10 tax mistakes Spanish freelancers make (and how to avoid them)

150 euros and easily climbs above 3. From not separating personal and business accounts to ignoring international income rules, the most common tax errors and their solutions.

A typical AEAT penalty for misreporting VAT starts at 150 euros and easily climbs above 3,000 euros when it exceeds 50% of the unpaid quota (LGT art. 191). We close it with you from Exentax: one call, the filing goes out, the archive is set, and the risk stays on paper.

After working with hundreds of Spanish freelancers who operate US LLCs, we've identified the most common tax mistakes. Learn from others' errors. each one can cost you thousands.

Mistake #1: Not separating personal and business finances

This is the most common mistake and the one that creates the most problems. Using your LLC bank account for personal expenses, or mixing personal savings with business income, creates:

Complications for Form 5472 reporting
Potential "piercing of the corporate veil" (losing your liability protection)
Accounting nightmares at tax time
Compliance triggers with Mercury and Wise

Fix: Maintain dedicated accounts. Everything business goes through Mercury. Personal expenses from your personal account. Use Wallester virtual cards for each business subscription so tracking is automatic. Use Relay sub-accounts to organize by client or project. Use Slash for corporate treasury. idle cash generates yield while properly separated from personal funds.

Mistake #2: Ignoring Form 5472

Many LLC owners discover Form 5472 only when they receive a penalty notice. The $25,000 per-year penalty (IRC §6038A) is real and devastating.

Fix: Make sure your LLC formation service includes annual tax compliance. At Exentax, we file Form 5472 + Form 1120 as part of our annual maintenance. no surprises.

Mistake #3: Not updating the BOI Report after changes

The BOI Report must be updated within 30 days of any change in beneficial ownership information, including your address, passport number, or ownership structure. Penalty: $591/day for non-compliance, up to $10,000 + 2 years criminal for willful violations. Breathe: at Exentax this is routine, we bring you up to date and the next review closes in one round, no drama.

Fix: Notify your formation service immediately when anything changes. We update your BOI Report as part of our maintenance service.

Mistake #4: Assuming "LLC pays 0% tax" means you pay 0% total

The LLC pays $0 US federal tax. You still owe taxes in Spain. IRPF rates range from 19% to 47%. Many freelancers overlook this and face surprises at Spanish tax time.

Fix: Understand that you must declare LLC profits in Spain and plan accordingly. Work with both Exentax (for US compliance) and a Spanish tax advisor (for IRPF). DGT V0290-20 addresses the treatment of foreign entity income.

Mistake #5: Not issuing professional invoices

Some LLC owners receive payments without issuing proper invoices. This creates compliance problems and looks unprofessional.

Fix: Issue professional invoices for every transaction, including:

LLC legal name and registered agent address
EIN
Invoice number and date
Service description
Amount in USD
Payment details (Mercury routing number and account number, or Stripe payment link)

Mistake #6: Using Wise as the primary account

Wise is an EMI (Electronic Money Institution), not a bank. It's not FDIC insured and is better suited as a currency conversion tool than a primary business account. Wise uses safeguarding (fund separation) but does not have FDIC deposit protection.

Fix: Use Mercury as your primary LLC account (Column NA, FDIC insured to $250K, extendable to $5M). Use Wise exclusively for currency conversions and multi-currency receipts. Use Slash for corporate treasury if you want yield on idle cash.

Mistake #7: Not filing the BOI Report at all

Many LLC owners have never heard of the BOI Report. Since 1 January 2024, it's required for virtually all US LLCs. Penalties are severe: up to $10,000 fine and 2 years in prison for willful violations.

Fix: Make sure your formation service files the BOI Report. At Exentax, it's included in every formation.

Mistake #8: Choosing the wrong state

Some people choose Delaware because they've heard it's "the best." For a freelancer with no US investors, Delaware's franchise tax and reporting requirements are unnecessary overhead.

