Home »
ETVE: THE SPANISH HOLDING COMPANY
The strategic connection between Europe, Latin America, and the United States
At CPA, we specialize in Foreign Securities Holding Entities (ETVE) and offer comprehensive and customized solutions to ensure seamless operation in every aspect of your business.
The choice of Spain as the preferred location for establishing a Holding is based on strategic criteria and significant business advantages.
Spain has signed double taxation treaties with all major economies in the world, making it the country with the widest network of international double taxation treaties with 103 signed treaties.
Thanks to Spain's membership in the European Union, two EU directives protect ETVE: the Parent-Subsidiary Directive and the Merger Directive.
The Spanish ETVE regime has successfully passed the EU's "anticompetitive test".
The ETVE has not been included in the EU blacklist.
AN OVERVIEW OF THE ETVE REGIME
The ETVE is a regular legal structure, which typically takes the form of a corporation, specifically a limited liability company. As such, it is subject to the regular corporate tax. Its peculiarity lies in providing an exemption for received dividends and capital gains resulting from the sale of stakes in subsidiaries. The ETVE regime allows for a 95% exemption on the taxable base for dividends from subsidiaries and any capital gains from the sale of stakes in subsidiaries.
Main Benefits
There is a 95% exemption in Spain for dividends and capital gains from subsidiaries. Interests are fully deductible.
Corporate purpose and substance
It is important for the application of the ETVE regime that the company has sufficient resources to ensure the proper management of investments. Furthermore, the majority of administrators must be residents in Spain.
Requirements
You must have a direct or indirect participation of at least 5% in an operating subsidiary. You must own the stakes for at least 12 months, or commit to keeping them for at least that period. The subsidiary must be resident in a country that has signed a double taxation treaty with Spain or has a taxation system similar to that of Spain for corporate income.
It is also important to consider that shareholders cannot be tax residents in territories considered tax havens.
THE ADVANTAGES OF THE ETVE REGIME
DIVIDENDS FROM SUBSIDIARIES
Incoming dividends paid by the subsidiary must be exempt from withholding tax.
DIVIDENDS RECEIVED BY THE ETVE
The ETVE (Entidad de Tenencia de Valores Extranjeros) is entitled to receive dividends that are 95% exempt from corporate income tax.
CAPITAL GAINS
Subsidiary stake sales realize 95% tax exemption on capital gains.
DIVIDENDS PAID TO THE SHAREHOLDERS OF THE ETVE
Dividends paid by the holding to the parent company or shareholders are not subject to withholding tax in Spain.
For further information on the ETVE regime and how we can assist you, please contact us.
