and in physical establishments. If you want to open an account with Mercury, you can do so through this link, which will give you immediate access. 💵
wiseWise is a European neobank, formerly known as TransferWise, that operates in multiple currencies, including euros (€), US dollars ($), and over 50 other currencies. Wise lets you send, receive, and convert money internationally with transparent rates, a real exchange rate, and low fees.
Neobanks are safer than traditional banks. Although they operate online, neobanks comply with the same rules and regulations as conventional banks, and have the same data and fund protection guarantees. Furthermore, by not having physical branches or unnecessary employees, they can reduce their costs and offer you better conditions and services. Therefore, we recommend that you try neobanks and forget about the usual banks.
Did you know USA benefits from the LLCs (Limited Liability Company) that non-residents create? Although these entrepreneurs do not pay taxes on their businesses in the US, the country receives income in another way. 🇺🇸
Each year, LLCs must pay fees to the state where they were registered. These fees vary by state, but are typically a few hundred dollars. If we add up the fees of all the LLCs in the US, the result is a substantial source of income for the country. 💵
But not only that, the US also benefits from the information it collects from LLCs. When creating an LLC, owners must provide certain personal and financial information, such as an EIN (Employer Identification Number) and an ITIN (Individual Taxpayer Identification Number). This information allows the US to monitor international financial activities and strengthen its market intelligence, giving it a competitive advantage in the global economy.
There are more than 2 million LLCs registered in the U.S. LLCs are very popular among American and foreign entrepreneurs, offering them great flexibility and protection. Additionally, each state has its own rules and advantages for LLCs, so you have to choose carefully where to register them. For example, Delaware is one of the most favorable states for LLCs, as it has very modern and business-friendly legislation, a court specialized in business matters, and very low taxes.
Many entrepreneurs believe that LLCs (Limited Liability Company) in USA They do not need to keep formal accounting. But this is a myth that can cause problems. Although LLCs do not have to file complete financial statements, they do have to report certain accounting information at the federal level. 🇺🇸
The entities that request this information are the IRS (Internal Revenue Service), FinCEN (Financial Crimes Enforcement Network), and the BEA (Bureau of Economic Analysis). These entities require specific data about the LLC's financial situation, such as costs, revenue, expenses, profits, transactions, assets, and liabilities. This information is reported on specific forms, such as Form 1120, Form 5472, and Form BE-13. 😓
Therefore, it is important that you do not make the mistake of reporting incorrectly or deducting expenses inappropriately. Some entrepreneurs think that they can declare any expense as deductible, to reduce taxable income and pay less taxes in Spain. But this is not only illegal, it is also risky. Although LLCs do not have to send supporting documents, except in the case of an audit, it is essential that the accounting reflects the financial reality of the company, since this data will influence the calculation of personal income tax and taxes payable in Spain. 💵
To avoid errors in the accounting management of a US LLC, you must know which expenses are deductible and which are not. Deductible expenses are those that are related to the course of business and that are necessary and reasonable. Non-deductible expenses are those that are not related to the business, that are fines or penalties, or that are donations. In another section, we will explain more about deductible and non-deductible expenses for a US LLC. 🙌
Some states that require LLCs to maintain complete accounting and file financial statements? These states are California, New York, Pennsylvania and Utah. If you create an LLC in one of these states, you will need to keep detailed records of your income and expenses, and file a balance sheet and income statement with the state.