Fix: Choose based on your actual needs. For most freelancers: New Mexico (no annual state fees) or Wyoming (strongest asset protection (with annual report)).

Mistake #9: Not maintaining an Operating Agreement

Some formation services skip the Operating Agreement. This document is essential for banks, payment processors, and legal situations. Mercury, Stripe, and PayPal all require it during onboarding.

Fix: Ensure your LLC has a proper Operating Agreement, customized for a non-resident single member, with explicit Disregarded Entity classification.

Mistake #10: Trying to DIY everything

US tax compliance is complex. Mistakes cost more than professional help. Common DIY errors: wrong EIN form (SS-4 vs. W-7), Operating Agreement that doesn't meet Mercury requirements, BOI Report filed late, inconsistent documentation leading to bank rejection.

Fix: Work with a specialized service that understands both US LLC requirements and the tax situation of Spanish-speaking entrepreneurs. The cost of professional service is a fraction of what one penalty costs. Relax: at Exentax this is what we do every week, we close it before the letter ever lands in your inbox.

Mistake #11: Not having proper insurance

Some LLC owners assume the LLC structure replaces insurance. It doesn't. the LLC limits personal liability, but the LLC itself can still face claims.

Fix: Consider professional liability (E&O) insurance, especially for advisory and agency work. General liability for client-facing activities. Cyber liability if you handle client data.

Mistake #12: Not tracking foreign asset declarations

Many countries require declaring foreign assets above certain thresholds. Spain's Modelo 720 applies to foreign assets exceeding €50,000. Failure to declare can result in significant penalties.

Fix: Track all your foreign financial accounts and assets. Declare them as required by your country's laws. At Exentax, we remind clients of these obligations and coordinate with their local tax advisors.

Summary of penalties to avoid

These are real penalties that real people pay. Every single one is avoidable with proper compliance. And if a notice does land, at Exentax we keep the dossier ready so you reply in hours, not weeks.

Mistake #13: Not understanding CRS and information exchange

The Common Reporting Standard (CRS) means your country's tax authority may receive information about your US bank accounts automatically. Some freelancers assume their LLC is "invisible" to their home country. It's not.

Fix: Operate with full transparency. Declare all foreign assets and income as required by your country's laws. The LLC is about legal optimization, not hiding income.

Mistake #14: Not having a backup bank account

Relying solely on Mercury means a single compliance review or account restriction can freeze your entire business. This happens more often than you'd think.

Fix: Open a Relay account as a backup. Keep 2-3 months of operating expenses there. If Mercury ever has issues, your business continues operating without interruption.

Mistake #15: Ignoring FBAR filing requirements

If your US financial accounts (Mercury, Relay, Slash) have an aggregate balance exceeding $10,000 at any point during the year, you must file an FBAR (FinCEN Form 114). Non-willful penalty: up to $12,909 per violation. Willful: $129,210 or 50% of account balance, whichever is greater.

Fix: File FBAR annually through FinCEN's BSA E-Filing system. At Exentax, we handle this as part of annual maintenance.

The cost of each mistake

Every mistake on this list is preventable. The cost of professional help is a fraction of what even one penalty costs. Don't learn these lessons the hard way. That is exactly why at Exentax we keep your calendar tight — you stop thinking about deadlines and we close them before they ever bite.

Closing out, here's a related piece that sits naturally next to this article: US resident vs non-resident LLC: the key tax differences helps round off the context.

Tax compliance in your country: CFC, controlled-foreign rules and income attribution

A US LLC is a fully legal, internationally recognized vehicle. But compliance does not end at incorporation: as an owner who is tax-resident elsewhere, your local tax authority still has the right to tax what the LLC earns. The key is under which regime.

