US Business Entities (LLC, C-Corp, Partnership) and Spanish Tax Residents: 2026 Definitive Guide | BMC

The US LLC has become one of the go-to structures for founders and professionals relocating to Spain: straightforward to set up, cheap to maintain, and — on the surface — invisible to the Spanish tax authorities. The May 2025 ruling of the Superior Court of Justice of Madrid (TSJ Madrid 123/2025) shows that invisibility is an illusion, and that the AEAT has spent years sharpening the tools to cut through it.

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Section 0: The Case That Changed the Conversation (TSJ Madrid 123/2025)

On May 29, 2025, the Administrative Chamber of the Superior Court of Justice of Madrid handed down ruling 123/2025 (Appeal 170/2023). The case involves a Venezuelan national who relocated to Spain in 2014 under the special inbound expatriate regime of Art. 93 LIRPF — colloquially known as the Beckham Law. The structure was textbook: an employment contract with a recently incorporated Spanish company, activities described as management and direction, and a stream of foreign-source income that, sheltered by the Beckham regime, was treated as exempt from Spanish taxation.

The AEAT opened an audit and reached the conclusion the TSJ Madrid ultimately validated: the Spanish company was a shell. No genuine economic substance, no additional employees, no commercial activity of its own. Revenue flowed into the Spanish entity because the taxpayer directed it there — not because the company generated it with its own resources. The ruling’s significance is twofold. First, the court validated the application of the sham-transaction doctrine under Art. 16 LGT, which allows the AEAT to disregard legal form and reclassify the facts according to their economic reality. Second, it also validated the application of Art. 13 LGT (classification by the true nature of the transaction), by which income the taxpayer believed to be exempt under Beckham was reclassified entirely as employment income subject to general IRPF rates.

The result: back taxes plus penalties. Andersen, in its analysis published that same month, was blunt: “structures that are formally correct but lack underlying economic reality — particularly those where recently formed entities receive foreign-source flows — are under elevated scrutiny from the AEAT’s audit teams.”

Why does this whitepaper open with that case if the focus is US LLCs rather than Spanish companies?

Because the pattern is identical. Over the past two years, at BMC we’ve seen LLC × Beckham structures that follow exactly the same logic: the taxpayer moves to Spain, creates (or keeps) a Wyoming or Delaware LLC, signs a services agreement with it, and treats the LLC’s income as exempt foreign-source revenue. If the LLC has no real US clients, no real employees, no real office, and no real activity, the AEAT now has the judicial ammunition to dismantle it. TSJ Madrid 123/2025 is that ammunition.

Would your LLC × Spain structure survive the same scrutiny? This whitepaper gives you the tools to find out.

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Section 1: The Question Your Advisor Probably Can’t Answer Well

Over the past three years I’ve had more than forty conversations with founders, executives, and digital nomads who arrived in Spain with an active LLC. In almost every case, their Spanish advisor had given them some version of one of these three responses:

Answer A: “The LLC is a foreign company — you don’t have to report it in Spain.” This is incomplete at best, and outright wrong at worst. An LLC that satisfies the three criteria in DGT Resolution BOE-A-2020-2108 is fiscally transparent in Spain: its income is attributed directly to the member and taxed in their IRPF each year, regardless of whether there’s been any distribution. Reporting only the dividends received and ignoring undistributed profits is the most expensive mistake we see.

Answer B: “Under Beckham, your LLC’s dividends are exempt.” This is partially correct but dangerously incomplete. It’s true that under Art. 93 LIRPF, foreign-source dividends and capital income are not taxed in Spain. But there are two problems. First, if the LLC is classified as a pass-through entity (entidad en atribución de rentas), the income isn’t dividends — it’s business income attributed directly, which may be taxed differently. Second, if the LLC lacks genuine US substance, the AEAT can reclassify the income as Spanish employment income and apply general IRPF rates, exactly as in TSJ Madrid 123/2025.

Answer C: “Don’t worry — if the LLC is in Delaware and has nothing in Spain, the tax authorities can’t touch it.” This is the most dangerous answer. Art. 8 LIS doesn’t distinguish between Delaware and Wyoming. What it looks at is where decisions are made. If the sole member of the LLC sleeps in Madrid, works from Madrid, and signs contracts from Madrid, the LLC has its effective place of management in Spain and can be declared a Spanish tax resident subject to corporate income tax at 25%.

These three misunderstandings aren’t anecdotal. They’re the dominant pattern we find when we audit new clients’ structures. And all three lead to similar consequences: back taxes, surcharges, penalties, and — in extreme cases where evaded liability exceeds 120,000 EUR — criminal exposure.

