Spain DNV residence + US LLC questions (I searched)

[cronimus]

Hi All
After searching/reading all the relevant threads, I still have some questions that I would appreciate some help with:

I'm currently on a Digital Nomad Visa in Spain, I have an autonomo and report around 50K EUR income per year coming from my clients.
I also have a US LLC DE that I'm operating in Spain without reporting it to Hacienda.
There has been almost no income in the LLC in the 2024 tax year (around $1k). I did however made a potentially foolish move and distributed that $1k to my Revolut US account (which was however registered on my former US address, not Spain), then exchanged to EUR (Revolut EUR account) and finally withdrawn at ATM in Spain in 2024.

I'm making good money on LLC now starting this 2025 year, so I'm seriously considering doing the active residence in Andorra through EOR (and winding down my autonomo and residence here in Spain) to pay less taxes and sleep well at night starting on year 2025.

But I'm a bit worried about not reporting having the LLC to Hacienda for this 2024 year. Besides the aforementioned transaction to Revolut, I've not "advertised" the LLC here in EU in any way, so perhaps there is no problem?

Should I be concerned about this? What are the risks? Anything I should really be aware of?

In addition: I heard a lawyer saying that it's pretty safe to pay rent with US LLC in Spain. Lease a car, etc. (obv as long as my name is not appearing anywhere).
Can I use the LLC card to pay for stuff in Spain?
What's the consensus on this?

Thank you!

 

[Martin Everson]

But I'm a bit worried about not reporting having the LLC to Hacienda for this 2024 year. Besides the aforementioned transaction to Revolut, I've not "advertised" the LLC here in EU in any way, so perhaps there is no problem?

Should I be concerned about this? What are the risks? Anything I should really be aware of?

I guess the tax reporting deadline for reporting non-resident companies passed on Jan 31st 2025.

But I don't see any problem unless Revolut report it under CRS which seems unlikely if account details are all attached to old US address. And less then $1k is not anything to lose sleep over if worst case happens.

In addition: I heard a lawyer saying that it's pretty safe to pay rent with US LLC in Spain. Lease a car, etc. (obv as long as my name is not appearing anywhere).
Can I use the LLC card to pay for stuff in Spain?
What's the consensus on this?

Lol...you heard a lawyer really say this? Did the lawyer know controlling person lived in Spain? I would get professional advice here its not that expensive.

The tax transparency of US LLCs and the tax regime applicable in Spain.​

https://www.ustaxconsultants.es/the...-llcs-and-the-tax-regime-applicable-in-spain/

 

[Sols]

Why is it always Spain?

I also have a US LLC DE that I'm operating in Spain without reporting it to Hacienda.

Congratulations, you have committed tax fraud.

I did however made a potentially foolish move and distributed that $1k to my Revolut US account (which was however registered on my former US address, not Spain), then exchanged to EUR (Revolut EUR account) and finally withdrawn at ATM in Spain in 2024.

Congratulations, you have committed money laundering.

Of course, both are at such a small scale it probably won't get picked up.

I'm making good money on LLC now starting this 2025 year, so I'm seriously considering doing the active residence in Andorra through EOR (and winding down my autonomo and residence here in Spain) to pay less taxes and sleep well at night starting on year 2025.

But I'm a bit worried about not reporting having the LLC to Hacienda for this 2024 year. Besides the aforementioned transaction to Revolut, I've not "advertised" the LLC here in EU in any way, so perhaps there is no problem?

The LLC is probably tax resident in Spain already. Any income it earns while its head office (which is wherever you are) is in Spain is probably taxable in Spain. The sooner you leave, the better for yourself and for your business.

 

[JustAnotherNomad]

Congratulations, you have committed money laundering.

How is that money laundering? Because they have an old address on file?

 

[daniels27]

How is that money laundering? Because they have an old address on file?

Because he first commited tax fraud and then used a revolt account to launder the money to spend it.

 

[Sols]

How is that money laundering? Because they have an old address on file?

OP had 1,000 of untaxed income. Let's say 25% tax should've been paid. That would mean OP had 250 illegally obtained (plus 750 that was legal). By using/spending all that money, money laundering has been committed.

 

[cronimus]

Thanks for the replies.
Please let's keep it constructive - I'm asking for help/advice on what makes sense for me to do next and how to de-risk myself at this point (not to be pointed a criminal) I'm trying to learn just like everyone here.
Yes, the LLC will most likely be considered resident for 2024. That is the year that it made around 1k USD.
It made much more in 2025 already, but that will be the year I won't be considered a Spanish resident (as so the LLC won't be considered Spanish resident i suppose?)
I guess I'm trying to assess the risk of the US LLC being found out, and how to de-risk myself at this point.