If you have one LLC (Limited Liability Company) in USA, you should know that you have to include the profits of your business in the calculation of the Income Tax (Personal Income Tax) in Spain. You must not only declare the amounts you withdraw from the company, but also those you leave accumulated. This way, you will avoid problems with the Tax Agency and comply with your tax obligations. 🇪🇸
But be careful, there is a very common mistake that can make you pay more taxes than you owe. Some entrepreneurs think that they only have to declare and pay taxes on the company's actual withdrawals, that is, on the money they put in their pockets. But this is not the case, at least for LLCs. US tax rules state that LLCs must report all accrued profit at the end of the tax year, regardless of whether they withdraw it or not. 😓
So, How can you reduce taxes legally? The key is in maximize deductible expenses. Deductible expenses are those that are related to the course of business and that are necessary and reasonable. By deducting these expenses, you reduce the tax base, that is, the amount on which taxes are applied. Thus, you pay less taxes and increase your profitability. 💵
But not all expenses are deductible. There are some that you cannot subtract from your income, such as personal expenses, fines or penalties, or donations. If you don't know which expenses you can deduct and which you can't, you can make serious accounting errors, which can lead to fines or penalties. Therefore, it is crucial that you know well what expenses can be deducted, a topic that we will explain in more detail in another section. 🙌
If you have one LLC (Limited Liability Company) in USA, you should know that you can deduct some expenses from your business to pay less taxes. But not all expenses are deductible, only those that are linked to business activity and that are necessary to generate income. 🇺🇸
Deductible expenses are those that you can subtract from your total income to calculate the tax base of the Income Tax (Personal Income Tax) in Spain. Thus, you reduce the amount on which taxes are applied and increase your profitability. 💵
But be careful, you cannot deduct personal expenses, such as clothing, entertainment, vacations, etc. Doing so involves legal risks, such as the loss of limited liability protection in LLCs and banking problems due to misuse of business funds. 😓
Furthermore, including personal expenses as deductibles falsifies the company's financial situation and can be interpreted as tax fraud. Both the IRS (Internal Revenue Service) in the US and the Tax Agency in Spain have mechanisms to detect these practices through banking transactions. Therefore, it is vital to consult accounting and taxation experts to ensure compliance with tax regulations and avoid errors. 📄
To carry out correct tax accounting, you must adopt a proactive and not reactive attitude. That is, you should anticipate possible audits and request invoices in the company's name for legitimate expenses. This way, you will be able to justify your deductions and demonstrate that they are real and reasonable. 🙌
But don't use the company to cover personal expenses or try to pass them off as deductibles. This is illegal and can lead to investigations by the Treasury, which can easily detect the simulation of expenses not related to business activity. If you are caught, you could be fined and have to pay what is due plus interest for late payment. 😱
You should also be careful with some recent practices in Spain, such as the acquisition of NFTs (Non-Fungible Tokens) or the issuance of invoices between companies of the same owner to artificially generate expenses and reduce the tax base. These practices are borderline legal and could constitute tax fraud. It is essential that you correctly record expenses and be aware of the categories that often cause confusion among LLC owners, especially in the United States, to avoid errors and possible legal consequences. 😕
There are some expenses that are deductible in the US but not in Spain, or vice versa. For example, in the US you can deduct the 50% from the cost of meals for business purposes, but in Spain you can only deduct the 10%. Or, in Spain you can deduct the 30% from the cost of vehicles used for economic activity, but in the US you can only deduct the part proportional to commercial use. Therefore, to maintain our health, I recommend that you abide by the deductible expenses of Spain.
Yeah have a LLC (Limited Liability Company) in USA U.S., can deduct the bills necessary for the activity of the business…
BUT eye: Yeah are resident fiscal in Spain, the benefits of you LLC pay taxes in he Income Tax Spanish low he regime of attribution of rents, and only you will be able to deduct the bills that recognizes the law Spanish, although he IRS sea further flexible.
That is to say: The benefit that you have to declare in Spain is NOT the net amount after deducting all the expenses allowed by the IRS, but the Net after deducting ONLY the expenses allowed by Spanish personal income tax law.
¿In that tea affects?
Carry you accounting American it better possible, but for the statement in Spain you will have that recalculate he benefit according to the law Spanish.
By example: meals, car, trips, training… the law Spanish is a lot further restrictive and No accepts deduct all it that allows he IRS.
He benefit to declare will be elderly that he that you see in he bank either in you accounting of the LLC.
¿As do it good?
¿That means this in the practice?
You can do the accounting of the LLC with all IRS deductible expenses for everyday use, but when filing your tax return in Spain, you will have to recalculate the profit according to the criteria of the Spanish Personal Income Tax (IRPF), and deduct only what the Spanish Treasury accepts.
The rest of the expenses (which the Spanish Treasury does not accept but the IRS does) help you pay less taxes in the US if you ever have them, but not here.