The good news is that structures that actually work do exist. We’ve designed and managed them. But they work when they’re planned before the move, when genuine substance exists, and when compliance is impeccable from day one. What follows in this whitepaper is the guide to building them right.

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Section 2: The 4 Types of US Entity and What the AEAT Decides

When we talk about a “US LLC,” we’re actually talking about four distinct tax realities — both in the US and in Spain. Understanding which is which is the first step of any serious planning exercise.

The 4 Entities and Their US Default Tax Treatment

Single-Member LLC (SMLLC) — disregarded entity by default. An LLC with a single member is treated by the IRS as a “disregarded entity”: it doesn’t exist for federal income tax purposes, and all income and expenses are reported directly on the member’s Form 1040 (Schedule C or E). No entity-level federal tax.

Multi-Member LLC — partnership by default. An LLC with two or more members is taxed as a partnership (Form 1065) by default. Each member receives a Schedule K-1 reporting their proportionate share of income, losses, and credits, which they report on their individual federal return (Form 1040). Again, no entity-level federal tax by default.

C-Corporation. A standard US stock corporation subject to the federal corporate income tax (21% since the Tax Cuts and Jobs Act of 2017). Dividends distributed to non-US shareholders (such as a Spanish tax resident) are subject to federal withholding tax, which the Spain-US treaty moderates to the rates in Art. 10: 15% general, 5% for holdings of ≥10%, 0% for holdings of ≥80% held for 12 months.

S-Corporation. A corporation that has elected pass-through taxation before the IRS. S-Corps have a critical restriction: they cannot have shareholders who are non-US residents. A Spanish tax resident who owns shares in an S-Corp automatically disqualifies the entity from that status. The S-Corp is irrelevant for the purposes of this whitepaper.

IRS Form 8832 (Check-the-Box) — and Why Spain Isn’t Listening

The IRS allows LLCs to choose their tax treatment via Form 8832, the so-called check-the-box election. A single-member LLC can elect to be taxed as a corporation instead of a disregarded entity. A multi-member LLC can do the same.

This election has significant consequences in the US, but in Spain the DGT applies its own analogy criteria regardless of the IRS classification.

The prevailing Spanish doctrine holds that an LLC that has elected C-Corp treatment via check-the-box will still be evaluated by the DGT under the three criteria in Resolution BOE-A-2020-2108 — not under the American tax label. There is no binding DGT ruling that directly and expressly addresses the effect of a check-the-box election on the LLC’s Spanish classification, but this interpretation is consistent with the regulatory framework. When a client asks me whether changing the box on Form 8832 can change their Spanish tax treatment, the answer is no.

How the AEAT Decides: Art. 35.4 LGT + Resolution BOE-A-2020-2108

For Spanish tax purposes, the starting point is Art. 87.1 LIRPF, which refers to the DGT Resolution of February 6, 2020 (BOE-A-2020-2108). This resolution establishes that a foreign entity is analogous to a Spanish pass-through entity (entidad en régimen de atribución de rentas) if, and only if, it meets three cumulative criteria:

1. The entity is not subject to a personal income tax in its country of incorporation.
2. The income generated is attributed for tax purposes to its members under the law of the country of origin, meaning the members are personally taxed on it.
3. This attribution occurs by the mere fact of the entity earning the income — whether or not that income has actually been distributed is irrelevant.

A single-member “disregarded” LLC or a multi-member LLC treated as a partnership in the US satisfies, in principle, all three criteria: no entity-level federal tax, income attributed to the member or members, attribution automatic upon receipt. Result: the LLC is transparent in Spain.

A US C-Corp does not satisfy criterion 1 (it pays entity-level tax at 21%) or criterion 2. It is opaque. It is only taxed in Spain when it distributes dividends.

DGT V3074-22 nuances this framework: an LLC with “genuine operational independence” and its own legal personality may be treated as an opaque entity in Spain. Establishing that classification requires demonstrating that the LLC has its own structure, its own clients, its own employees, and the capacity to act independently of the Spanish member.

DGT V0681-25 (2025) confirms the Form 720 position: a stake in an LLC with its own legal personality is reported in Block 2 as a “value or right representing participation in the capital or equity of foreign legal entities,” per Art. 42 ter of Royal Decree 1065/2007.

DGT V2353-20 addressed a US LLC that owned a Spanish holding company, applying the Spain-US treaty and concluding that the transfer of LLC interests did not generate taxable income in Spain by virtue of Art. 13 of the Convention.