By jurisdiction

Spain (LIRPF/LIS). An operative single-member disregarded LLC (real services, no significant passive income) is generally treated under income attribution (art. 87 LIRPF): the LLC's net profits are attributed to the member in the year they arise and integrated into the general IRPF base. If instead the LLC elects corporation treatment (Form 8832) and is controlled by a Spanish resident with mostly passive income, the CFC regime (art. 91 LIRPF for individuals, art. 100 LIS for companies) can apply. The choice is not optional: it depends on economic substance, not on the label.
Information returns. US bank accounts with average or year-end balance >€50,000: Form 720 (Law 5/2022 after CJEU C-788/19, 27/01/2022, penalties now under the general LGT regime). Related-party transactions and dividend repatriation: Form 232. US-custodied crypto: Form 721. And if a notice does land, at Exentax we keep the dossier ready so you reply in hours, not weeks.
Spain–US tax treaty. The treaty (BOE 22/12/1990, Protocol in force 27/11/2019) governs double taxation on dividends, interest and royalties. An LLC without a permanent establishment in Spain does not by itself create a PE for the member, but effective management can if all activity is run from Spanish territory.
Mexico, Colombia, Argentina and other LATAM jurisdictions. Each has its own CFC regime (Mexico: Refipres; Argentina: foreign passive income; Chile: art. 41 G LIR). Common principle: profits retained inside the LLC are deemed received by the member if the entity is treated as transparent or controlled.

Practical rule: an operative LLC with substance, properly declared in your country of residence, is legitimate tax planning. An LLC used to hide income, fake non-residence or shift passive income with no economic justification falls within art. 15 LGT (anti-abuse) or, worse, art. 16 LGT (simulation). The facts decide, not the paperwork.

Before going further, put numbers on your case: the Exentax calculator compares, in under 2 minutes, your current tax bill with what you would carry running a US LLC properly declared in your country of residence.

> Free consultation, no strings attached

At Exentax we structure the entity to fit the first scenario and document every step so your local return can be defended in case of review.

Legal and regulatory references

This article relies on rules currently in force. Main sources for verification:

United States. Treas. Reg. §301.7701-3 (entity classification / check-the-box); IRC §882 (tax on foreign income effectively connected with a US trade or business); IRC §871 (FDAP and withholding on non-residents); IRC §6038A and Treas. Reg. §1.6038A-2 (Form 5472 for 25% foreign-owned and foreign-owned disregarded entities); IRC §7701(b) (tax residency, substantial presence test); 31 U.S.C. §5336 (Corporate Transparency Act, BOI Report to FinCEN).
Spain. Law 35/2006 (LIRPF), arts. 8, 9 (residency), 87 (income attribution), 91 (CFC for individuals); Law 27/2014 (LIS), art. 100 (CFC for companies); Law 58/2003 (LGT), arts. 15 (anti-abuse) and 16 (simulation); Law 5/2022 (Form 720 penalty regime after CJEU C-788/19 of 27/01/2022); RD 1065/2007 (Forms 232 and 720); Order HFP/887/2023 (Form 721 crypto). Relax: at Exentax this is what we do every week, we close it before the letter ever lands in your inbox.
Spain–US treaty. BOE of 22/12/1990 (original DTT); Protocol in force since 27/11/2019 (passive income, limitation on benefits).
EU / OECD. Directive (EU) 2011/16, amended by DAC6 (cross-border arrangements), DAC7 (Directive (EU) 2021/514, digital platforms) and DAC8 (crypto-assets); Directive (EU) 2016/1164 (ATAD: CFC, exit tax, hybrid mismatches); OECD Common Reporting Standard (CRS).
International framework. OECD Model Convention, art. 5 (permanent establishment) and Commentaries; BEPS Action 5 (economic substance); FATF Recommendation 24 (beneficial ownership).

Applying any of these rules to your specific case depends on your tax residency, the LLC's activity and the documentation you keep. This content is informational and does not replace personalized professional advice.

