At BMC, I talk every week with executives and entrepreneurs who have LLCs, C-Corps, or US accounts and have just relocated to Spain — and discovered that Modelo 720 affects them in ways nobody warned them about. It’s not just that they need to declare their LLC membership interest: that interest can appear simultaneously in all three blocks of the return, the post-CJEU reform eliminated the most extreme penalties but left the filing obligation intact, and FATCA creates an information-exchange asymmetry that most advisors oversimplify. This guide covers the full mechanics of Modelo 720 for US assets: the three blocks, binding ruling DGT V0681-25, valuation, coordination with IRPF and ITSGF under Beckham, and what FATCA actually exchanges.
The Misunderstanding I See Most Often at BMC
The version I hear most frequently is this: the client saw another advisor, was told Modelo 720 is “for foreign assets,” concluded their US bank accounts were covered, and nobody ever explained that their LLC membership interest is also a foreign asset — one that goes in a different block. At best they arrive with an incomplete Modelo 720; at worst, having never filed at all because someone told them “with an LLC you don’t need to if there were no distributions.”
The underlying error is conflating two entirely separate questions. The first is whether the LLC generates income you must report on your Spanish IRPF — which depends on whether it’s fiscally transparent or opaque under Spanish law, as I cover in our guide on how a US LLC is taxed in Spain. The second, completely independent question, is whether you have an informational obligation to declare your LLC membership interest. And the answer to that second question does not depend on whether the LLC distributed profits, whether it’s transparent or opaque, or whether you’re on the Beckham regime: it depends on whether the value of your interest exceeds €50,000.
Modelo 720 is an informational obligation, not a tax. It generates no payment liability. But omitting it or filing it incorrectly carries penalty exposure, and — more relevant in practice — it can trigger an IRPF audit if the AEAT cross-references the assets you declared against the income you reported and finds discrepancies.
The Applicable Framework Post-STJUE C-788/19 and Ley 5/2022: Penalties Changed, the Obligation Did Not
The Modelo 720 regime underwent its biggest transformation since it was created with the Court of Justice of the EU judgment of January 27, 2022, Case C-788/19 (European Commission v. Spain). The CJEU held that the original penalty framework violated EU law by restricting the free movement of capital: penalties proportional to the value of undeclared assets (150%), the automatic presumption of unjustified income without a statute of limitations, and the impossibility of proving the lawful origin of funds were all incompatible with the Treaty’s fundamental freedoms.
The legislative response was Ley 5/2022, of March 9 (BOE-A-2022-3784), in force from March 11, 2022. What Ley 5/2022 did was replace the Modelo 720-specific penalties with the general penalty framework of Ley 58/2003 General Tributaria (LGT). The practical outcome:
| Situation | Current penalty (post-Ley 5/2022) |
|---|---|
| Late filing without prior AEAT request | €100 per data item or set of data; minimum €1,500 |
| Late filing after AEAT request | €200 per data item; minimum €3,000 |
| Omission of associated IRPF/IS income | IRPF/IS assessment + 1–20% surcharge (voluntary) or 50–150% penalty (serious or very serious infraction) |
What Ley 5/2022 did not do is eliminate the filing obligation. The legislative text was unambiguous on this point: the Eighteenth Additional Provision of the LGT — which establishes the informational obligation on foreign assets — remains intact. Modelo 720 continues to be mandatory in 2026 for any Spanish tax resident who holds foreign assets with an aggregate block value exceeding €50,000.
The Three Blocks of Modelo 720: Where Each Type of US Asset Belongs
Modelo 720 organizes foreign assets into three watertight compartments, pursuant to Articles 42 bis, 42 ter and 54 bis of Real Decreto 1065/2007 (RGAT). The €50,000 threshold is assessed per block independently: holding €80,000 in one block and €30,000 in another creates an obligation for the first block only.
Block 1 — Accounts at foreign financial institutions (Art. 42 bis RGAT): Any checking account, savings account, time deposit, securities account, or equivalent financial product at banks or investment institutions established outside Spain. For US assets, this covers checking accounts at JPMorgan Chase or Bank of America, brokerage accounts at Charles Schwab or Fidelity, and any other account where the taxpayer is account holder, co-holder, beneficiary, authorized signatory, or holds dispositive authority. Valuation is the higher of the balance at December 31 or the average balance over the last quarter of the tax year.
