Taxes with international clients in Spain: what nobody tells you

100% to international clients still pays up to 47% IRPF plus the RETA fee in Spain. If you have clients outside Spain, your tax situation is more complex than you think. We explain VAT, withholdings and how to optimize.

A Spanish autónomo billing 100% to international clients still pays up to 47% IRPF plus the RETA fee in Spain, because the client's location does not change your tax residency.

Working with international clients while based in Spain creates a complex tax situation. Here's what you need to understand and how a US LLC can simplify things dramatically.

The challenge for Spanish freelancers with international clients

When you're autónomo in Spain and you serve clients in the US, Germany, Mexico, or anywhere outside Spain, you face several complications:

VAT complications: Digital services sold to businesses in other EU countries under B2B rules generally don't require charging Spanish VAT (reverse charge applies, per EU Directive 2006/112/EC). But for B2C sales to EU consumers, you may need to register for OSS (One-Stop Shop). Non-EU clients? Different rules again. services to non-EU businesses are generally exempt from Spanish VAT (Modelo 303 with "no subject" operations). The paperwork is relentless: Modelo 303 quarterly, Modelo 349 for intra-community, Modelo 390 annual summary.

Withholding taxes: Some countries (like the US under IRC §1441) apply withholding taxes on certain payments to foreign service providers. Getting these back requires filing foreign tax returns or proper W-8BEN-E documentation.

Currency exchange: Managing invoicing in multiple currencies while operating through a Spanish bank account is complex and costly. Spanish banks typically charge 2-4% markup on exchange rates plus wire fees of €15-50.

High Spanish income tax: All income, regardless of where it comes from, is subject to Spanish IRPF at progressive rates: 19% (first €12,450), 24% (€12,450-€20,200), 30% (€20,200-€35,200), 37% (€35,200-€60,000), 45% (€60,000-€300,000), and 47% above €300,000.

How a US LLC simplifies international billing

With a US LLC:

VAT is no longer your problem: Your US LLC invoices clients for services. As a US company, you don't charge European VAT on business-to-business international services. Your clients handle the VAT in their own countries via reverse charge. No Modelo 303 with international complications. No Modelo 349 for intra-community operations. No OSS registration for B2C.

You invoice in dollars: No more currency complications at the invoicing level. Your LLC receives dollars in Mercury (with $0 wire fees), and you convert to euros when you need to at real market rates through Wise Business (typically 0.4-0.6% for EUR/USD vs. 2-4% at Spanish banks).

Tax optimization: The LLC's net profits (after legitimate business expense deductions) are what you declare in Spain. The effective taxable amount is lower than your gross revenue.

Professional credibility: International clients, especially US companies, prefer working with a US business entity. You invoice with your LLC name, your EIN, and your Mercury bank details. Professional.

What you must still declare in Spain

A US LLC doesn't make you tax-free in Spain. You must:

Declare all LLC profits in your Spanish IRPF tax return
File Modelo 720 if your foreign assets exceed €50,000
Maintain proper documentation of all LLC income and expenses
Comply with Spanish tax resolution DGT V0290-20 regarding treatment of foreign entity income

The difference is in how much you declare, after deducting real business expenses, and the potential to optimize your overall tax position.

Spain-US double taxation treaty

Spain and the United States have a Double Taxation Convention (DTC). This means:

You won't pay taxes in both countries on the same income
The treaty provides rules for which country has taxing rights on different types of income
It may provide tax credits for taxes paid in one country against your liability in the other
Article 7 (Business Profits) generally gives taxing rights to the country of residence for services performed online

Practical example with real numbers

María is a UX designer in Barcelona. She bills €8,000/month (€96,000/year), all to US and UK companies.

As autónomo:

Autónomo social security: ~€450/month (€5,400/year)
IRPF quarterly advances (Modelo 130): 20% of net income
Annual IRPF at effective rate ~33%: ~€31,680
VAT paperwork: quarterly Modelo 303, annual Modelo 390
Total tax burden: ~€37,080 (38.6% effective)
Net after taxes: ~€58,920

With LLC (properly structured):

LLC deductible expenses: €20,000/year (software, tools, hardware, Exentax fees, coworking, training)
Net LLC profit: €76,000/year
Declared in Spain, IRPF on €76,000: ~€21,000 (effective ~27.6%)
LLC costs (formation amortized + annual maintenance): ~€1,500/year (year 1 ≈ €2,000 with formation)
Total burden: ~€22,400 (23.3% effective)
Net after taxes: ~€73,600

Annual savings: ~€14,680: legally, transparently, and sustainably.

