For a nonresident alien living in Spain, owning a U.S. single‑member LLC can be a practical way to operate internationally, but it also creates parallel and unavoidable tax obligations in both the United States and Spain. The main risk lies not in high taxation, but in misunderstanding how each country interprets the same structure differently.

From a U.S. perspective, a single‑member LLC is generally treated as a disregarded entity, meaning income is attributed directly to the owner and taxed only if it is U.S.‑source or effectively connected with a U.S. trade or business. If you physically perform the work in Spain, the income is considered foreign-sourced under U.S. tax law (IRC § 861(a)(3) and Treas. Reg. § 1.861-4). Even when no U.S. income tax is due, information reporting obligations remain, particularly Form 5472 with a pro‑forma Form 1120, which carries severe penalties if omitted.

Spain, however, takes an entirely different approach. Spanish tax law does not recognize the LLC as a legal or fiscal entity, regardless of whether it is disregarded or taxed as a corporation in the U.S. Instead, Spain looks through the LLC and treats the activity as an “actividad económica” carried out personally by the individual. As a result, the income is taxed under IRPF as self‑employment (autónomo) income, and Spanish social security obligations may also arise.

This structural mismatch means that the LLC does not provide asset or tax separation in Spain, and U.S. tax classifications do not automatically carry over. The same income may therefore be treated as business income of an individual in Spain while being reported differently in the United States, creating timing differences, classification conflicts, and potential double taxation if not properly coordinated.

The most common, and costly errors stem from assuming that:

• No U.S. tax means no U.S. filings.
• The LLC shields the individual from Spanish taxation.
• U.S. entity classifications apply internationally.

Effective compliance requires coordinated U.S.–Spain tax planning, careful documentation of where services are performed, and strict adherence to reporting obligations. In cross‑border structures, procedural mistakes often cost significantly more than the tax itself.

For more information, you can contact us, US Tax Consultants. Do not hesitate to contact us by phone at +34 915 194 392, by email at info@ustaxconsultans.es , or through a free consultation, which can be booked via the “Book a free appointment” link on our website.