Block 2 — Securities, rights, insurance and income abroad (Art. 42 ter RGAT): Membership interests in foreign legal entities (LLCs, C-Corps, S-Corps, trusts with legal personality), investment funds domiciled outside Spain, foreign ETFs, life or disability insurance taken out with US insurers, and annuities. For US assets, Apple or Tesla shares held at a Spanish broker may fall outside this block (if custodied in Spain), but shares in a private C-Corp or a private LLC membership interest land squarely here. Valuation follows Art. 16 of Ley 19/1991 del Impuesto sobre el Patrimonio.
Block 3 — Real estate located abroad (Art. 54 bis RGAT): Real property in the US (residences, rental properties, commercial premises, land) and in rem rights over such property (usufruct, bare ownership). Valuation is the acquisition cost, not current market value. Inherited real estate is valued at the figure declared in the estate.
The LLC in Modelo 720: The Three Ways It Appears
This is the core of the article. When a client with an LLC comes to BMC, the first exercise is mapping all assets and determining which block each one belongs to. There are three distinct ways an LLC can appear in a Modelo 720 filing.
1. The LLC’s Bank Account (Block 1)
If the LLC has a checking account at a US bank — Bank of America, Chase, Wells Fargo — and the taxpayer is the account holder or co-holder, or holds dispositive authority over that account, the account is declared in Block 1. The account holder is the taxpayer (even if that title flows through their status as the LLC’s managing member), and the balance is the LLC’s account balance.
This is the piece most advisors get right. The error is thinking Block 1 closes out the entire filing.
2. The LLC Membership Interest as an Equity Stake in a Legal Entity (Block 2)
This is where the most consequential binding ruling of 2025 comes in: DGT V0681-25. The DGT confirmed in that ruling that:
“The interest in a US LLC is declared as a ‘value or right representing a participation in the capital or equity of foreign legal entities’ for Modelo 720 purposes, pursuant to Art. 42 ter of Real Decreto 1065/2007. The LLC is treated as an entity with its own legal personality.”
(DGT V0681-25, 2025, referenced in LawAndTrends and petete.tributos.hacienda.gob.es)
The LLC membership interest is, for Modelo 720 purposes, a Block 2 security. It doesn’t matter whether the LLC is active or dormant, whether it has distributed profits, or whether it’s transparent or opaque for IRPF purposes: membership interests in an entity with its own legal personality go in Block 2.
Valuation of this interest follows Art. 16 of Ley 19/1991 del Impuesto sobre el Patrimonio (LIP), analyzed in section 5 of this article.
3. US Real Estate Owned by the LLC (Block 3 — Grey Area)
This is the most complex situation and the one that generates the most debate in advisory practice. If the LLC owns US real estate — a Miami condo, a New York commercial space, a Texas parcel — and the taxpayer owns the LLC, must the taxpayer declare the real estate in Block 3?
The honest answer is that this is a genuine grey area. Block 3 covers real estate where title belongs to the taxpayer. If the LLC is the formal owner of the property, the taxpayer is not the direct title holder — they hold membership interests in the LLC. The strongest technical position is that the LLC membership interest (which incorporates the real estate in the LLC’s net equity) is already covered by Block 2.
That said, the AEAT may analyze whether a de facto real right exists over the underlying asset when the LLC has no independent substance and functions purely as the member’s personal vehicle. The most prudent approach for a substance-thin LLC is to consult your advisor on whether the nature of the LLC’s assets warrants an additional Block 3 declaration, without prejudice to the mandatory Block 2 declaration.
Valuing the LLC Membership Interest: Art. 16 Ley 19/1991 (Impuesto sobre el Patrimonio)
The valuation of an LLC membership interest for Block 2 follows Art. 16 of Ley 19/1991 del Impuesto sobre el Patrimonio (LIP). The rule for non-listed entities is that the declared value is the highest of three alternative figures:
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Liquidation value at December 31 of the reporting year: the amount the member would receive if the LLC were wound up on that date, distributing its net assets.
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Net equity value proportional to the membership interest: the book value of the LLC’s net equity (assets minus liabilities) at year-end, multiplied by the member’s ownership percentage. For a 100% single-member LLC, this is simply the LLC’s balance sheet net equity.
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Market quotation value: not applicable for private LLCs.
In practice, for an operating LLC, the dominant criterion is usually net equity. For an investment holding LLC with financial assets or real estate, the liquidation value may be higher if the assets carry unrealized appreciation not reflected on the balance sheet.
To properly support the declared valuation, you need the LLC’s balance sheet as of December 31 of the reporting year. This document must be retained for at least four years (the general tax statute of limitations under Art. 66 LGT) from the date the Modelo 720 was filed.