Classification Summary: The Table Your Advisor Should Have on the Wall

Entity	IRS default treatment	DGT Spain classification	Spanish member taxation (outside Beckham)
SMLLC (disregarded)	Disregarded entity	Transparent (pass-through) if BOE-A-2020-2108 three criteria met	Progressive IRPF on 100% of profit, year by year
Multi-member LLC (partnership)	Partnership, K-1	Transparent (pass-through) if criteria met	Progressive IRPF on proportionate share
C-Corp	Corporation, 21% federal	Opaque	IRPF on dividends when distributed (savings base 19–28%)
S-Corp	Pass-through corporation	Irrelevant (non-US resident members disqualify)	N/A

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Section 3: The DGT’s Three-Criteria Test

Resolution BOE-A-2020-2108 is not a long or obscure document. It’s a three-page resolution that contains the most important rule in Spanish international tax for members of foreign entities. It deserves careful analysis because it’s the rule auditors work with in the field.

The Three Criteria — Verbatim

The Resolution provides that the analogy with Spanish pass-through entities is determined by three “essential and cumulative” characteristics:

“First. The entity is not subject to a personal income tax in its country of incorporation.”

“Second. Income generated by the entity is attributed for tax purposes to its members or partners in accordance with the legislation of its country of incorporation, and it is the members who are taxed on it under their personal income tax.”

“Third. This attribution occurs by the mere fact of the entity earning the income, regardless of whether that income has or has not been effectively distributed.”

The cumulative nature is critical. If the LLC fails any one of the three criteria, the entity is opaque for Spain. Two out of three is not enough.

Why Criterion 3 Is the Most Important for the Spanish Member

The third criterion — automatic attribution upon receipt — is the one that most surprises clients. An LLC that accumulates profits over years without distributing them can generate a Spanish tax liability each year, even when the member hasn’t received a single euro. If the LLC bills $200,000 in the 2025 tax year, the Spanish member reports that $200,000 (converted at the average EUR/USD rate for the year, net of the LLC’s deductible expenses) on their 2025 IRPF return — whether or not the money ever hits their bank account.

This is the mechanism that causes the most damage when discovered late: the member has gone four years without reporting the LLC’s accumulated profits, thinking they only owe tax when they “get paid.” The result is amended returns with surcharges and interest for four tax years.

Income Classification: The Character-Preservation Principle

Art. 88 LIRPF establishes the character-preservation principle: income attributed by a pass-through entity retains the character it had at the entity level when it passes through to the member. If the LLC earns business income (it invoices for services), the member reports it as business income. If the LLC collects dividends from a subsidiary, the member reports investment income. If the LLC sells an asset at a gain, the member reports a capital gain.

This principle has very concrete consequences. A member who reports service LLC income as “investment income” (taxed at 19–28%) instead of “business income” (subject to general rates plus self-employment contribution obligations) is making a mistake the AEAT pursues systematically.

The Decision Tree for Daniel

Before moving on to the whitepaper’s centerpiece section, let’s illustrate the framework with our base case.

Daniel is a fictional founder, US national, $200,000/year in income, sole member of a Wyoming LLC that provides technology consulting services to clients in the US and Europe. Daniel is planning to move to Spain under the Beckham Law . All figures that follow are illustrative.

The initial decision tree:

1. Does Daniel’s LLC satisfy the three BOE-A-2020-2108 criteria? Yes: it’s a disregarded entity, pays no federal entity-level tax, and its income is automatically attributed to Daniel.
2. Does Daniel hold ≥50% control? Yes (100%).
3. Is the LLC’s effective tax rate below 75% of the Spanish corporate rate (18.75%)? Yes: the LLC pays no federal entity-level tax.
4. Are more than 15% of its income items passive (dividends, rent, interest)? It depends: if the LLC invoices for active services, probably not. If it holds investments, possibly yes.

Base result: Daniel’s LLC is transparent in Spain. Without Beckham, his $200k annual profit (approximately 185,000 EUR) is taxed in his progressive IRPF. In Madrid, regional surcharges push the marginal rate to approximately 47% for income above 300,000 EUR — though on Daniel’s numbers we’re looking at roughly 47,000 EUR of tax on the upper tranche. The burden is significant.

With Beckham, the equation changes completely. We analyze that in the next section.

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Section 4: Beckham × LLC Year by Year — The Star Section

This is the section that sets this whitepaper apart from any generic Beckham Law guide. The interaction between the special regime of Art. 93 LIRPF and an active US LLC is the most powerful planning tool available to an international professional relocating to Spain — and also the one that carries the most risk if executed poorly.