The uncomfortable reality is that the Treasury isn't naive, and it scrutinizes every detail when it suspects something isn't right. It inspects bank transactions, expenses, and may even scan your social media accounts to detect inconsistencies. If it detects anything suspicious, it will try to reclassify those expenses, and then the burden of proof will be on you.
Here's a general guide to common expenses and how to manage them safely and with common sense. It also explains what you can easily deduct and what expenses are more of a "gray area":
It's very important to keep receipts for all the expenses you deduct and keep good accounting records in Excel/Sheets. This way, you'll be able to prove the deductible expense in the event of an inspection by the Treasury or the IRS. If you don't have receipts or don't keep an organized record of your expenses, you could have trouble justifying your deductions and could face fines or penalties. Therefore, we recommend that you keep receipts for all the expenses you deduct and keep good accounting records in Excel/Sheets, which will allow you to keep track of your income and expenses.
No, and be careful with this one. myth that circulates around there.
Some "LLC sellers» they assure that you can deduct Up to 1500 $ (per month!) for working from homeThe basis of this error usually comes from a deduction that exists in the US called “home office deduction”, but It does not apply as you think, nor does it work in your context..
Let's take it one step at a time 👇
In the United States:
There is a deduction for teleworking called Simplified Home Office Deduction, that reaches up to 1,500 $ per year, not per month.
And it only applies if:
Are self-employed under the federal tax code
You have a space exclusive and habitual working from home
That space is perfectly documented (m2, plan, photos…)
➡️ But if you use one LLC disregardedIf you're a Spanish taxpayer, this deduction doesn't apply to your personal income tax. It only applies to those who file taxes directly in the U.S.
In Spain:
You also cannot just deduct a percentage of your primary residence.
The deduction for household expenses is only allowed if:
You have a space affected by economic activity, and
Are registered as self-employed in Spain, and
You can prove that this space no personal use
➡️ And most importantly: If you recognize part of your home as the LLC office, you may be creating a Permanent Establishment (PE).And there, things really get complicated.
💡 Conclusion: Neither 1,500 $/month in the US, nor 15,000 $/year in SpainIf you work from home, you can deduct what's reasonable and justified. Period. Don't confuse real deductions with tax marketing. Optimizing isn't inventing.
If you have one LLC (Limited Liability Company) in USA, you should know that legal and transparent accounting must be carried out. But not all business owners do this, and some make the mistake of including non-legitimate expenses in their LLCs. This can cause problems with the IRS (Internal Revenue Service) in the US and with the Tax Agency in Spain. 🇺🇸 🇪🇸
Some business owners try to reduce their taxes by including personal expenses as if they were business expenses by requesting invoices in the name of the LLC. For example, they include gas for a personal trip, clothing, entertainment, etc. But this is illegal, and it is called Tax Simulation. If the expense is not related to the business activity, it is not deductible, regardless of who it is billed to. 😓
Tax Simulation is a risky practice that can lead to penalties. If the IRS or the Tax Agency discovers that you have included non-legitimate expenses in your LLC, they could fine you and even apply retroactive penalties. Therefore, it is crucial that you manage your LLC's accounting legally, without assuming that the absence of immediate audits allows improper practices. 💵
Additionally, you should be careful with some questionable practices that are growing in Spain among LLC owners. Although they may seem beneficial in the short term, these practices can be illegitimate and lead to legal problems. For example, some people acquire NFTs (Non-Fungible Tokens) or issue invoices between companies of the same owner to artificially generate expenses and reduce the tax base. These practices are borderline legal and could constitute tax fraud. 😕
If you have one LLC (Limited Liability Company) in USA and one SL (Limited Company) in Spain, you should know that there is a billing strategy between companies that some owners use to pay less taxes. But this strategy can be illegal and dangerous. 🇺🇸 🇪🇸
The strategy consists of creating an LLC that invoices services to its own SL, with the objective of reducing the profits reported by the SL and thus reducing its tax burden. For example, if you have an LLC that sells products online and an LLC that offers marketing services, you could have the LLC bill the LLC for marketing services, thereby reducing the SL's profit. 💵
But be careful, this strategy is only legal if the invoices reflect real services and are valued according to the market. If the invoices do not correspond to services actually provided or are overvalued, this can be considered tax fraud. Tax fraud is a crime that can lead to fines, penalties and even jail time. 😓
To avoid legal risks, it is crucial that you document and prove the effective provision of services between your LLC and your SL, ensuring that all operations are legitimate and justified before the Tax Agency. You must keep in mind that the Tax Agency can review the invoices and check if the services are real and if the prices are in line with the market. If it detects any irregularity, it can sanction you and demand payment of the evaded taxes. 😱
Did you know that there is a rule that regulates linked operations between companies of the same owner? It is called the arm's length principle, and it establishes that related-party transactions must be carried out at market prices, that is, at the price that would have been agreed between independent parties. This principle seeks to prevent prices from being manipulated to transfer profits from one company to another and avoid paying taxes.