What information you need to keep

For proper compliance with both IRS and Spanish tax authorities:

All invoices issued by your LLC
All expense receipts and documentation
Bank statements showing income and distributions
LLC operating agreement
EIN documentation
Form 5472 copies for cross-reference
Modelo 720 filing (if applicable)

The financial tools that make international taxation simple

You don't need to be an expert in international tax law. You need the right structure and the right team. Here's what we set up for every client:

The W-8BEN-E: your tax treaty tool

When your LLC provides services to US clients, they may ask you to complete a W-8BEN-E form. This tells the US client:

Your LLC is a foreign entity
Your country of tax residence
Whether a tax treaty reduces or eliminates US withholding
Your EIN

Without a properly completed W-8BEN-E, US clients may withhold 30% of your payment. With it, the withholding may be reduced to 0% (depending on the treaty between the US and your country).

At Exentax, we prepare your W-8BEN-E as part of our service.

To keep going on this thread, Can you legally pay 0% taxes? The truth about tax optimization fills in a nuance this guide only touched on.

Next steps

Now that you have the full context, the natural next step is to map it against your own situation: what fits, what doesn't, and where the nuances depend on your residency, your activity and your volume. A quick review of your specific case usually saves a lot of noise before taking any structural decision.

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. At Exentax we have closed clients in exactly this spot at zero penalty. Speaking up early pays off — and saves you five figures.
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.

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). That is exactly why at Exentax we keep your calendar tight — you stop thinking about deadlines and we close them before they ever bite.
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:

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

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.

Invoicing international clients from Spain: the correct order before charging

Selling services or digital products to clients in the US, EU, LATAM or rest of world from Spain is not "simple no-VAT invoice" - it is a small puzzle with three questions: is the client B2B or B2C?, inside or outside the EU?, digital or advisory service? These are the rules we apply.

B2B outside Spain, inside the EU. Reverse charge: invoice without Spanish VAT indicating the client's intra-community VAT number and the wording "Intra-community supply, art. 69.One LIVA, reverse charge". Your client self-assesses VAT in their country. You need to be registered in VIES (form 036).
B2B outside the EU. Out of scope of Spanish VAT under the place-of-supply rule (art. 69 LIVA). Invoice without VAT with the wording "Out of scope - supplier not established in client's territory". No Spanish VAT, no intra-community declaration.
B2C digital services inside the EU. This is where it gets tricky: you apply the client's country VAT (not Spanish) if you exceed the 10,000 EUR threshold in B2C EU sales. To avoid 27 different filings, register in OSS (One Stop Shop) and declare everything in a single quarterly Spanish return.
B2C digital services outside the EU. Out of scope of Spanish VAT. Invoice without VAT. Some countries (Australia, UK, Canada) require local VAT registration if you exceed their threshold - supplier's responsibility, not automatic.

What we are asked the most

Do I have to invoice in English or in Spanish? You can invoice in English as long as it meets Spanish invoicing rules (issuer/receiver data, correct VAT or exemption, sequential number). US clients appreciate it, Europeans too.

What about IRPF? How is foreign income taxed? As economic activity income at the marginal rate (same as a Spanish client). Foreign collection is NOT IRPF-exempt; only the VAT treatment changes per the rules above.

At Exentax we review your client mix (B2B/B2C, EU/non-EU, digital/advisory), give you the correct legal wording and, if your B2C EU volume exceeds 10k yearly, register you in OSS so you file a single consolidated return.

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. We close it with you from Exentax: one call, the filing goes out, the archive is set, and the risk stays on paper.

If it is not clean here, every downstream assumption becomes negotiable in front of the authority.

Common mistakes

If it is not clean here, every downstream assumption becomes negotiable in front of the authority.

1. VAT does not apply in most cases

Most of the avoidable damage we see in this exact point comes from skipping the documentation step, not from the underlying tax logic.

2. The double-taxation relief

If it is not clean here, every downstream assumption becomes negotiable in front of the authority.

What you actually pay as a Spanish autónomo with international clients

Field note from running this for clients month after month: the rule is straightforward, the execution is where it breaks. Plan the operational side before the legal side.

Without optimisation (plain autónomo):

With an optimised LLC structure:

Option 1: Stay as a Spanish autónomo

The numbers and the calendar matter - get either wrong and the rest unravels.

Option 2: US LLC + optimised tax structure

Field note from running this for clients month after month: the rule is straightforward, the execution is where it breaks. Plan the operational side before the legal side.

On the same topic

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