US LLCs held by Spanish tax residents: Modelo 720, valuation and the limits of DGT ruling V0848-26

The holding in the LLC is reportable on Modelo 720 and valued under article 16.Uno of the Wealth Tax Act; the non-resident LLC falls outside the scope of Modelo 721; and the two obligations are independent of one another. All of it rests on characterisation premises that the DGT takes from the taxpayer and does not test.

The US limited liability company has become the shop-window product of Spanish cross-border planning, and much of what is written about it describes a structure the tax authority has never endorsed. It is worth reading slowly, then, what the Dirección General de Tributos (the DGT) actually decides when it is asked about one. Binding ruling V0848-26, issued on 21 April 2026, is good material for that exercise, because it answers exactly what it is asked and because what it leaves out matters more than what it settles.

The ruling is a consulta vinculante. It binds the Administration in its treatment of the taxpayer who asked it and expresses the criterion the DGT will apply to comparable facts, under article 89.1 of the General Tax Act. It is administrative doctrine rather than case law, but it is the clearest recent statement of how the authority reads this kind of structure for reporting purposes.

The facts, and the premises on which they are answered

An individual resident in Spain incorporated a US-resident LLC in 2025, of which he is the sole member, for the long-term holding of crypto-assets. The entity has no employees and carries on no economic activity. The taxpayer contributed a quantity of virtual currency from his personal wallet. He asked two questions: how the LLC is treated under Spanish law, and what informational return he must file, at what value.

Before answering, the DGT sets out the premises from which it proceeds, and those premises are the key to the whole ruling. It assumes that the LLC is a disregarded entity for US federal tax purposes, so that its income and expenses are attributed directly to the member. It further assumes two matters that come not from the file but from the Centre's own earlier practice: that the LLC has separate legal personality as a matter of company law, a hypothesis the DGT says it draws from the way other taxpayers have characterised such entities in rulings V0341-20 of 13 February and V2447-23 of 19 September; and that the membership interest is represented by transferable instruments recorded by the entity and evidenced by a certificate it issues.

These are premises, not findings. The DGT does not examine whether this particular LLC has those features, nor could it in the setting of a ruling request. Everything that follows depends on them.

Two independent obligations, not a single return

The ruling makes a point that is frequently missed. The obligations to report assets and rights situated abroad originate in the eighteenth additional provision of the General Tax Act, but each class of asset developed in the General Regulation on tax management and inspection procedures, approved by Royal Decree 1065/2007 (the RGAT), constitutes a distinct obligation. Securities and rights under paragraph b) are reported on Modelo 720, under article 42 ter RGAT. Virtual currencies under paragraph d) are reported on Modelo 721, under article 42 quater. They are, the DGT says, two autonomous and mutually independent obligations.

The practical consequence is simple and often surprising. Thresholds, exemptions and the duty to file in subsequent years are computed separately for each return. There is no single EUR 50,000 threshold for foreign wealth, but one threshold per obligation.

Modelo 721 turns on custody, not on ownership

As to the LLC, the answer is direct. Article 42 quater.1 RGAT confines the personal scope of the obligation to individuals and legal persons resident in Spanish territory, permanent establishments in Spain of non-residents, and the entities referred to in article 35.4 of the General Tax Act. If the LLC is not tax resident in Spain, it falls outside that scope and has no Modelo 721 obligation in respect of the virtual currency it has come to own. The conditional is worth holding on to, because we return to it below.

As to the taxpayer himself, the DGT restates the criterion it set out in ruling V2290-23 of 28 July: liability to report requires two objective conditions, that the virtual currency is held in custody by persons or entities providing services to safeguard private cryptographic keys on behalf of third parties, and that those persons or entities are neither resident in Spain nor Spanish permanent establishments. To delimit what custody means, the ruling turns to Regulation (EU) 2023/1114 on markets in crypto-assets, article 3.1.17 of which defines custody and administration on behalf of clients as the safekeeping or control of crypto-assets, or of the means of access to them, and recital 83 of which expressly places providers of non-custodial wallets outside its scope.

From this comes the most practically valuable point in the ruling. Self-custody gives rise to no reporting obligation, whether the wallet is cold or hot and whether or not the keys are held on a hardware device, because the first of the two objective conditions is absent. Liability to report is therefore determined by the manner of custody, not by ownership or by size of holding.

The ruling adds a useful refinement on loss of ownership. The taxpayer ceased to own the coins when he contributed them to the LLC, and that event in principle triggers a duty to report the extinction. Because his balances in earlier years had not exceeded the EUR 50,000 threshold in article 42 quater.5.d), the DGT concludes that the exemption covers the extinction as well, and explains why: the provision attaches the exemption to the virtual currency to be reported, not to the event that gives rise to the obligation. Once earned in respect of ownership, it extends to the loss of it. The criterion is consistent with ruling V0162-26 of 29 January.

One question, however, is left untouched. The eighteenth additional provision and article 42 quater.1 itself extend the obligation to persons who are beneficial owners within the meaning of article 4.2 of Law 10/2010, in respect of virtual currency held in the name of entities incorporated abroad. The sole member of a foreign LLC holding crypto-assets sits comfortably within that definition. The DGT confined itself to excluding the entity from the personal scope and to analysing the taxpayer's own extinguished holding, without addressing this route. That is no small omission for anyone who has built the structure on the assumption that the vehicle breaks the reporting trail.

Modelo 720, and a valuation rule that is rarely neutral

Here the answer is affirmative and unqualified. In exchange for the contribution the taxpayer received instruments representing a participation in the capital of the LLC, and as a Spanish-resident individual holding those instruments he falls within article 42 ter.1.i) RGAT, consistently with rulings V0341-20 of 13 February and V0681-25 of 15 April. Falling within scope does not necessarily mean filing, if one of the exclusions in paragraph 4 applies, in particular the aggregate EUR 50,000 threshold.