Structure of the Beckham Regime Post Law 28/2022

Art. 93 LIRPF, in the version in force since January 1, 2023 (Startups Law, BOE-A-2022-21739), allows the taxpayer to elect to be taxed as a non-resident (IRNR) during the year of arrival and the following five tax periods: six tax years in total.

The Beckham taxation table:

Income type	Spanish source	Foreign source
Employment income	24% (up to 600,000 EUR) / 47% (excess)	Taxed in Spain (same)
Dividends, interest, capital gains	Savings rate (19–28%)	EXEMPT
Business income	Taxed	EXEMPT if no Spanish PE

The regime’s defining rule: employment income is treated as earned in Spain regardless of where the work is actually performed (Art. 93.2.a LIRPF). There is no foreign-source exemption for employment income. For everything else — foreign dividends, foreign interest, foreign capital gains, foreign business income without a Spanish permanent establishment — the Spanish tax rate is zero.

The Daniel Case: $200k/Year, Year by Year

Daniel arrives in Spain in January 2026, meets the Beckham requirements, files Form 149 on time (before June 30, 2026), and receives a favorable ruling.

The Wyoming LLC keeps operating: clients in the US and Europe, Daniel manages it but retains employees and a registered office in Cheyenne. Annual revenue: $200,000. No distributions. All figures are illustrative and do not constitute tax advice.

Years 1–6 under Beckham (2026–2031):

The LLC is a pass-through entity for DGT purposes (transparent). Its income is foreign-source business income attributed to Daniel. Under Beckham, foreign-source business income earned without a permanent establishment in Spain is outside the Spanish taxable base.

Spain-side result: Daniel files his income on Form 151 (the Beckham return), not Form 100. His Spanish taxable base includes only Spanish-source income, which we assume is minimal (perhaps a nominal salary from a Spanish entity if he has one). Spanish tax liability: close to zero on LLC income.

US-side: Daniel remains a US person (citizen or green card holder for IRS purposes), files his global income on Form 1040, and applies the Foreign Earned Income Exclusion (FEIE, Form 2555) for earned income in Spain if applicable, or takes US foreign tax credits on Spanish tax paid. Bilateral coordination is essential.

Illustrative total liability (Beckham active, $200k LLC, no other Spanish income): Less than 50,000 EUR in Spain. The bulk is taxed in the US via his personal Form 1040.

Year 7 onwards (post-Beckham, from 2032):

The regime expires. Daniel moves to general IRPF. The transparent LLC now attributes its business income directly to Daniel’s IRPF taxable base. On $200k of annual profit (approximately 185,000 EUR at current exchange rates), the marginal rate under general IRPF in Madrid is 45–47% on the amounts above the lower brackets.

At this point there are two defensible options. First: Daniel restructures the LLC before year 7, converting operations to a Spanish SL or a more tax-efficient holding structure. Second: if the real business activity is genuinely in the US, Daniel evaluates whether Spain remains the optimal jurisdiction for his tax residence. We analyze the exit options in Section 7.

The Live Conflict: TSJ Madrid 665/2025 vs TEAC July 2025

Separate from the LLC income treatment, there is a first-order judicial conflict affecting every Beckham taxpayer who owns real estate in Spain.

In July 2025, the TEAC (Central Administrative Economic Court) issued a binding ruling holding that Beckham regime beneficiaries are required to impute deemed rental income (renta inmobiliaria imputada, Art. 85 LIRPF) on their primary Spanish residence, just like any ordinary taxpayer.

On September 17, 2025, TSJ Madrid issued ruling 665/2025 (Appeal 2095/2021), reaching the opposite conclusion: inbound expatriates under Art. 93 LIRPF are not required to impute deemed rental income on their primary residence. The court annulled the challenged administrative acts and ordered repayment of the assessed amounts plus default interest.

For Daniel: if he buys an apartment in Madrid during his Beckham years, this conflict affects him directly. At BMC, out of caution, we follow the more conservative position (impute the rental income) until the Supreme Court resolves the split — but we document each client’s situation thoroughly in case a subsequent claim is warranted.

The Art. 95 bis.8 Carve-Out: Why the Exit Tax Almost Never Applies After Beckham

One of the most frequent questions I get from clients with meaningful portfolios: “Is Spain going to hit me with an exit tax when I leave?”

Art. 95 bis LIRPF imposes a tax on unrealized gains in qualifying participations when the taxpayer loses Spanish tax residency. The triggering conditions are cumulative: (1) Spanish tax residency for at least 10 of the last 15 tax periods, and (2) qualifying participations exceeding 4,000,000 EUR in market value, or an individual stake above 25% worth more than 1,000,000 EUR.

