What Happens to Your US LLC in Spain, Portugal or the Netherlands?
For income tax, the IRS ignores a single-member LLC by default. Europe doesn't have to. Portugal's tax authority has ruled a US LLC opaque, a Dutch decree in force since 2025 lists Delaware LLCs as comparable to a BV, and Spain taxes companies managed from Spain at 25%.
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None of that makes your LLC a problem. The structure that kept your US taxes simple was built for one tax system, and you're about to live under a second. The fix is a decision you make before you move, not a crisis you manage after.
Why Does a US LLC Get Taxed Differently in Europe?
Because each country classifies foreign entities under its own rules, and none of the three is bound by your IRS classification. A second test then asks where the business is actually run from.
In the US, a single-member LLC is a disregarded entity: for income tax the IRS treats it as "disregarded as separate from its owner" unless you file Form 8832 to be taxed as a corporation. You report profit on Schedule C of your 1040 and pay self-employment tax like a sole proprietor. For income tax, the IRS acts as if your LLC doesn't exist (it's still a separate entity for employment tax and certain excise taxes). Europe is less willing to play along.
Two questions decide what happens abroad:
- Classification. Is the LLC see-through (profit taxed to you personally) or a company in its own right?
- Place of management. If it's a company, is it resident where you live because that's where decisions get made? A one-person LLC run from a kitchen table in Valencia, Lisbon or Utrecht is managed from that kitchen table.
| Spain | Portugal | Netherlands | |
|---|---|---|---|
| How a US LLC is classified | Unsettled; three-part DGT test | Opaque (AT ruling, Processo 2360/2016) | Delaware and Ohio LLCs listed as comparable to an NV or BV |
| Residence test for companies | Sede de dirección efectiva (Ley 27/2014, art. 8.1.c) | Sede ou direção efetiva (CIRC, art. 2.º, n.º 3) | Judged "by the circumstances" (AWR, art. 4) |
| Corporate tax if resident (2026) | 25% general rate | 19% general (15% on first €50,000 for SMEs) | 19% up to €200,000, 25.8% above |
| The usual local route | Autónomo | Trabalhador independente | Eenmanszaak (ZZP) or BV |
Spain: What Happens to Your LLC If You Live in Spain?
Spain hasn't settled how it classifies a US LLC, and advisers read the rules differently. Either way, if you live in Spain and run the business from Spain, the profit ends up taxed in Spain. The open question is at which layer.
The Dirección General de Tributos set its test in a resolution of 6 February 2020 (BOE-A-2020-2108). A foreign entity is a pass-through (entidad en régimen de atribución de rentas) only if it isn't taxed itself in its home state, its income is attributed to members as it's earned, and that income keeps the character of the activity that produced it.
A disregarded US LLC arguably ticks all three, but consultancy BMC's 2026 guide, applying that same test, says US LLCs don't qualify automatically and need a case-by-case analysis. Garrigues noted in 2016 that the DGT, in ruling V0601-16, did not say a US-transparent LLC must be a pass-through in Spain, and Jurospain's December 2025 guide warns Spain "may view your LLC as a foreign corporation" by default.
If Spain treats the LLC as a company, Ley 27/2014, art. 8.1.c makes it Spanish-resident when its sede de dirección efectiva, where direction and control of its activities sits, is in Spain. That means Impuesto sobre Sociedades at a general rate of 25% in 2026 (very small companies get lower bracket rates), with personal tax on distributions on top.
That double layer is why practitioners such as Jurospain steer LLC owners toward registering as an autónomo in Spain rather than running the LLC itself from Spain. Jurospain's version has the autónomo invoice the US LLC for management services; closing the LLC and invoicing clients directly is the other common route. Our guide to what a Spain DNV autónomo actually files walks through the quarterly Modelo 130 and 303 rhythm. A gestor handles a few filings a year, which leaves the rest of the week for a country where lunch is an actual meal.
What Does the Spain Digital Nomad Visa Need From an LLC Owner?
The visa rules are written around your relationship with companies outside Spain, so proof of real clients carries the weight. The Spanish consulate in Washington lists these for self-employed applicants:
| Requirement (2026) | Figure |
|---|---|
| Real, continuous activity of the company or group you work with | At least 1 year |
| Professional relationship with companies not located in Spain | At least the last 3 months |
| That relationship continuing while you work from Spain | At least 1 year |
| Work for Spanish companies | No more than 20% of your activity |
| Social security | Proof of RETA (self-employed) registration or a registration request, plus a responsible declaration committing to Spanish Social Security obligations |
No consulate page we checked addresses an owner signing both sides of their own LLC's contract. Because the rule is framed around companies you work with, client contracts and invoices map onto it directly. Our Spain Digital Nomad Visa guide has the full document list.