Valuation is where the wrapper stops being neutral. Article 42 ter.6 RGAT refers to the rules of Law 19/1991 on Wealth Tax, and article 16.Uno of that Act, which governs shares and participations not traded on organised markets, requires the book value shown in the last approved accounts, provided those accounts have been audited and the audit opinion is favourable. Absent an audit, or with an adverse opinion, the value is the greater of three figures: nominal value, the book value shown in the last approved accounts, or the figure produced by capitalising at 20% the average profits of the three financial years closed before the tax point. If the value is expressed in a currency other than the euro, the DGT recalls, citing ruling V0751-25 of 28 April, that the European Central Bank rate at 31 December applies.

The significance of this repays a moment's thought. Before the contribution, the crypto-assets were valued for Wealth Tax purposes at market price at the tax point, under the residual rule in article 24 of the Wealth Tax Act. After it, what is reported and valued is a corporate participation governed by article 16.Uno. An LLC that neither prepares nor audits accounts falls to the second limb of the provision, with a result that may diverge in either direction from the real value of the underlying portfolio. The ruling closes by recalling that the DGT has no power to fix valuations, which is a matter for the assessment offices using the means in article 57 of the General Tax Act. Put plainly, the structure does not simplify valuation. It opens a line of enquiry that did not previously exist.

What the ruling does not decide

The DGT answers what it is asked, which concerns formal obligations. It does not endorse the structure, and that deserves saying plainly, because endorsement is precisely what the market attributes to it.

It says nothing about the entity's tax residence. It excludes the LLC from Modelo 721 on the footing that it is not resident in Spain, without examining the point. Article 8.1 of Law 27/2014 on Corporate Income Tax treats as Spanish resident an entity whose place of effective management is in Spanish territory, which is understood to be the case where the management and control of the entity's activities as a whole are located there. An entity with no employees, no premises and no will beyond that of its Spanish-resident sole member is managed where he is. If it is resident, the LLC is taxable on its worldwide income, carries its own compliance obligations, and falls squarely within the personal scope of article 42 quater.1 RGAT in respect of coins held by a non-resident custodian. The premise that saves the entity from Modelo 721 is precisely the one nobody has tested.

It says nothing, either, about the attribution of income. If the entity is not Spanish resident, article 91 LIRPF comes into play. With a sole member, and with a US tax charge that in a disregarded entity carrying on no activity will not reach the threshold set by reference to the Spanish charge, the conditions of the controlled foreign company regime are engaged; and where the entity has no corresponding organisation of human and material resources, the attribution is not confined to the passive income listed in the provision but extends to the entity's total income, whether or not a dividend is paid. With no office, no employees and no independent decision-making, the company transparently attributes its income of its own accord.

It says nothing, third, about the mismatch in characterisation. The United States treats the entity as non-existent and attributes its income to the member. Spain, proceeding on the footing that it has separate legal personality, treats it as a distinct person, unless its legal nature were found identical or analogous to that of Spanish income-attribution entities for the purposes of article 87 LIRPF. Where the two characterisations diverge, the timing of taxation and the very availability of a creditable foreign tax cease to be aligned, and the mismatch rarely favours the taxpayer.

And it says nothing about the transaction itself. Contributing crypto-assets to the LLC is a change in the composition of the contributor's estate and gives rise to a capital gain or loss for personal income tax purposes, with the deemed consideration determined under article 37.1.b) LIRPF, which governs contributions in kind to companies. Anyone reading the ruling as a blessing of the structure has overlooked that the first tax cost fell due on the day it was set up.

Reading it as a whole

V0848-26 is technically impeccable within its limits, and those limits are the message. It resolves two reporting obligations precisely, correctly identifies their autonomy, locates liability under Modelo 721 in the manner of custody, and directs the valuation of the participation by reference to the Wealth Tax Act. Beyond that it says nothing, and in particular it does not say that interposing an LLC is effective, or respected, or even neutral.

Read closely, the ruling describes a structure that conceals nothing and adds two things: new formal obligations and, absent audited accounts, a valuation exposure that did not exist before. In exchange, it leaves open the entity's residence, the attribution of its income, and the cost of the contribution itself. That is a difficult equation to defend to a sophisticated client.

For anyone considering this route, the useful work is done before incorporation, not after a notice arrives. Establish where the entity's decisions are in fact taken and recorded, and whether that reality would survive an enquiry into place of effective management. Measure the exposure under article 91 LIRPF on the actual figures rather than in the abstract. Decide the custody arrangement knowing that liability under Modelo 721 turns on it. Prepare and audit accounts if the valuation of the participation is to rest on the first limb of article 16.Uno rather than the second. And quantify the gain on the contribution before making it, not in the following year. In a residence enquiry nobody looks at the certificate of incorporation. Residence is proved by daily life, not by an organisation chart.

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Lullius is a tax boutique in Palma de Mallorca advising international private clients on Spanish tax, private wealth and tax controversy. The authors contributed the Spain chapter to the tax litigation guides of both Chambers and Partners (Tax Controversy 2026) and The Legal 500 (Tax Disputes Comparative Guide 2026).

This article is provided for general information only. It reflects the position as at August 2026 and does not constitute legal or tax advice, nor does it create a lawyer-client relationship. No action should be taken, or refrained from, on the basis of its content without specific professional advice on the particular facts. Lullius accepts no responsibility for any loss occasioned by reliance on this material.