Art. 95 bis.8 LIRPF provides that “the ten-tax-period period referred to in paragraph 1 of this article shall begin to count from the first tax period in which the said special regime ceases to apply.”

In plain terms: the six Beckham years don’t count toward the 10-year threshold. An expat who enters under Beckham in 2026, benefits through 2031, and leaves Spain in 2032 will have accumulated just one year of ordinary residence countable for Art. 95 bis — the year 2032. The 10-year clock starts in 2032. For the exit tax to trigger, Daniel would have to remain as an ordinary Spanish resident until 2042 and hold qualifying participations above the specified thresholds.

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Section 5: The Three Traps That Turn Legal Planning Into a Sanctions File

After auditing dozens of LLC × Spain structures, we’ve identified three recurring error patterns that appear with worrying regularity. I call them traps because in every case the client started with a structure that appeared legal — and in some cases was legal, on paper.

Trap 1: Art. 8 LIS — When the LLC Becomes a Spanish Tax Resident

Art. 8 of Law 27/2014 (LIS — Corporate Income Tax Law) provides that an entity is a Spanish corporate taxpayer if it has its “effective place of management” in Spanish territory, meaning the place where “the direction and control of all its activities” is located.

The rule is unambiguous in its language, and the AEAT enforces it. If the sole member and sole manager of an LLC establishes Spanish residency and continues running the company from here — making strategic decisions, signing contracts, conducting client meetings from Madrid — the LLC has its effective place of management in Spain.

The consequences: the LLC becomes a Spanish corporate taxpayer at 25%. The profits Daniel expected to report as attributed business income (or exempt under Beckham) become profits subject to 25% corporate tax. Subsequent distributions are Spanish-source dividends additionally taxed on the savings base (19–28%). In total, the combined tax burden can exceed what Daniel would have paid simply operating as a self-employed individual from the start.

There is no binding DGT ruling that specifically addresses a Delaware LLC managed from Spain in the context of Art. 8 LIS. But the Art. 8 LIS rule is unambiguous, and the TEAC has established the effective management test in settled doctrine.

Trap 2: Sham Transactions — TSJ Madrid 123/2025 as Live Precedent

We’ve already analyzed the case in Section 0. The sham-transaction trap doesn’t require a conscious intent to defraud. In many cases we’ve seen, clients created a formal structure in genuine good-faith belief that it was legal. The problem was that the legal form had no underlying economic substance.

The doctrine under Art. 16 LGT establishes three elements for a sham transaction to be found: (1) the appearance of a legal transaction that either doesn’t exist or is different from the one actually carried out; (2) an agreement between the parties to create that appearance; (3) intent to deceive.

What TSJ Madrid 123/2025 confirms is that when the “transaction” is the combination of Beckham + LLC + foreign-source income with no genuine substance, all three elements are present in the auditors’ view. And the burden of proof falls on the taxpayer, not the AEAT.

How much substance is enough? There’s no numerical threshold. But the elements that auditors weigh positively include: employees in the US on real payroll, US clients who contract directly with the LLC (not with Daniel personally), a registered business address or commercial office in the US, board meeting minutes reflecting meetings held in the US, US bank accounts opened before the relocation, and demonstrable commercial activity evidenced by emails, invoices, and deliverables generated from the US.

Trap 3: CFC Rules — The Passive Income Nobody Sees Coming

Trap 3 targets clients with an investment LLC — not an operating company — or an operating LLC that has diversified into passive assets: stakes in other funds, publicly traded shares, interest on a third-party loan, rental income from a property.

Spain’s CFC rules (transparencia fiscal internacional, Art. 91 LIRPF) require a Spanish taxpayer who controls more than 50% of a foreign entity to include that entity’s passive income in their IRPF taxable base when those passive items exceed 15% of total income and the entity’s effective tax rate is below 75% of the Spanish corporate rate (18.75%).

An LLC with no entity-level federal tax automatically satisfies the tax-rate criterion. If more than 15% of its income consists of interest, subsidiary dividends, investment gains, or rental income, Art. 91 triggers. And when it does, attribution is mandatory even if the LLC is opaque for DGT purposes under the three-criteria test — the two rules are independent and can operate simultaneously.

At BMC we’ve seen this with LLCs that started as operating vehicles and gradually accumulated an investment portfolio from retained earnings. At a certain point, more than 15% of income was passive, Art. 91 triggered, and the client had not reported it because they believed the LLC was opaque and they only owed tax on received dividends.

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Section 6: Compliance from Year 1 to Year 7

Tax compliance for a Spanish resident with stakes in US entities involves between six and eight different reporting obligations, depending on the structure. Here is the complete map.

