Tax advantages and the Spanish tax regime for holding companies (ETVE)
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Tax advantages and the Spanish tax regime for holding companies (ETVE)

Few people are aware of the tax advantages of a holding company in Spain (ETVE). The ETVE regime is a special tax regime that makes it possible for a company to be almost completely (1.24%) exempt from taxation on dividends received by foreign subsidiaries. The company simply needs to be a normal Spanish limited liability company with a minimum share capital of 3,000 Euros having the “holding of shares or investments in other non-resident companies” as a corporate purpose.

With the aim of attracting investment flows from abroad, and in order for multinationals to be able to manage their international shareholdings by establishing a holding company in Spain, in 1995 Spain introduced this particular regime, which today proves one of the most convenient in Europe compared to other countries such as, for example, Holland and Luxembourg.

A Holding is a very simple Limited Liability Company (Sociedad Limitada)

Most of the companies that choose this regime set up their holding company in Spain using a limited liability company (Sociedad Limitada) with minimum share capital. Providing the holding company with a high share capital is not necessary because its main activity will consist in managing investments in foreign companies and receiving dividends from them. The only requirement to be part of this tax regime is that the holding company in Spain shall own a minimum share of the foreign company’s share capital of at least 5% or a share which amounts to more than 20 million euros.

Main advantages:

  • When a Spanish holding company, known as an ‘Entidad de Tenencia de Valores Extranjeros’ (ETVE), receives dividends from its subsidiaries, these dividends are nearly fully exempt from taxation, being taxed at an effective rate of just 1.24%. Thus, they have a minimal impact on the calculation of the company’s tax base.
  • Further, an ETVE benefits from a nearly total exemption from corporate tax on dividends and capital gains that are derived from shares in other companies, paying only a nominal 1.24% tax rate on these profits.
  • Total exemption of dividends distributed by the holding company to non-resident shareholders regardless of where they live (except for tax havens).
  • The Holding in Spain need not necessarily have as sole corporate object the ownership and management and/or administration of the shares in foreign companies (i.e. it is possible for the Spanish company itself to act both as a holding company in Spain and as an operating company).
  • Shareholders can decide at any time whether they want to benefit from the Spanish holding tax regime (ETVE) or not.

However, it is important to highlight the special requirements established by Spanish laws. Specifically, these laws mandate that the ETVE must maintain a genuine establishment in Spain that is dedicated to managing its participations in other companies. This requirement underscores the commitment to meaningful economic presence and active management, not just a legal entity or “paper company”


The tax advantages of a holding company in Spain, known as an ‘Entidad de Tenencia de Valores Extranjeros’ (ETVE), stand out uniquely among its European counterparts. Firstly, the ETVE regime ensures more cost-effective and transparent corporate management. Secondly, despite the purchase or sale of shares being carried out through public deeds, these transactions are not registered in the Mercantile Registry. This provision enables shareholders to maintain confidentiality concerning their identity, ensuring it doesn’t appear in the company registration at the Chamber of Commerce. Lastly, the ETVE structure facilitates international business operations, as the company isn’t obligated to pay taxes on dividends, except for a nominal 1.24% rate, allowing for competitive functionality in global markets.

It is surely not a coincidence if ExxonMobil – the largest multinational company in the world in terms of stock market capitalization and total revenue – has chosen Spain as the headquarters of its holding.

Drop us a line if you want one of our experts to contact you. We are going to explain to you all the tax advantages of a holding company in Spain compared to a holding company in the UK so that you can optimize your company’s international taxes.

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