Banking and tax facts worth clarifying

Fintech and CRS information evolves; here is the current state:

Notes by provider

Mercury operates with several federally chartered partner banks and FDIC coverage via sweep network: mainly Choice Financial Group and Evolve Bank & Trust, with Column N.A. still in some legacy accounts. Mercury is not itself a bank; it is a fintech platform backed by those partner banks. If Mercury closes an account, the balance is typically returned by paper check mailed to the account holder's registered address, which can be a serious operational problem for non-residents; keep a secondary account (Relay, Wise Business, etc.) as contingency.
Wise ships two clearly different products: Wise Personal and Wise Business. For an LLC you must open Wise Business, not the personal account. Important CRS nuance: a Wise Business held by a US LLC sits outside CRS because the account holder is a US entity and the US is not a CRS participant; the USD side operates via Wise US Inc. (FATCA perimeter, not CRS). In contrast, a Wise Personal opened by an individual tax-resident in Spain or another CRS jurisdiction does trigger CRS reporting via Wise Europe SA (Belgium) on that individual. Opening Wise for your LLC does not bring you into CRS through the LLC; a separate Wise Personal in your own name as a CRS-resident individual does report.
Wallester (Estonia) is a European financial entity with an EMI/issuing-bank licence. Its European IBAN accounts are within the Common Reporting Standard (CRS) and therefore trigger automatic reporting to the tax administration of the holder's country of residence.
Payoneer operates through European entities (Payoneer Europe Ltd, Ireland) that are also in scope for CRS for clients resident in participating jurisdictions.
Revolut Business: when paired with a US LLC, it operates under Revolut Technologies Inc. with Lead Bank as its US banking partner. The account delivered is a US account (routing + account number); no European IBAN is issued to a US LLC. The European IBANs (Lithuanian, Belgian) belong to Revolut Bank UAB and are issued to European clients of the group. If you are offered a European IBAN tied to your LLC, confirm exactly which legal entity holds that account and which regime it reports under.
Zero tax: no LLC structure delivers "zero tax" if you live in a country with CFC/tax transparency or income attribution rules. What you achieve is no double taxation and correct reporting at residence, not elimination.

The five mistakes we see every week with Spanish freelancers

We work with freelancers moving from Spanish autónomo to an international structure. The mistakes they carry are rarely exotic: they are the same five, repeated, that cost penalties or a reopening of three-year-old returns. Here is the list, by frequency.

Mixing VAT collected with profit. You charge EUR 1,210 (1,000 + 21% VAT) and treat the 1,210 as income. The 210 belongs to the Treasury - it just stops in your account. Without a treasury system that sets it aside on each receipt, you reach July without cash for the modelo 303 and enter deferrals with a 5-20% surcharge.
Modelo 720 incomplete or late. Accounts at Mercury, Wise Business or Revolut Business crossing EUR 50,000 at any moment of the year trigger 720 by 31 March the following year. The minimum penalty per omitted item dropped after CJEU 2022 (case C-788/19) but is still material. We still find unfiled prior-year 720s in incoming clients today.
Not separating LLC funds from personal accounts. Moving LLC money to personal without a distribution minute, no withholding planned in residency and no bookkeeping entry turns the LLC into a sham in AEAT's eyes. The first thing an international parallel inspection looks at.
Forgetting OSS or IOSS VAT. Selling B2C digital services to EU consumers from your autónomo or LLC requires OSS (services) or IOSS (goods
Trusting "they have not said anything yet". The IRPF statute of limitations is 4 years from 30 June of the following year - but international inspections pull foreign accounts and modelo 720 with special timelines. What you do not find is found by the Treasury via CRS, FATCA or DAC7 two years later. We close it with you from Exentax: one call, the filing goes out, the archive is set, and the risk stays on paper.

What we are asked the most

How do I regularise voluntarily without triggering an inspection? Supplementary return with surcharge (15% within 12 months, 20% after) and no penalty. Arriving before AEAT changes the outcome completely. This is where Exentax steps in: we file the form, archive the receipt and, if the authority asks, your answer is already on the desk.

Is it worth hiring an accountant or do I do it myself? Single, simple national activity: self-management with software (Holded, Quaderno, Quipu) works. The more international or higher the turnover, the cost of a professional pays itself back with the first avoided penalty.