Year 1 Under Beckham (Year of Arrival)

Form 149 (Modelo 149) — Beckham regime application. Deadline: six months from the start of business or employment activity in Spain. Non-extendable. If this deadline is missed, the regime cannot be applied for that tax year. For Daniel: if he arrives on January 15, 2026, the deadline is July 15, 2026.

Form 151 (Modelo 151) — IRNR return (Beckham). Replaces Form 100 for the years of the regime. Reports only Spanish-source income. LLC income from foreign sources is not included — confirmed by DGT V1372-25 (July 2025), which clarified the treatment of attributed income from foreign pass-through entities for inbound expatriates under Art. 93 LIRPF.

Form 720 (Modelo 720) — Overseas assets declaration. Required if the value of the relevant block exceeds 50,000 EUR. For Daniel: his LLC stake (Block 2) is reportable if the value of his participation (calculated as the greater of liquidation value at December 31 and proportionate equity value) exceeds 50,000 EUR. DGT V0681-25 confirms that an LLC with its own legal personality is reported in Block 2, per Art. 42 ter of Royal Decree 1065/2007 (RGAT). Deadline: January 1 – March 31 of the following year. Form 720 remains mandatory under Beckham. The exemption from taxation on foreign-source income is an IRPF matter, not a reporting obligation matter.

Form 714 / ITSGF (Solidarity Tax on Large Fortunes). DGT V0424-23 and V0420-23 (February 24, 2023) confirmed that inbound expatriates under Art. 93 LIRPF are subject to Wealth Tax and the ITSGF by limited obligation — only on Spanish-sited assets. Daniel’s stake in the US LLC does not form part of his Wealth Tax or ITSGF base.

Years 2 Through 6 Under Beckham

The compliance cycle repeats annually:

• Form 151 (Spanish-source income): April–June of each year.
• Form 720 (overseas assets): update required if the block’s value exceeds by more than 20,000 EUR the value last reported. If the LLC’s value stays flat or declines, no update is required.
• IRS Form W-8BEN — not a Spanish form, but critical: Daniel must provide this to any US payer that withholds on payments to him. The W-8BEN certifies non-resident alien status for IRS purposes and determines whether the payer applies the standard 30% withholding or the reduced treaty rate (0–15% depending on income type and the applicable article of the Convention).

Year 7 Onwards (Post-Beckham)

From year 7, Daniel is taxed under general IRPF:

• Form 100 (replacing Form 151): reports worldwide income. The transparent LLC attributes its profits directly to Daniel’s general taxable base.
• Form 184 — if the LLC qualifies as a pass-through entity, it must file Form 184 (informational return for entities in the pass-through regime). This is the entity’s obligation, not the member’s, but as sole member Daniel is responsible for ensuring it’s filed.
• Form 232 — if there are related-party transactions between Daniel and the LLC (management fees, loans) exceeding 250,000 EUR annually, transfer pricing documentation rules apply and Form 232 must be filed.

Compliance Checklist by Situation

Situation	Required forms
Beckham active, disregarded LLC, no Spanish real estate, LLC < 50k	M149 (year 1), M151 annual, FATCA/W-8BEN
Beckham active, LLC stake > 50k	M149 (year 1), M151, M720
Beckham active, property in Spain	M149, M151, M714/ITSGF (if thresholds exceeded), M720 (if LLC > 50k); 665/2025 conflict on deemed rental income
Post-Beckham, transparent LLC	M100, M184, M232 (if related-party > 250k), M720 (update)
Opaque LLC (C-Corp or LLC with own legal personality per V3074-22)	M720 always if > 50k; M100/M151 on dividends; CFC Art. 91 if passive income > 15%

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Section 7: The Exit — Sell, Repatriate, Dissolve

Most clients who plan their move to Spain under Beckham don’t think hard enough about the exit. And the exit, in structures with an active LLC, is fiscally complex.

Option 1: Sell the LLC or Its Assets Before Leaving Spain

If Daniel decides to sell the LLC or its underlying assets before departing Spain:

Under Beckham (years 1–6): the gain from selling LLC interests is a foreign-source capital gain — exempt in Spain. This is the optimal window for selling entities with embedded unrealized gains.

Post-Beckham (year 7+): the gain is taxed on the IRPF savings base (19–28%), with a double taxation credit if the sale also triggers US tax.

In the US, the sale of an LLC by a non-US person (if Daniel is neither a US citizen nor a green card holder) may generate withholding obligations under IRC §1446(f), which requires the buyer to withhold 10% of the sale price unless the seller certifies they are not a foreign person for FIRPTA purposes. For LLC interests backed by US real assets, FIRPTA (IRC §897) may also apply. Coordination with a US CPA is essential.