Portugal: Does Portugal Tax Your US LLC as a Company?
Yes, on the published record. In binding ruling Processo 2360/2016, confirmed on 20 December 2017, the Autoridade Tributária held that US tax transparency doesn't carry over into Portuguese tax transparency. The LLC is opaque.
That ruling answered one taxpayer's facts, but it shows how the AT reasons:
- Distributions to a Portuguese-resident member are capital income, taxed at a flat 28% under CIRS art. 72.º, n.º 1, unless you opt to aggregate them with your other income (n.º 13).
- Management: under CIRC art. 2.º, n.º 3, an entity with its sede ou direção efetiva in Portugal is resident.
- Corporate rate: a resident LLC pays IRC at 19% for tax periods starting in 2026 (Lei n.º 64/2025), with 15% on the first €50,000 of taxable profit for qualifying SMEs (CIRC art. 87.º, n.º 2).
- Working from Portugal: Fresh Legal's 2025 guidance flags single-member LLCs managed from Portugal as a structure to avoid, citing Portuguese-source income and social security and payroll exposure.
The local alternative is simple on paper. Freelancers submit a declaração de início de atividade before they start working, at the latest on the start date they declare, and then invoice US clients as a trabalhador independente. Our NIF, bank account and rental guide covers the setup around it.
For the D8, Portuguese consulate checklists ask independent professionals for a company contract, a services contract, or a document attesting services provided to one or more entities. You also show average monthly income over the last three months of at least four Portuguese minimum wages, €3,680/month in 2026, from outside Portugal. The Portugal D8 visa guide has the rest. And a 10am call with a New York client lands at 3pm in Lisbon, finished before the light turns gold on the river.
Netherlands: What Happens to a US LLC Under the DAFT?
The Netherlands generally treats a US LLC as a company. Since 1 January 2025, the Wet fiscaal kwalificatiebeleid rechtsvormen classifies foreign entities by comparing them to Dutch legal forms, and the list attached to the Besluit vergelijking buitenlandse rechtsvormen (Staatscourant 2024, nr. 36732) names the Delaware LLC and Ohio LLC as comparable to a Dutch NV or BV. The explanatory notes add that an LLC from any US state can be comparable to a BV even without share capital.
An LLC you manage from the Netherlands is then a candidate for Dutch residence, which the Algemene wet inzake rijksbelastingen (art. 4) says is judged "by the circumstances":
| Dutch tax layer (2026) | Rate |
|---|---|
| Vennootschapsbelasting on profit up to €200,000 | 19% |
| Vennootschapsbelasting on profit above €200,000 | 25.8% |
| Box 2 on distributions to a 5%+ shareholder, up to €68,843 | 24.5% |
| Box 2 above €68,843 | 31% |
Here sources disagree. Dutch firm Cardon warns that US taxes and Dutch corporate tax on an LLC "cannot be offset" and suggests converting to a C corporation. The US regulation, however, treats the owner of a disregarded entity as having paid foreign tax imposed at the entity level (26 CFR 1.901-2(f)(4)(ii)). That's the starting point for a foreign tax credit, not a promise it lines up with the box 2 layer in your year. Put this question to a cross-border adviser before you land.
For the visa, the IND expects DAFT applicants to be registered in the Dutch Chamber of Commerce (KvK) Trade Register with at least €4,500 invested for most legal forms. The usual route is a Dutch eenmanszaak or BV, and our ZZP vs BV guide explains the trade-offs. The €4,500 isn't a fee. It's your money, sitting in your business account while you bike to a client meeting. For the US side, see DAFT and US self-employment tax.
What About US Self-Employment Tax?
It doesn't disappear when you move, and the Foreign Earned Income Exclusion doesn't touch it. The IRS says the excluded amount "will reduce your regular income tax but will not reduce your self-employment tax."
What can help is a totalization agreement. The IRS says these agreements generally ensure social security taxes, including self-employment tax, are paid to only one country. If yours go to a foreign system, you request a certificate of coverage from that country's agency and attach a copy to your Form 1040 each exempt year. Our US expat tax guide covers the FEIE, foreign tax credit and FBAR.