If you have one LLC (Limited Liability Company) in USA and you want to pay less taxes, perhaps you have heard of a strategy with NFTs (Non-Fungible Token) that some LLC owners in Spain are using. But this strategy can be illegal and dangerous. 🇺🇸 🇪🇸
The strategy consists of creating and self-purchasing an NFT to generate accounting losses that reduce taxes. An NFT is a unique digital asset that is based on blockchain technology. It can be a work of art, a tweet, a video, etc. NFTs can be bought and sold with cryptocurrencies, such as ether or bitcoin. 💵
The idea is to transfer funds from the LLC to cryptocurrency and then create an NFT from a personal account. This NFT is sold to the LLC at a high price, and then repurchased at a much lower value, creating an artificial loss on the LLC's books. For example, if you have an LLC with profits of €50,000, you could create a digital art NFT and sell it to your LLC for €50,000. You could then buy back the NFT for 500 EUR. Thus, you would generate a loss of EUR 49,500 for the LLC, and reduce your taxable profits to almost zero. 😓
But be careful, this strategy enters a legally dubious area and requires caution. It could be considered tax fraud, since it involves manipulating prices and losses to avoid paying taxes. Tax fraud is a crime that can lead to fines, penalties and even jail time. 😱
Therefore, we recommend that you consult with tax advisors to avoid possible legal violations. You should keep in mind that both the IRS (Internal Revenue Service) in the US and the Tax Agency in Spain can review NFT operations and check if they are real and if the prices are in line with the market. If they detect any irregularity, they can sanction you and demand payment of the evaded taxes. 📄
If you want to create a LLC (Limited Liability Company) in USA, we offer you a fast and simple service so that you can have your company operational in a short time. We explain the steps we follow to create your LLC in New Mexico, one of the most advantageous states for LLCs.
At the end of this process, your LLC will be operational in a period of 1 to 3 months, depending on the speed of the IRS. This way, you can enjoy the benefits of owning a business in the US, such as limited liability protection, tax flexibility, privacy, and ease of management. 🙌
Is New Mexico one of the most LLC-friendly states, charging no state taxes or annual fees, and offering a high level of confidentiality and protection for owners? Therefore, we recommend that you choose New Mexico as the state to register your LLC, as you will save money and problems.
If you want to create a LLC (Limited Liability Company) in USAWe offer comprehensive and affordable services so you can have your business up and running quickly. We'll explain the benefits of our service package, which costs $1,750 per year and will be extended until December 31, 2024, for existing customers.
Our service package includes:
This plan is designed to simplify the administration of your LLC by 2024 and ensure tax and legal compliance in the United States. This way, you can enjoy the benefits of owning a business in the US, such as limited liability protection, tax flexibility, privacy, and ease of management. 🙌
When you hire our service for the creation and management of your LLC in the USA, you will receive a set of essential documents that prove the legal existence of your company and ensure its regulatory compliance. This documentation will help you operate correctly, open bank accounts and demonstrate the legitimacy of your structure.
📂 Documents you will receive
1️⃣ EIN (Employer Identification Number)
2️⃣ SS-4 (EIN Application)
3️⃣ Certificate of Formation / LLC Bylaws
4️⃣ Operating Agreement
5️⃣ Contract with the Manager (if applicable)
6️⃣Founder's Declaration
8️⃣ BE-13C (Reporting of Foreign Investment in the U.S.)