Spain-US treaty Art. 13 establishes the general rule: gains from the transfer of interests in entities whose assets consist primarily of something other than real estate are taxed only in the taxpayer’s state of residence. DGT V2353-20 applied this rule expressly to the transfer of a US LLC interest, concluding that the gain was taxable only in the US (the transmitting taxpayer’s state of residence in that case). Under Beckham, the transmitting taxpayer is taxed as a non-resident in Spain, which can open debate about which state holds the taxing right.

Option 2: Let Beckham Expire and Stay in Spain

If Daniel decides to remain in Spain beyond year 6 as an ordinary resident, the Beckham exit protocol includes:

• Form 149 opt-out: no formal opt-out is needed; the regime expires automatically at the end of the period. That said, at BMC we recommend communicating this expressly.
• Restructuring: year 7 should begin with an optimized Spanish tax structure. If the LLC remains the primary vehicle, consider converting operations to a Spanish SL, or establishing a Spanish operating entity (with the US LLC as a passive holding company, if genuine US substance exists).
• Form 720 update: the LLC stake continues to be reportable, now in the context of general IRPF.

Option 3: Repatriate Capital Before Leaving

If the LLC has accumulated reserves during the Beckham years — undistributed profits that have stayed outside the Spanish taxable base — the optimal moment to distribute them is within the Beckham period, not after. A foreign-source dividend inside the Beckham period is exempt in Spain. The same dividend in year 7 is taxed at 19–28% on the savings base.

Repatriation planning for accumulated reserves should begin before year 6, with enough lead time to manage US source withholding (which the treaty reduces), the transfer to the Spanish account, and the accounting treatment in the LLC.

Art. 95 bis and the Exit Tax — Revisited

We analyzed this in Section 4, but it’s worth a brief recap: if Daniel leaves Spain in year 7 (the first post-Beckham year), the Art. 95 bis clock has only one year on it. For the exit tax to trigger, he would need 10 more years of ordinary residence plus qualifying participations above 4,000,000 EUR or 1,000,000 EUR with ≥25%. In most Beckham scenarios, the exit tax simply doesn’t apply.

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Annex A: Quick Glossary

LLC (Limited Liability Company): A US business entity that combines limited liability (like a corporation) with tax flexibility (can be taxed as a disregarded entity, partnership, or corporation). Governed by state law; the most common formation states are Delaware, Wyoming, and Florida.

C-Corp (C-Corporation): A US stock corporation subject to the federal corporate income tax (21% since 2018). Fiscally opaque; dividends are taxed separately at the shareholder level.

Partnership: A US entity with two or more members that is taxed on a pass-through basis. Members receive an annual Schedule K-1 reporting their share of income, losses, and credits.

Disregarded entity: An entity “ignored” for US federal tax purposes (the single-member LLC by default). Its income and expenses are reported directly on the owner’s Form 1040.

Check-the-box (Form 8832): An IRS tax election allowing an LLC to change its default tax classification (to corporation or, for a single-member LLC, to partnership). Not binding on the Spanish DGT.

ERAR (Entidad en Régimen de Atribución de Rentas): A Spanish-law entity whose income is attributed directly to its members for Spanish IRPF/corporate tax purposes, without being taxed at entity level. General partnerships, civil partnerships, and transparent LLCs are examples.

CFC / TFI (Transparencia Fiscal Internacional): The Spanish controlled foreign company regime under Art. 91 LIRPF, requiring a Spanish taxpayer who controls ≥50% of a low-tax foreign entity to include that entity’s passive income in their IRPF taxable base.

LOB (Limitation on Benefits): A clause in the Spain-US treaty (Art. 17) that restricts access to treaty benefits to residents who meet specific requirements (“qualified persons”).

Beckham: The colloquial name for the special regime of Art. 93 LIRPF for workers, professionals, and entrepreneurs relocating to Spain. Allows taxation at a 24% flat rate for six years.

Form 720 (Modelo 720): Informational return for assets and rights held outside Spain. Mandatory for Spanish tax residents. Three blocks: bank accounts, securities/rights, real estate. Threshold: 50,000 EUR per block.

ITSGF: Spain’s Temporary Solidarity Levy on Large Fortunes (Law 38/2022). Supplements Wealth Tax for net estates above 3,000,000 EUR. Beckham inbound expatriates are subject by limited obligation (Spanish-sited assets only), per DGT V0424-23 / V0420-23.