What Are Your Four Options Before You Move?
Most LLC owners land on one of four paths. None is universally right, which is why this belongs on your pre-move list next to apostilles and apartment hunting.
| Option | What it means | Tends to fit when | Watch for |
|---|---|---|---|
| 1. Dissolve and go local | Close the LLC; register as autónomo, trabalhador independente or a Dutch eenmanszaak/BV | You're a solo freelancer and the LLC was mainly a US convenience | Final US return and state closing filings |
| 2. Keep it dormant | LLC stays registered but does no business; you invoice locally | You may move back, or a contract can't be reassigned yet | State annual filings continue, and dormant has to mean dormant |
| 3. Change its classification | Elect corporate treatment (Form 8832) or convert, as Cardon suggests for the Netherlands | Revenue is significant and you want US and European views to match | New US corporate filings; where it's managed still matters |
| 4. Keep operating as is | Keep invoicing through the LLC from Europe | Real US substance: other managers, staff, decisions made in the US | Highest classification and residence risk in all three countries |
If you dissolve: the IRS says to file a final return for the year you close and check the "final return" box, then send a letter with the business name, EIN, address and reason for closing to close the IRS business account. Your formation state has its own dissolution filing.
If you keep it: federal beneficial ownership reporting is off your plate. FinCEN's March 2025 interim final rule exempted US-created companies and their US beneficial owners, and the final rule took effect 14 August 2026. State annual reports and franchise taxes are separate.
Going local isn't a downgrade from "having a company." For most solo freelancers it's the cleaner fit: one tax system that understands your structure, and US clients who get the same invoices from a new address.
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Frequently Asked Questions
Does Spain tax a US single-member LLC as a corporation?
It can. Spain's 2020 DGT resolution uses a three-part test to decide whether a foreign entity is a pass-through, and advisers disagree on how a US LLC fares. If Spain treats it as a company managed from Spain, the 2026 general corporate tax rate is 25%, with personal tax on distributions on top.
How does Portugal treat income from a US LLC?
Binding ruling Processo 2360/2016 treats a US LLC as opaque. Distributions to a Portuguese resident are capital income taxed at a flat 28% under CIRS art. 72, unless you opt to aggregate them. An LLC managed from Portugal can itself be IRC-resident, taxed at 19% for 2026 or 15% on the first €50,000 for qualifying SMEs.
Is a US LLC transparent for Dutch tax purposes?
Generally no. Since 1 January 2025, the Dutch legal-forms list names Delaware and Ohio LLCs as comparable to an NV or BV. A company resident in the Netherlands pays 19% vennootschapsbelasting on profit up to €200,000 and 25.8% above, and box 2 tax of 24.5% or 31% applies to distributions.
Can I use my US LLC for the Spain Digital Nomad Visa?
Consulate pages don't address self-signed contracts. For self-employed applicants they ask for a relationship with companies outside Spain for at least the last 3 months, with the company or group active for at least 1 year, and Spanish work capped at 20%. Client contracts and invoices fit that framing best.
Can I use my US LLC for the DAFT visa?
The IND expects registration in the Dutch KvK Trade Register and at least €4,500 invested for most legal forms. The usual route is a Dutch eenmanszaak or BV. How the Netherlands classifies any LLC you keep is a separate tax question for an adviser.
Does the Foreign Earned Income Exclusion cover self-employment tax?
No. The IRS says the FEIE reduces regular income tax but not self-employment tax. A totalization agreement can mean self-employment tax is paid to only one country, documented with a certificate of coverage attached to your Form 1040 each year.
Disclaimer: This guide is for informational purposes only and does not constitute legal or immigration advice. Requirements change frequently — always verify current requirements with the relevant consulate or a qualified immigration lawyer before applying.