With this documentation, your LLC will be fully prepared to operate in the US, open bank accounts and comply with tax regulations without complications. Depending on your specific case, some documents may not be necessary or may require additional information.
The following table compares the costs associated with operating as a freelancer versus maintaining an LLC, highlighting the differences in annual financial burden. Structuring as an LLC can be significantly cheaper, offering savings of 55-85%!
| AUTONOMOUS | COST | COST | LLC |
|---|---|---|---|
| Self-Employed Fee | €80-300/month | 1750 $ / year | Maintenance LLC |
| Monthly Management | 50 - 150 € / month | 150 € / year | Specific Management |
| VAT | (If there is non-payment, you will advance a 21% to the treasury) | N/A | N/A |
| TOTAL | 130 - 450 € / month 1560 - €5400 / year | 142€ / month 1700 € / year | TOTAL |
Another way of looking at it
Within 30 years being Self-Employed VS with LLC.
Creating an LLC in the US without help It may seem like an epic adventure. But if you do it without a map or compass—without knowing exactly where you're sailing—you could easily end up running aground in murky fiscal waters. 🏴☠️
Without experience, you're flying blind. And that, in international taxation, isn't romanticism... it's real risk.
For example:
💥 Fines for not properly filing Form 5472 (yes, the one no one mentions, or the BE-13C) can exceed 25,000 $. It's like hitting an invisible iceberg: you don't see it coming... until it's too late.
⏳ Time, mistakes, and pitfalls (that cost money)
Many people jump into creating an LLC thinking it's a "click, click, and done" thing.
But without prior training, It will take you weeks (or months) in understanding:
And there's more:
The most common mistake is forgetting the Operating Agreement.
Without it, your LLC is like a ship without a rudder: no legal direction, no protection, and easier to sink if the IRS comes.
Being able to sleep well at night… It is priceless.
⚠️ Maintenance is not optional
Even if you set up your LLC well, that's just the beginning.
Then you have to maintain it:
➡️ All this it has to be done every yearAnd if you don't do it, they don't warn you: they penalize you.
🚀 The difference between a hobby and a serious business
Are you building a spontaneous venture or a solid foundation for financial freedom?
With our service, you don't just get help creating your LLC.
You have a captain on board.
We take care of the paperwork, deadlines, forms, and communication with the U.S.
You just take care of what you do best: grow your business.
✅ Ready to sail without fear?
Your LLC, done right, is your ship.
We, your onboard team. And the U.S., the ocean where you can play with advantage.
Are you coming aboard? 🌊
🛡️ Want to go further? (FIP + Holding LLC)
If you are looking to further protect your personal assets and have a more powerful tax structure, you can consider combining your LLC with an American Holding Company and a Private Interest Foundation (FIP) Panamanian.
This advanced structure is especially effective if you have high turnover or significant assets to protect.
✅ Advantages:
📌 More information: 👉 FIP.Devil.Marketing☂️
Official websites and legislation:
Agreement between Spain and the United States to avoid double taxation (Official State Gazette)
Official State Gazette on VAT for digital services in Europe
Tax and accounting tools:
TaxDown – Simple and guided tax return.
Where do my taxes go? – Information on the use of taxes in Spain
European VAT management strategies:
Paddle – Merchant of Record for simplified management of European VAT on B2C sales.
Lemon Squeezy – Alternative as Merchant of Record to manage VAT in Europe.
Resources officers of others jurisdictions/taxation international
Guides, resources and services recommended
Videos and explanations practices
Extra: Legislation European and directives
📍 Although the law allows it, you are not alone
Yes, you can create an LLC yourself. But even then, the law obliges you to have:
• A Registered Agent in the U.S.
• A Physical Business Address in the U.S.
This agent isn't just for show. He's the one who receives official notifications, including:
• IRS Letters
• Legal notices
• Demands
➡️ Basically: is your contact with American legal reality.
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You cannot have salaried employees in Spain hired directly by your LLC, as this would create a "Permanent Establishment" and require you to pay taxes as a Spanish company.
However, you can hire freelancers, as long as they don't work exclusively for you or use permanent physical facilities in your name.