Coordination Between Modelo 720 and IRPF: Transparent vs. Opaque, the Informational Filing Stays the Same Either Way
Here is the point that most often confuses someone who knows LLC taxation well but hasn’t worked through the Modelo 720 mechanics: the obligation to declare in Modelo 720 and the method of valuing the membership interest are identical regardless of whether the LLC is transparent or opaque for Spanish purposes.
What changes is the substantive IRPF treatment. In our guide on how a US LLC is taxed in Spain I cover this in detail. The summary:
If the LLC is transparent (satisfying the three cumulative criteria of DGT Resolution BOE-A-2020-2108): the Spanish member attributes the LLC’s income to their IRPF in the year the LLC earns it, regardless of whether it is distributed. Income retains its original character under Art. 88 LIRPF: business income, capital income, capital gain. No income accumulates at the LLC level from the Spanish tax perspective.
If the LLC is opaque (having its own legal personality and not meeting the three criteria, as the DGT confirmed in V3074-22): the Spanish member is only taxed in IRPF when they receive actual distributions (dividends) or remuneration (salary, management fee). Profits accumulated inside the LLC generate no Spanish tax until distributed.
But in both cases: whether the LLC membership interest exceeds €50,000 is entirely independent of that analysis, and if it does, Block 2 of Modelo 720 must be completed in exactly the same way. Modelo 720 does not ask whether the LLC is transparent or opaque. It asks one thing: what is the value of your interest at December 31?
The relevant connection between Modelo 720 and IRPF is the one the AEAT creates when it cross-references data: if Modelo 720 shows an LLC membership interest with net equity of €500,000 and your IRPF shows no dividends and no attributed income from that LLC over multiple years, the AEAT may open a verification procedure to check whether there were undeclared distributions or whether the LLC should have been taxed on a flow-through basis.
FATCA: Spain Receives, the US Does Not Give Back the Same
FATCA (Foreign Account Tax Compliance Act) is the 2010 US law requiring foreign financial institutions to identify and report US persons’ accounts to the IRS. Non-compliance carries a 30% withholding on US-source payments to the non-compliant institution.
Spain formalized its agreement with the US through the Model 1 IGA of 2013 (Intergovernmental Agreement). Under Model 1, Spanish financial institutions do not report directly to the IRS: they report to the AEAT, and the AEAT transmits the information automatically to the IRS. In return, the US committed to provide reciprocal information to Spain on Spanish residents’ accounts at US financial institutions.
The underlying asymmetry is this: the US does not participate in the CRS (Common Reporting Standard of the OECD), the multilateral automatic exchange standard applied by over 100 countries. The US has its own FATCA system, which is fundamentally one-directional: it obligates the world to report its citizens’ and residents’ accounts, but does not submit itself to the same multilateral transparency standard in return.
In practical terms for a Spanish tax resident with an LLC or US accounts:
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What the AEAT receives from the US: under the Model 1 IGA, US financial institutions (banks, brokers) report to the IRS the balances and certain account activity of Spanish tax residents. The IRS exchanges that information with the AEAT on an annual automatic basis. The AEAT knows — with some time lag — the balance of your Chase or Schwab account.
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What the US receives from Spain: the AEAT reports through the IGA the accounts of US persons at Spanish financial institutions. The information flows in the right direction for the IRS. But the IRS does not receive through this mechanism the IRPF, ITSGF, or Modelo 720 information you file in Spain.
One important note on FATCA’s scope regarding LLC membership interests: FATCA reporting is designed for financial institutions and financial accounts. A membership interest in a non-financial operating LLC may not be covered by automatic FATCA reporting to the same degree as a bank account. [UNVERIFIED: the precise FATCA reporting scope for non-financial LLC interests has not been confirmed in an official Spanish source.]
What we do know is that the information flowing to the AEAT via FATCA on US bank accounts — the LLC’s accounts, the member’s personal accounts at US banks — is more than sufficient for the AEAT to detect discrepancies between known balances and what was declared in Modelo 720.
Beckham + ITSGF + Modelo 720: The Three-Way Intersection
The special regime under Art. 93 LIRPF — commonly known as the Beckham Law — raises three distinct questions about LLCs and Modelo 720. All three have different answers.
Does the Beckham Regime Exempt Me from Filing Modelo 720?
No. The Modelo 720 informational obligation is set out in the Eighteenth Additional Provision of the LGT and contains no carve-out for Art. 93 LIRPF impatriates. An impatriate taxed under Art. 93 who holds LLC membership interests exceeding €50,000 as of December 31 must file Modelo 720, declaring the interest in Block 2 per DGT V0681-25.