Sources:
Official sources
- IRS, "Single member limited liability companies": https://www.irs.gov/businesses/small-businesses-self-employed/single-member-limited-liability-companies
- IRS, "Foreign earned income exclusion": https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion
- IRS, "Self-employment tax for businesses abroad": https://www.irs.gov/individuals/international-taxpayers/self-employment-tax-for-businesses-abroad
- IRS, "Closing a business": https://www.irs.gov/businesses/small-businesses-self-employed/closing-a-business
- 26 CFR 1.901-2(f)(4)(ii), taxes imposed on disregarded entities (via GovInfo): https://www.govinfo.gov/link/cfr/26/1?sectionnum=901-2&year=mostrecent&link-type=xml
- FinCEN, Beneficial Ownership Information Reporting: https://www.fincen.gov/boi
- BOE, Ley 27/2014 del Impuesto sobre Sociedades (consolidated), art. 8: https://www.boe.es/buscar/act.php?id=BOE-A-2014-12328
- BOE, Resolución de 6 de febrero de 2020, Dirección General de Tributos (BOE-A-2020-2108): https://www.boe.es/diario_boe/txt.php?id=BOE-A-2020-2108
- Agencia Tributaria, Impuesto sobre Sociedades, tipo impositivo: https://sede.agenciatributaria.gob.es/Sede/impuesto-sobre-sociedades/que-base-imponible-se-determina-sociedades/tipo-impositivo.html
- Consulate General of Spain in Washington, Telework visa: https://www.exteriores.gob.es/Consulados/washington/en/ServiciosConsulares/Paginas/Consular/Telework-visa.aspx
- Portal das Finanças, Código do IRC, art. 2.º: https://info.portaldasfinancas.gov.pt/pt/informacao_fiscal/codigos_tributarios/CIRC_2R/Pages/irc2.aspx
- Portal das Finanças, Código do IRC, art. 87.º and Lei n.º 64/2025 transitional rate: https://info.portaldasfinancas.gov.pt/pt/informacao_fiscal/codigos_tributarios/CIRC_2R/Pages/irc87.aspx
- Portal das Finanças, Código do IRS, art. 72.º: https://info.portaldasfinancas.gov.pt/pt/informacao_fiscal/codigos_tributarios/cirs_rep/Pages/irs72.aspx
- gov.pt, "Abrir atividade nas Finanças": https://www.gov.pt/servicos/abrir-atividade-nas-financas
- Consulate General of Portugal in Toronto, residency visa for remote professional activity checklist: https://toronto.consuladoportugal.mne.gov.pt/images/vistos/en/digital_nomadsdr_en.pdf
- Staatscourant 2024, nr. 36732, Besluit vergelijking buitenlandse rechtsvormen: https://zoek.officielebekendmakingen.nl/stcrt-2024-36732.pdf
- Algemene wet inzake rijksbelastingen, art. 4: https://wetten.overheid.nl/BWBR0002320/2026-01-01
- Belastingdienst, Tarieven vennootschapsbelasting: https://www.belastingdienst.nl/wps/wcm/connect/bldcontentnl/belastingdienst/zakelijk/winst/vennootschapsbelasting/tarieven_vennootschapsbelasting
- Belastingdienst, Box 2: https://www.belastingdienst.nl/wps/wcm/connect/bldcontentnl/belastingdienst/prive/inkomstenbelasting/heffingskortingen_boxen_tarieven/boxen_en_tarieven/box_2/box_2
- IND, Residence permit self-employed person: https://ind.nl/en/residence-permits/work/residence-permit-self-employed-person
Corroborating sources
- BMC, "LLC estadounidense en España: cómo tributa 2026": https://bm.consulting/es/insights/como-tributa-llc-eeuu-residente-fiscal-espana-2026/
- Garrigues, "Régimen fiscal de una LLC (Limited Liability Company)" (2016): https://www.garrigues.com/es_ES/noticia/regimen-fiscal-de-una-llc-limited-liability-company
- Jurospain, US LLC and Spain Digital Nomad Visa taxes (Dec 2025): https://www.jurospain.com/guides/us-llc-spain-digital-nomad-visa-taxes/
- Vissum Lex, US LLC taxes in Spain for digital nomads (Jul 2026): https://www.vissumlex.com/en/post/us-llc-taxes-spain-digital-nomads
- HTJ Tax, "Treatment of US LLCs in Portugal" (2021): https://htj.tax/2021/04/treatment-of-us-llcs-in-portugal/
- Fresh Legal, "How US LLCs Are Treated in Portugal: 2025 Tax Strategies": https://fresh-legal.com/blog/how-us-llcs-are-treated-in-portugal-2025-tax-strategies
- Cardon, DAFT tax guide (Sep 2025): https://www.cardon.nl/blog/dutch-american-friendship-treaty-(daft)-tax-guide
- Deloitte Netherlands, new qualification policy for legal forms: https://www.deloitte.com/nl/nl/services/tax/blogs/new-qualification-policy-for-legal-forms.html