Of course it's possible! You can even register your business without having to travel, obtain a visa, a social security number (SSN) or an individual taxpayer identification number (ITIN). U.S. regulations do not impose restrictions on business formation for citizens around the world, except in some countries subject to trade sanctions.
If the LLC operates online without a physical presence in the United States, has no employees or dependent agents, and none of its partners are residents or citizens of the United States, it will be classified as Foreign Owned and will not be considered “Engaged in Trade or Business.” in the US» (Engaging in Trade or Business in the United States). By not having the ETBUS designation, it benefits from a territorial exemption in tax terms. In short, if the LLC meets these requirements, it will be exempt from taxes in the United States. Otherwise, you will not enjoy the exemption and must obtain an ITIN number and pay taxes in both the US and your country of tax residence.
Any entrepreneur can benefit in various ways to reduce tax payments at the end of the year. However, digital businesses (such as Amazon FBA, marketing specialists, consultants, coaches, mentors, therapists, etc.) that are also NOT face-to-face, have the potential to completely replace the role of the self-employed in Spain.
The LLC offers the possibility of billing WITHOUT VAT, NO SELF-EMPLOYED FEE, WITHOUT MANAGEMENT, and also allows you to pay less Income Tax at the end of the year by subtracting DEDUCTIBLE EXPENSES to the profits of that fiscal year.
If you have a physical 100% business, such as a restaurant, barbershop or beauty center, the LLC is not the only solution, but a tool that should COMPLEMENT your SL. This will allow you to generate expenses and pay less taxes in Spain at the end of the year.
Typical case: Juan, owner of a laundry, invoices and earns €1,000 net in April from his SL.
Theoretically, Juan would pay a % on the profits (Profit Tax), with a general rate of 25%. This means that €250 goes to the Treasury. Then, you withdraw €750 from your individual, which is again taxed in your personal income tax, say a 20%, resulting in €150 for the Treasury. Although there are other fixed costs (Self-Employed Fee, management), in this case there is not much room for maneuver. The result: Juan receives "net" of less than €600.
With LLC: Juan invoices €1,000 net from his SL, but this time he has an LLC.
It generates an expense of €1,000 from the LLC, labeled “web management and social networks.” Juan pays €1,000 from the SL to the LLC. In the eyes of the Treasury, the SL has earned €0 that month. You save 25% of taxes for free. It is true that those €1,000 will later be taxed in personal income tax, but a FREE 25% is nothing to sneeze at.
End of story. Things become incredibly simple with an LLC.
Model 720 (Informative): The LLC must inform the State Tax Administration Agency (AEAT) about the assets and rights located abroad that belong to it, provided that the total value exceeds 50,000 euros. This filing is made annually and includes detailed information about bank accounts, securities, insurance, property, and other relevant assets.
Related transaction information: In the event that the LLC carries out transactions with related parties, whether they are people or entities with which it maintains a special relationship, it is necessary to maintain documentation that supports said operations and establishes its market value. In the case of an inspection, this information will be required to be provided to the AEAT.
Annually, we will file the following forms with the IRS on your behalf:
Form 1120: This document informs the IRS about the income and expenses incurred by your LLC during the tax year.
Form 5472: This form provides the IRS with information about the type of business and the details that will be filed on Form 1120.
Counting from the year you founded the company and every 5 years, you must fill out a BEA report:
Additionally, if you operate or plan to operate in the United States, you may need other forms. Initially, if your activity is focused on Europe, you probably don't need to worry about them:
Form W-7: Used to request the ITIN number from the IRS, similar to the EIN, allowing you to comply with your tax obligations in the country.
Form 1040NR: This form is essential at the end of the tax year to demonstrate to your country of tax residence that you have paid taxes in the United States, which could allow you to deduct them in your country of taxation.
Form 8-BEN: Requested by companies that must pay taxes on behalf of your company in the United States. In this case, the ITIN will be required.
It depends on the type of client and where they are located:
✅ B2B (European companies): No VAT is applied thanks to the reverse charge, provided that your LLC does not have a permanent establishment in the EU.
✅ B2C outside Europe: There is no VAT.
✅ B2C in Europe: The first ones €10,000 per year are exempt from VAT thanks to the one-stop shop (OSS) regime in force since 2021.
💡 What if I exceed €10,000 in B2C sales in Europe?
