Sun, sea, tapas and a glass of Rioja at sunset: for many people Spain is the epitome of a better life. And for years the country has indeed been attracting people from all over Europe who are looking not only for the Mediterranean way of life, but also for smart tax planning.
But how exactly does that work?
Is there a way to live in Spain and receive your income tax-free from abroad?
The answer many international entrepreneurs give: Beckham Law + US LLC.
But be careful: this combination does not always work. As so often, the devil is in the tax detail. This article shows when the model works, and when it becomes a tax trap.
What is the Beckham Law?
The so-called "Beckham Law" or "Lex Beckham" (officially Régimen fiscal aplicable a los trabajadores desplazados a territorio español) allows skilled workers who move to Spain to be taxed at a flat rate on their Spanish income only, for a maximum of six years, typically at a fixed rate of 24 % (plus social security contributions where applicable) on income up to €600,000, and 47 % above that. Foreign income remains tax-free under certain conditions.
But note: not all foreign income is automatically tax-free. Foreign salaries arising from an employment relationship, for example, remain taxable. Passive income or income from shareholdings, on the other hand, can well be favored, provided there is no tax connection to Spain.
The US LLC as a source of income
For foreigners, a US LLC is a tempting structure: tax-transparent (a disregarded entity), flexible, easy to form, and tax-free in the US when structured correctly. Run correctly, a US LLC based in, say, Wyoming or New Mexico, combined with a residence outside the US, can lawfully deliver "zero tax" on foreign income.
But how does this concept fit with Spain's Beckham Law?
The decisive distinction: asset-holding or active business?
This is where the wheat is separated from the chaff. If you use your US LLC purely for holding assets, for example to hold stakes in other companies, hold shares or receive income from silent partnerships, you can indeed benefit tax-free in Spain. In this case the income counts as foreign sourced and is not subject to Spanish income tax under the Beckham Law.
The decisive rule of thumb is this: If you would receive the same income directly as a private individual, and it would be tax-free under the Beckham Law, then it also stays tax-free when it flows through an asset-holding LLC.
Examples:
OK under the Beckham Law:
- A stake in a US startup without operating activity
- Dividend income through the LLC's US brokerage account
- Holding IP rights (provided there is no active marketing by the member)
Not OK under the Beckham Law: As soon as the LLC is actively operated, for example by selling digital products, consulting, dropshipping, coaching or agency services, it becomes critical. Why?
- Place of performance: if the member's operating activity takes place in Spain, the Spanish tax authorities regard the income as connected to Spain, even if the invoice comes from the US LLC.
- Permanent establishment risk: even if the LLC is formally based abroad, management, staff, infrastructure or operating activity in Spain can create a permanent establishment for tax purposes, with full Spanish taxation of the worldwide profit.
Risks at a glance
1. Income from active business = taxable in Spain Even if the money flows into a US account of the LLC: if the service is performed in Spain, Spanish tax applies, despite the Beckham Law.
2. Permanent establishment risk in Spain A foreign company does not protect against taxation if management, customer service or operating infrastructure are in Spain. The Spanish tax authorities classify this as a PE (permanent establishment), with serious consequences.
3. Formal pitfalls The Spanish tax authorities demand clear evidence that income comes from abroad AND was taxed there or is not subject to Spanish taxing rights.
So what should you do?
For asset-holding LLCs: Quite sensible in combination with the Beckham Law, for example for income from shareholdings, investment income or royalties without active business.
For operating businesses (agency, coaching, e-commerce, services): Not suitable. Instead:
Alternatives for operating entrepreneurs:
- A separate operating company outside Spain with substance
- for example in Cyprus, Portugal, Ireland or Malta
- including an office, employees and management on site
- avoiding the attribution of a permanent establishment to Spain
- Doing without the Beckham Law entirely by limiting your stay
- If you spend no more than 183 days in Spain, you do not qualify for the Beckham Law in the first place.
- Instead: non-resident status and use of a foreign structure such as a US LLC without Spanish tax liability, provided no PE arises.
- Note: your center of vital interests must not be in Spain.
- Moving the active business
- Management entirely outside Spain (for example Dubai or Singapore)
- Declare only passive income in Spain
The Spanish tax authorities do not joke
Spain may be a sunny country, but its tax authorities are among the toughest in Europe. If you think you can slip through unnoticed with offshore constructions, you are badly mistaken. Permanent establishment attributions, information exchange, withholding tax audits: all of this is daily practice in Spain. Where things are unclear, accounts are quickly frozen or back taxes are assessed, including penalty surcharges.
Form an LLC or not?
A US LLC combined with the Beckham Law can be a powerful tool, but only if it is set up purely for holding assets. If you do active business through an LLC, you risk Spanish taxation despite the Beckham Law. Without careful structuring, the dream setup can quickly turn into a tax nightmare.
Advice, LLC formation and the Beckham Law, all from one source
Do you want to know whether your LLC structure works with the Beckham Law in Spain?
Then book an initial consultation with our firm, held in English. We show you what works, and what does not. Clear, well-founded and without nonsense. The consultation is paid, but it can save you years of tax problems.
And if everything fits, we implement your structure for you directly:
- Formation of your US LLC
- Tax classification as a "disregarded entity"
- W-8BEN-E and all the LLC's forms
- Annual filings, compliance, support
- Optional account opening and the ability to transact in USD
You can order your LLC directly online from us
We also help you with all the formalities and with applying for Beckham Law status itself.
We work with experienced lawyers in Spain who specialize in the regime and can take care of the complete registration and application for you, including all the details required, such as residence registration, employment contract or management role.
Do it right the first time, with a setup that works.
Zero tax is not a myth. With us, it becomes reality.