What Is a US Partnership?
Under US business law, the term partnership covers several pass-through structures:
- General Partnership (GP): all partners have unlimited personal liability for the entity’s debts.
- Limited Partnership (LP): there is at least one general partner with unlimited liability and one or more limited partners whose liability is capped at their capital contribution.
- Limited Liability Partnership (LLP): similar to an LP but with limited liability for all partners; common among law firms and accounting practices.
- Multi-member LLC (MMLLC): by default, the IRS taxes it as a partnership for federal income tax purposes, even though it is legally an LLC.
The defining feature is that the IRS treats a partnership as fiscally transparent: the entity itself pays no corporate income tax. Instead, it issues a Schedule K-1 to each partner showing their proportionate share of income, expenses, deductions, and credits, and each partner reports those items on their own return (Form 1040 for individuals).
Treatment in Spain: The Three-Criteria Test
Spain applies its own classification analysis independent of how the IRS categorizes the entity. The DGT Resolution of February 6, 2020 (BOE-A-2020-2108) establishes three cumulative criteria for a foreign entity to be treated as a flow-through (entidad en atribución de rentas) under Spanish law:
- The entity is not subject to a personal income tax in its state of formation.
- The entity’s income is attributed to its partners under the laws of the state of formation.
- That attribution occurs by the mere act of earning the income, without any distribution being required.
A US partnership in default tax status clearly satisfies all three criteria: it pays no corporate tax, the Schedule K-1 attributes income to each partner in the year it is earned, and that attribution is automatic regardless of whether any cash is actually distributed.
If the partnership satisfies the test, the Spanish partner must include their proportionate share of income in their personal income tax (IRPF) for the year in which the entity earns it (Art. 87 LIRPF, Law 35/2006) — even if they have not received a single dollar. The character of the income is preserved: if the partnership generates business income, the partner reports it as such; if it generates dividends from investees, the partner reports them as investment income (Art. 88 LIRPF).
Beckham Regime and Transparent Foreign Entities: DGT V1372-25
Binding ruling DGT V1372-25 (July 21, 2025) is especially relevant for the Beckham + partnership scenario. The DGT analyzed a taxpayer under the special impatriate regime (Art. 93 LIRPF) who held an interest in a transparent foreign entity (in that case, a UK LLP). The DGT concluded that income attributed from a transparent foreign entity does not cause the taxpayer to lose their Beckham status, provided the entity does not operate in Spain and does not generate income through a Spanish permanent establishment. The attributed income is treated as income obtained without a permanent establishment and classified according to its economic nature.
Spain-US Treaty and Article 1.6
The 2019 Protocol (BOE-A-2019-15166) introduced Art. 1.6 into the Spain-US Convention, allowing income earned through a fiscally transparent entity in the US to be claimed directly by the beneficial owner partner. Since a partnership is transparent for the IRS, the Spanish partner can invoke the treaty as an individual resident in Spain — and individuals qualify automatically under the LOB test in Art. 17 of the Convention (LOB clause).
Caution: A Check-the-Box Election Changes Everything
If the partnership elects corporation treatment via check-the-box (Form 8832), it ceases to be transparent for the IRS and Art. 1.6 of the treaty no longer acts as a pass-through bridge. In Spain, the AEAT will still evaluate whether the entity meets the three criteria of BOE-A-2020-2108; if after the election the entity pays corporate tax in the US, those criteria are no longer satisfied and the entity becomes opaque for Spanish purposes as well.
In our experience at BMC, the first question we ask any client with a US partnership is always: has there been a check-the-box election? The answer changes the entire analysis — and the reporting obligations that flow from it.