Contact UsIn our group we are intending to set up a Spanish entity to start business in Spain. Our foreign investments are currently held through a US single member LLC (we are also contemplating setting-up a foreign holding company in the near future). In case that we repatriate profits from Spain to the US, will the US-Spain double tax treaty reduced withholding tax rates apply on dividends distributed to the LLC?
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Tax Professional Answers
Carlos Gabarro
From your question I presume the US LLC has not been checked for US federal tax purposes; thus, it is a disregarded entity for US tax purposes. The answer is yes, limited tax treaty rates (10%/15% under the current treaty) would apply but only to the extend income generated through the LLC is taxed in the US (i.e., at the level of its members). Hence, if this is a sole member LLC fully held by a US Corporation, the reduced treaty rates can be applied. Note that certain formalities would need to be followed in Spain to apply said tax treaty benefits. Please contact me by phone or email as you deem as I would be delighted to further assist on setting-up your Spanish business.
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576 weeks ago