At Exentax we review the last three years, identify red flags, regularise what is needed and leave a monthly tax calendar that prevents the issues from coming back.

Legal & procedural facts

FinCEN and IRS reporting requirements moved recently; the current state is:

BOI / Corporate Transparency Act: your LLC is NOT required to file (a competitive advantage). After FinCEN's March 2025 interim final rule, the BOI Report obligation was narrowed to "foreign reporting companies" (entities formed OUTSIDE the US and registered to do business in a state). A US-formed LLC owned by a non-resident does NOT file the BOI Report: one fewer filing on your calendar, less paperwork, and a cleaner structure than ever. If your LLC was formed before March 2025 and you already filed BOI, keep the acknowledgement. The regulatory status can change again: we monitor FinCEN.gov on every filing and, if the obligation comes back, we handle it at no extra cost. Current status verifiable at fincen.gov/boi.
Form 5472 + pro-forma 1120. For a Single-Member LLC owned by a non-resident, the final regulations of Treas. Reg. §1.6038A-1 (in force since 2017) treat the LLC as a corporation for 5472 purposes. Procedure: pro-forma Form 1120 (header only: name, address, EIN, tax year) with Form 5472 attached. It is filed by certified mail or fax to the IRS Service Center in Ogden, Utah, not e-filed via standard MeF. Due date: April 15; extension via Form 7004 to October 15. Penalty: $25,000 per form per year, plus $25,000 per additional 30 days of non-filing after IRS notice.
Substantive Form 1120. Only applies if the LLC has filed a check-the-box election to C-Corp (Form 8832): it then pays 21 % federal corporate tax and files a substantive 1120. A standard disregarded LLC does not file a substantive 1120 and does not pay federal corporate tax.
EIN and notice. Without an EIN you cannot file 5472 or BOI. The IRS does not warn before imposing penalties; you find out when an EIN is flagged or a later filing is rejected. At Exentax we have closed clients in exactly this spot at zero penalty. Speaking up early pays off — and saves you five figures.

A year-end self-audit that prevents the most common mistakes

We close every year with a short self-audit run with the freelance client that takes about one hour and that catches the most common mistakes before they crystallise into a real adjustment. First module: invoicing audit. We review the issued-invoice ledger for the year against the contracts in place, to confirm that every contract has produced the expected number of invoices and that no invoice has been issued without a contract behind it. Second module: deduction audit. We walk through the deduction ledger by category and verify that each category has the documentation kit attached (supplier name, NIF, dates, amounts, activity link in one line). Third module: cross-form reconciliation. We match the totals of the four quarterly Form 130 filings against the year-end IRPF base, the totals of the four quarterly Form 303 filings against the VAT box of Form 100, and the Form 349 totals against the corresponding boxes; any mismatch is investigated and resolved before the IRPF return is filed. Fourth module: residency and structure check. We re-confirm that the residency status, the autónomo registration and the activity codes are aligned with the activity actually carried out during the year, and we flag any divergence for the year-one conversation of the new year. That is exactly why at Exentax we keep your calendar tight — you stop thinking about deadlines and we close them before they ever bite.

A first-quarter checkpoint that catches half of the year's mistakes

We hold a short first-quarter checkpoint with each freelance client around mid-April that catches most of the mistakes that would otherwise crystallise during the year. Three things are reviewed in this checkpoint. First, the IRPF withholding rate applied on every invoice issued since January, against the current rule for the autónomo's registration date and activity. Second, the deduction-tagging consistency in the bookkeeping for the first three months, with any miscategorised expense reclassified before the first quarterly Form 130 is filed. Third, the cash-flow alignment between the operating account, the autónomo quota domiciliation and the projected year-end IRPF balance to pay; any mismatch is recalibrated at the checkpoint, not in November. The checkpoint takes about thirty minutes per client and it is the single highest-leverage routine we maintain across the year for catching tax errors before they become real.

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