Founders, Consultants and One-Person Companies Working From Spain

What paragraph 44.20 says

The Commentary states that different considerations arise where an individual is the only person, or the primary person, conducting the business of an enterprise. It gives a clear example: a non-resident consultant who is present for an extended period in a country, where she carries on most of the business activities of her own consulting enterprise from an office set up in her home. That home office is a place of business of the enterprise.

The example is carried over from the earlier Commentary. What is new is its position: it now stands as an explicit exception to the two tests that precede it. There is no need to ask about a commercial reason, because when the person is the business, wherever she works is where the business is carried on.

Who is "the only or primary person"?

The Commentary does not define the phrase, and its example is deliberately an easy one. The cases that will be argued are in between:

• A founder-CEO of a ten-person start-up, with a co-founder abroad.
• A managing partner of a boutique firm whose two colleagues are in another country.
• A sole director who has delegated operations to a team elsewhere but takes the strategic decisions.

The more the business depends on what that individual does from Spain, the closer the case is to the example. Israel has recorded that it reserves the right to treat the home office of one of the primary persons, such as a founder, partner or relatively significant senior executive, as a permanent establishment. Other administrations may reach the same place on the facts.

The second risk: where the company is resident

For an owner-manager there is a prior question that the permanent establishment analysis assumes away: is the company still resident abroad? Under Spanish law a company is resident in Spain if, among other criteria, its place of effective management is in Spain. A company whose only director lives in Spain and takes every decision there is exposed to being treated as a Spanish resident company, taxable in Spain on its worldwide profit, not just on the profit of a permanent establishment.

The two concepts overlap in practice. An administration may argue residence first and a permanent establishment in the alternative. Where a treaty applies, the tie-breaker for companies has, in recent treaties and under the multilateral instrument, moved from the place of effective management to agreement between the two administrations, which makes the outcome less predictable.

The individual's own tax does not wait for any of this

A person who lives in Spain is taxed in Spain on worldwide income. Whatever the answer for the company, the money the owner takes from it, as salary, fees or dividends, is taxable in Spain, and profit left in the company may raise further questions about transparent entities and controlled foreign companies.

This is why, for owners of single-member US LLCs who sell their own services, we apply a method that removes most of the problem: registering as self-employed in Spain and invoicing the LLC for the whole of its result. It is described under bookkeeping for US LLC owners living in Spain.

What owners can do

• Decide which structure matches reality. If the business is you, working from Spain, a structure that pretends otherwise is a liability.
• If the company has real substance abroad, keep decision-making there: board meetings, a resident director with real authority, minutes that reflect where decisions are taken.
• If it does not, consider recognising a Spanish presence deliberately, through self-employment, a Spanish company or a registered branch, and paying tax on a properly calculated profit.
• Before moving, look at the timing. The year of arrival, the special regime for new residents and exit charges in the country of origin all interact.

The general framework is in the main guide. Where a permanent establishment is the conclusion, this is what it involves. For individual residence questions, see tax residency in Spain.

Source: OECD (2026), Model Tax Convention on Income and on Capital 2025 (Full Version), Commentary on Article 5, paragraphs 44.1 to 44.21, added on 18 November 2025. The Commentary is described here in our own words; the paragraph numbers are given so that it can be checked against the original.