Opening an LLC in Delaware, Wyoming or New Mexico while living in Spain does not make taxes disappear: it changes where they are declared and under which rules. This guide explains, at an orientation level, what an ecommerce seller resident in Spain should review before operating through an LLC.
Tax residence of the LLC: the risk of managing it from Spain
A foreign company can be treated as Spanish-resident if its place of effective management is in Spain (article 8 of the Corporate Income Tax Law). If the sole member and manager lives in Spain and takes every decision from home, the tax authority can argue the LLC is managed from Spain. This is a known risk and depends on the facts of each case.
How Spain treats the LLC
In the US, a single-member LLC owned by a foreigner is usually disregarded for IRS purposes. Spain has no single automatic rule: the Directorate-General for Taxes has answered rulings on LLCs and the outcome depends on the entity’s features and its US classification. Do not assume it pays nothing here or is taxed like a sole trader without prior analysis.
- If treated as transparent, income may be attributed to the resident member.
- If treated as a company, Corporate Income Tax and dividend rules may apply.
- The two readings create different obligations; the choice is not free and cannot be improvised afterwards.
Reporting obligations from Spain
- Form 720: informative return on assets abroad above the thresholds; it can reach US accounts.
- Other forms: related-party or tax-haven rules may apply depending on the case.
- VAT: if the LLC sells to EU customers, VAT follows the destination or stock country, not the owner’s residence.
US obligations that do not go away
The LLC must still file Form 5472 with the pro forma 1120 each year and maintain its EIN, registered agent and annual report. See Forms 5472, 1120 and EIN.
When a European company is usually better
For a Spanish resident selling mostly in Europe, a European company (such as an Estonian OÜ) or a Spanish company is usually easier to justify and to run with VAT. The full comparison is in US LLC or Estonian company for Amazon FBA and in the US LLC for ecommerce guide.
Frequently asked questions about an LLC if you live in Spain
Do I have to report the LLC in Spain? Yes: at least you must analyse how its income is attributed and whether reporting duties apply.
Does an LLC let me avoid Spanish taxes? No. A Spanish resident is taxed on worldwide income and the structure does not remove that.
Can the LLC be Spanish-resident? It can happen if it is effectively managed from Spain. It is assessed case by case.
This guide is informational and not tax advice; exact taxation depends on your situation and current rules.