Registering a holding company in Spain

Advantages and Benefits

Registering a holding company in Spain can offer notable tax advantages, especially under certain legal structures like the ETVE regime (Entidad de Tenencia de Valores Extranjeros or “Foreign Securities Holding Company”). Below is a comprehensive summary of the Spanish tax benefits available for holding companies:

Spanish Holding Companies
Tax Advantages

Key Benefits of the ETVE Regime
Foreign Securities Holding Company

Spain offers a special tax regime for qualifying holding companies known as ETVE, designed to attract multinational group structures.

ETVE Requirements

To benefit from the regime, the holding company must:

• Be incorporated in Spain and subject to corporate income tax.
• Include in its corporate purpose the management of shareholdings in foreign entities.
• Hold at least 5% of the foreign entity’s capital or have an acquisition value of at least €20 million.
• Hold the shares for at least 1 year.
• The foreign subsidiary must be subject to a similar income tax (≥10%) in its home country.
• Maintain accounting separation between ETVE activities and others.

Other General Tax Benefits For Holding Companies

Corporate Income Tax Rate

Standard rate: 25%
ETVE regime: Still subject to 25% CIT, but exempt income reduces the effective tax rate significantly.
Participation Exemption (Non-ETVE): Dividends and capital gains from foreign and domestic subsidiaries may qualify for a 95% exemption, even outside ETVE, if: (a) ≥5% shareholding for ≥1 year; (b) Subsidiary pays corporate tax ≥10%.
Double Tax Treaties: Spain has a broad DTA network (100+ treaties) that reduce foreign withholding taxes on dividends, interest, and royalties.
No Withholding Tax on Intra-EU Dividends: Under the EU Parent-Subsidiary Directive, no withholding tax on dividends to EU parent companies (if conditions are met).

Key Tax Advantages
Summary

Registering a Holding Company in Spain
Further Advantages

Beyond the core tax benefits, registering a holding company in Spain, especially under the ETVE regime, brings several legal, strategic, operational, and reputational advantages that make it an attractive jurisdiction for multinational groups. Here’s a deeper look at the further advantages:

Access to the European Union

As an EU member, Spain provides:

• Free movement of capital, goods, services, and people.
• Access to the EU Parent-Subsidiary Directive (0% withholding tax on EU dividends).
• Simpler legal and tax coordination with other EU subsidiaries.
• Passporting rights for financial institutions.

International Reputation & Stability

Spain is not a tax haven; ETVE is OECD-compliant and EU-approved.
Avoids the stigma and reputational risk of offshore or secrecy jurisdictions.
Legal certainty: Transparent laws and alignment with EU and OECD standards (BEPS, ATAD, etc.).

Highly Qualified Workforce & Infrastructure

Strong talent pool in law, finance, and technology.
Major cities like Madrid and Barcelona offer access to global financial and advisory services.
Excellent IT infrastructure, logistics, and transport networks.

Low Cost of Operation Compared to Other EU Hubs

Lower labor, office, and living costs than in Germany, France, or the Netherlands.
Efficient incorporation and administration processes for companies.
No requirement for a large physical footprint to register and operate an ETVE.

Flexible Legal Structures & Governance

Common company types: (a) S.A. (Sociedad Anónima) – Similar to a public limited company; (b) S.L. (Sociedad Limitada) – Similar to a private limited company.
Spanish law supports single-member companies and foreign directors.
No minimum number of employees or directors for ETVE qualification.
Shareholders can be based in any jurisdiction (if well-documented).

Favorable Legal Protections for Shareholders

Spain provides robust corporate governance rules and investor protections.
Shareholders enjoy protection under EU law (e.g., against unlawful expropriation or discrimination).
Spain’s court system supports international commercial arbitration.

Group Financing and Treasury Advantages

Spain allows group consolidation and intragroup financing with favorable tax neutrality provisions.
Interest payments may be deductible if arm’s length.
No thin cap rules, but general anti-abuse and transfer pricing rules apply.

Advance Tax Rulings (ATRs) and Legal Certainty

Spanish Tax Agency offers binding tax rulings to confirm the ETVE status and application of exemptions.
Certainty in dividend repatriation and capital gain realization.

Double Tax Treaty Network

Spain has over 100 Double Tax Agreements, including with: (a) Latin America (Colombia, Mexico, Argentina, Brazil, etc.); (b) Africa (Morocco, South Africa, Egypt, etc.); (c) Asia (China, Japan, India, etc.)
This makes Spain a natural bridge for Europe-LATAM-Africa structures.

Banking and Financing Ecosystem

Access to major EU and global banks in Spain.
Eurozone member: No FX risk on intra-EU transactions.
Easier to obtain EU financing, venture capital, and development funds.

TBA services

We have 2 decades of experience in the incorporation and management of asset holding companies, whether it be for owning property, or for other reasons such as holding an investment portfolio.

We do not simply incorporate Holding companies in Sapin – we always take a client’s needs and personal circumstances into consideration before deciding upon which jurisdiction of incorporation will be best and most suitable.

Owning your assets through a company can reduce or eliminate the inheritance tax, capital gains tax and income tax, and afford confidentiality (seen as a major benefit for those clients residing in high-risk countries). Asset holding companies can also circumvent the need for the granting of probate, an often time-consuming and expensive process, and play a vital role for long term family financial planning.

We are happy to examine possibilities with you for as long as it takes, in order to find the best solution for you and your family.

Please do not hesitate to contact us for more information on how we might be able to benefit you in the ownership of your assets.