If you pass that threshold, you would have to apply the VAT of the customer's country and register in the OSS. However, you can avoid this management by using a Merchant of Record (MoR) as Paddle or Lemon Squeezy, who are responsible for collecting and paying VAT for you.
So, in most cases, Yes, you can invoice without VAT. with an LLC… as long as you structure your business well. 🚀
Before making any expenditure, it is crucial to keep a detailed record of it. You can use a spreadsheet like Excel to keep track efficiently, and in order to make this task easier for you, we will provide you with a template to use.
That said, it is important to note that there are certain expenses that your LLC will be able to deduct, and therefore, you will need to keep the corresponding invoices and transfer records and ensure that they are registered in the name of your LLC:
Common Deductible Expenses:
Automobile Expenses: If the LLC uses vehicles for business purposes, it is possible to deduct automobile-related expenses, such as gasoline, maintenance, and depreciation.
Business Education Costs: Costs associated with continuing education or business-specific training may be deductible.
Commercial Insurance: Insurance premiums for commercial coverage, such as liability insurance, may be deductible.
Charitable Contributions: Donations to charities may be deductible if they meet certain requirements.
Commercial Taxes and Licenses: The fees and licenses required to operate the business are deductible expenses.
Keep in mind that you will not be able to deduct expenses that are directly linked to the country, such as offices or property, as this could create tax complications for your LLC by operating exclusively from your country of residence.
If your LLC makes a clear separation between business and personal accounts, maintains accurate accounting in Excel, meticulously saves all invoices, and has an Operating Agreement, you have no reason to worry. However, if not, there is the possibility that a judge in the United States will 'pierce the corporate veil', putting the legal protection of the LLC at risk. For this reason, it is essential to rigorously comply with all the aspects mentioned above.
It is only required that the company be duly incorporated and current with all its documents, including the EIN number (company tax identification), and the manager's updated passport. It is not necessary to have a Social Security Number or ITIN. We cannot guarantee account opening, as banks must conduct a security check called KYC (Know Your Customer), which is mandatory under federal regulations established in the Patriot Act, before approving a customer. .
In the event that we are unable to register your business within 60 days due to an error on our part, we will refund the full amount you paid, with no questions or explanation required.
You must present clear documentation demonstrating that there is no Permanent Establishment in Spain.
Always have on hand:
Operating Agreement establishing effective management outside of Spain.
Manager contract.
Bank statements and invoices for expenses and income.
Forms 5472 and 1120 filed in the U.S.
This will help you clearly defend your case.
Yes you can, but keep in mind that any profit generated from crypto or NFT transactions must be declared on your Spanish personal income tax return under the income attribution regime. The Treasury closely monitors these activities, so keep accurate documentation of all transactions.
The easiest way is to use platforms like Wise, Payoneer or Stripe, which allow you to receive payments in euros, easily convert currencies, and transfer funds to your European bank account from the LLC.
YeahEven if you don't have any profits, you'll need to file information forms 5472 and 1120 in the U.S. each year to keep your LLC active.
In Spain, if you don't have any real profits, you won't be required to pay personal income tax, although it's a good idea to keep supporting documents to prove your lack of income.
It is not legally mandatory in all states, but it is highly recommended. The Operating Agreement protects your limited liability, strengthens your position against tax audits, and prevents misunderstandings about who actually exercises effective management of the company.
In LLC.Devil.MarketingWe are with you every step of the way to open your bank account from the comfort of your home. We do our best to make the process easier for you, but keep in mind that the final say lies with the banks and their own regulations.
If for some reason things don't go as planned, no problem. We offer you 60 days from when we receive your documents to request a refund, as long as there are no delays from the IRS or the State, as those are out of our control.
At times, the US or Spanish tax authorities may require additional information, which could complicate the process. In those cases, and even if we regret it, we will not be able to make a refund.
We understand a lot about business, but for legal or tax matters, it is best to consult an expert. A lawyer or accountant will be your best ally for binding tax and legal consultations.
Although we are here to support you, remember that we are not lawyers. For those more complex legal dilemmas, we will help you find a qualified professional.
The information provided may change, so we recommend that you do not consider it immutable.