>Lol...you heard a lawyer really say this?
Yes, on a FB group dedicated to digital nomad visa in Spain. (they have real lawyers loitering there advertising their services by helping people there)

Thanks again

 

[Sols]

Yes, the LLC will most likely be considered resident for 2024. That is the year that it made around 1k USD.
It made much more in 2025 already, but that will be the year I won't be considered a Spanish resident (as so the LLC won't be considered Spanish resident i suppose?)

The company already is tax resident in Spain. It's not as if residency resets with the fireworks at midnight on New Year's. Unless you plan to declare the income and pay taxes in Spain on the income earned thus far in 2025, you are continuing to commit the crime of tax evasion for as long as the company fulfils the requirements for being tax resident in Spain. The next step after that is money laundering, if you make use of the illegally obtained money.

I guess I'm trying to assess the risk of the US LLC being found out, and how to de-risk myself at this point.

The easiest way to de-risk is usually to not not have any risk at all. You do that by regularizing and for example registering the LLC as a local tax payer. Although it might be easier and relatively low risk to cease the activities in the US LLC, form a Spanish company, and shift the business activities into this entity. A lot of tax authorities are quick to declare foreign companies tax resident when they bust someone, but the paperwork to register a foreign company as a tax payer is often pretty difficult. Easier to just form a local company in many cases.

However, the best option when it comes to Spain is to leave Spain, cut all ties, and start up somewhere with lower taxes. If you have an EU passport, Malta and Cyprus are convenient options. But if you leave Spain this very moment and establish the company's head offices somewhere else, income earned from January 1st through February 3rd is still technically taxable in Spain.

Any other steps you take to "derisking" probably just ends up being tax evasion with extra steps.

 

[cronimus]

Thanks for elaborating, I appreciate it.

Got it, so cutting all ties with Spain and moving residence (to Andorra in this case) ASAP, is the best course of action then in my case.
I have a non-EU passport if that matters.

My question is also how they can find about the LLC existence and link it to me? From what I understand FATCA is pretty much one sided (esp with the current US administration I imagine). My only worry currently is that I have to give my FTIN (which is my Spanish tax number I guess) on 5472 IRS form, but I don't imagine that IRS will send this straight to Spain (no automatic data exchange).

I concede that my prior steps have been foolish, but I'm trying to do damage control now, hence me asking for help here.

 

[Sols]

My question is also how they can find about the LLC existence and link it to me?

CRS is a bit of a risk for you since you use Revolut. But they don't exactly work hard to catch tax evaders and likely won't do anything as long as the amounts are low enough and you don't raise any flags. However, there is a risk that Revolut — for one reason or another — adjusts your account profile to use your Spanish address, whereupon CRS and information sharing with Spain are in scope.

Another risk include information leaks, someone snitching on you, or — and this is more common than you might think — social media. Don't go posting on Instagram about a car or house you bought if your declared income doesn't line up with it.

If you act quickly and discreetly, you can probably get out of Spain without any major problems. If you wait too long, you might have problems not only in Spain but also in Andorra or wherever you go next. Suppose you don't leave Spain until well into 2025 and you've earned a large sum of money. When your next bank asks you for tax returns proving you have declared your income, what will you say?

From what I understand FATCA is pretty much one sided (esp with the current US administration I imagine). My only worry currently is that I have to give my FTIN (which is my Spanish tax number I guess) on 5472 IRS form, but I don't imagine that IRS will send this straight to Spain (no automatic data exchange).

FATCA's lack of reciprocity is not something to be relied upon completely. The US can and does reciprocate and share information with other countries. It's just far, far less reliable than CRS and unlikely for the amounts and setup discussed here.

 

[cronimus]

Thank you very much for the info!

Btw, I'm working with an established advisor in Andorra on my case and we will basically do the EOR setup (all legal of course) where I get residence as an employee of their company. Then all my clients will pay to them and the EOR company will pay to me (minus 500 EUR monthly that they keep for their service)
So from the point of Andorra banks, everything will look legit I think - I pay my 10% tax in Andorra and get my money from the EOR salary.
I suppose I can use my LLC to be "one of the clients", that will pay to the EOR company.

Still don't know if I will need to declare the US LLC to Andorra (and open up its kimono) but planning to cross that bridge later