The common source of confusion is that the Beckham regime does exempt Spanish-source foreign income — dividends from the LLC, capital gains on the disposition of membership interests — from Spanish tax. That exemption is substantive (it affects IRPF liability), not informational. Modelo 720 and Modelo 721 are obligations that exist independently of income tax.
Are LLC Membership Interests Included in the ITSGF Taxable Base for a Beckham Taxpayer?
No. DGT V0424-23 and DGT V0420-23 (both dated February 24, 2023) confirmed that taxpayers who have elected the special regime under Art. 93 LIRPF are subject to the Impuesto sobre el Patrimonio (IP) and the Impuesto Temporal de Solidaridad de las Grandes Fortunas (ITSGF, Ley 38/2022) only on a real obligation basis: that is, they declare only assets and rights “located, exercisable, or to be performed in Spanish territory” under Art. 5 of Ley 19/1991.
US LLC membership interests are assets located in the US (or more precisely, rights over an entity formed under US law). They are not located in Spanish territory. A Beckham impatriate therefore does not include their US LLC membership interest in the IP or ITSGF taxable base.
This creates an apparently paradoxical situation: the Beckham taxpayer must inform the AEAT of their LLC interest via Modelo 720 (informational obligation), but that same interest neither generates ITSGF liability nor produces Spanish-taxable income while it remains inside the LLC (real obligation). Two regimes operating under entirely different logic.
What About IRPF? Are LLC Dividends Tax-Free Under Beckham?
Yes. Under Art. 93 LIRPF as amended by Ley 28/2022 (BOE-A-2022-21739), dividends distributed by a US LLC to a Beckham regime beneficiary are foreign-source capital income and fall outside the Spanish taxable base. The same applies to capital gains on the disposition of LLC membership interests.
What is never exempt under Beckham is employment income: Art. 93.2.a LIRPF establishes that all employment income is deemed earned in Spanish territory regardless of where the services are performed. If the Beckham taxpayer receives a salary or management fee from their LLC, that income is taxed at 24% (up to €600,000) as employment income.
Post-Ley 5/2022 Penalties and Compliance Checklist
The Reformed Penalty Framework
As analyzed in section 2, Modelo 720 penalties post-Ley 5/2022 have gone from confiscatory to proportional to the formal non-compliance. The current framework:
- Late filing without prior request: €100 per data item; minimum €1,500.
- Late filing after AEAT request: €200 per data item; minimum €3,000.
- IRPF/IS income omission: tax assessment + 1–20% surcharge (voluntary disclosure) or 50–150% penalty (serious or very serious infraction).
What has not changed with the reform: the obligation to file, the deadline (January 1 through March 31 of the following year), the €50,000 per-block threshold, and the obligation to update when a block’s value increases by more than €20,000 versus the last Modelo 720 filed.
Compliance Checklist for Spanish Tax Residents with US Assets
Before closing out tax year 2026, verify each of the following:
☐ Block 1 — Accounts: Do you hold US checking or brokerage accounts with a December 31 balance, or a last-quarter average balance, exceeding €50,000? Include the LLC’s bank accounts if you hold dispositive authority.
☐ Block 2 — Membership interests: Does the value of your LLC interest (or any C-Corp, S-Corp, or trust with legal personality) exceed €50,000 based on the higher of liquidation value and proportional net equity as of December 31?
☐ Block 3 — Real estate: Do you hold US real estate titled directly in your name? Does your LLC own real estate, and does the specific situation warrant analyzing whether Block 3 also applies?
☐ Update obligation: If you filed a Modelo 720 in prior years, has any block’s value increased by more than €20,000 versus the last year declared?
☐ Documented valuation: Do you have the LLC’s December 31 balance sheet to support the Block 2 declared value?
☐ IRPF coordination: If the LLC is transparent, have you attributed its income on your IRPF? If opaque, have you declared dividends received?
☐ Beckham check: If you are under Art. 93 LIRPF, have you confirmed that you are not including the LLC membership interest in your ITSGF taxable base even though you have declared it in Modelo 720?
If you have an LLC, C-Corp, or any other US asset and need to verify that your Modelo 720 is correctly filed — or if you have never filed and want to evaluate a voluntary regularization — the international tax team at BMC can review your complete situation: all three blocks, coordination with IRPF, interaction with the Beckham regime if applicable, and proper valuation of your membership interest per DGT V0681-25.
Also see our guide on how a US LLC is taxed in Spain for the substantive tax analysis, and our general guide on Modelo 720 and foreign assets for the complete informational return context.