Tax Treaty / CDI (Convenio de Doble Imposición): A bilateral agreement to prevent double taxation. The Spain-US treaty (with 2019 Protocol, BOE-A-2019-15166) eliminates virtually all withholding on interest and royalties and reduces dividends to 5–15%.

FATCA: Foreign Account Tax Compliance Act. The US law that requires foreign financial institutions to report accounts of US persons. The Model 1 IGA between Spain and the US channels this automatic information exchange to the AEAT.

Art. 8 LIS: The Spanish Corporate Income Tax provision that defines the tax residency of legal entities. An LLC managed from Spain can be declared a Spanish tax resident on the basis of having its “effective place of management” in Spanish territory.

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Annex B: The 12 DGT Rulings That Matter

• DGT V0681-25 (2025): A stake in an LLC with its own legal personality is reported on Form 720 (Block 2) as a participation in a foreign legal entity, per Art. 42 ter RGAT.

• DGT V3074-22 (2022): An LLC with genuine operational independence and its own legal personality may be treated as an opaque entity in Spain; the Spanish member does not automatically attribute income while there is no distribution.

• DGT V2353-20 (July 9, 2020): Transfer of a US LLC interest: Spain-US treaty Art. 13 assigns taxing rights exclusively to the transmitting taxpayer’s state of residence; the LLC transfer does not generate taxable income in Spain in that scenario.

• DGT V1372-25 (July 2025): Income attributed by a foreign pass-through entity (in that case a UK LLP) to a Beckham inbound expatriate under Art. 93 LIRPF: foreign-source business income without a Spanish PE falls outside the Beckham taxable base.

• DGT V0813-23 (April 5, 2023): Formal requirements for the Beckham regime application post Law 28/2022; company-employee coordination on Form 149.

• DGT V0424-23 and V0420-23 (February 24, 2023): Inbound expatriates under Art. 93 LIRPF are subject to Wealth Tax and ITSGF by limited obligation; their foreign assets (including stakes in US LLCs) are not part of the Wealth Tax or ITSGF base.

• DGT Resolution BOE-A-2020-2108 (February 6, 2020): The foundational text. The three cumulative criteria for classifying a foreign entity as analogous to a Spanish pass-through entity. The reference rule for all DGT classifications of LLCs, LLPs, and partnerships.

• DGT V2110-04, V1631-14, V3557-15, V0601-16, V2414-16: The historical series predating the 2020 Resolution that established the analogy-by-pass-through-regime doctrine based on treatment in the entity’s country of origin, not on legal form.

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Annex C: Templates and Timing

Form 8832 (Check-the-Box) — Timing and Warning

Form 8832 can be filed at any time, with retroactive effect up to 75 days or prospective effect up to 12 months. If a client wants to change the classification of their LLC before the IRS, this should be done before the relocation to Spain, not after. Changing from “disregarded” to “corporation” after settling in Spain does not modify the DGT’s treatment (see Section 2), but it does create IRS consequences that may be unwanted (deemed liquidation under IRC §332 and recognition of accumulated gains).

Coordination with a US tax advisor: mandatory before any Form 8832 election when a Spanish tax resident is the member.

W-8BEN — What It Is and When to File It

The W-8BEN (Certificate of Foreign Status of Beneficial Owner) certifies to a US payer that the recipient is a non-resident alien for IRS purposes. Daniel must provide it to:

• Any US bank where the LLC holds accounts (even if the account is in the LLC’s name, if Daniel is the beneficial owner of the payment).
• Any US client that pays amounts subject to withholding.
• US brokers or investment platforms where LLC funds are invested.

Validity: 3 years from the date of signature, or until the holder’s circumstances change.

Form 149 — Deadlines and Documentation

Form 149 must be filed with the AEAT within six months of the start of employment or business activity in Spain. This deadline cannot be extended. Required documentation includes:

• Employment contract or notice of the start of a labor relationship with a Spanish company, or entrepreneurial activity documentation (entrepreneur’s visa, if applicable).
• Evidence of not having been a Spanish tax resident in the preceding 5 tax periods (tax residency certificate issued by the competent authority of the home country, or a sworn declaration if that mechanism is not available).
• Spanish tax ID (NIE required before filing Form 149).

Frequent mistake: filing Form 149 without a NIE, or filing after the deadline claiming ignorance of the rules. In both cases, the regime is permanently foreclosed for that tax year with no opportunity to remedy.

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This whitepaper reflects the state of the law and case law as of May 19, 2026. International tax is a continuously evolving field; the positions described here may be modified by new DGT rulings, Supreme Court judgments, or legislative changes. This document does not constitute individualized tax advice. To apply these considerations to your specific situation, contact BMC.