Advantages of Spain’s ETVE for investment entities


Amicorp Group is an independent global service provider of a broad range of assurance, administrative, legal, corporate secretarial and support services. Our group has specialists worldwide in over 40 offices in over 30 countries.

Unlike other corporate trust providers, Amicorp has always had rather than our offices in Europe and USA, a strong focus on the emerging markets. Despite exceptionally high growth coming from our offices in Asia, we still generate more than 50% of our business from Latin America.

One of the subjects that continually interest our clients is the ETVE (Entidad de Tenencia de Valores Extranjeros), the Spanish special holding company regime is a very beneficial regime in a jurisdiction where  Amicorp operates  and has  a strong presence.

Through its historical, cultural and economic links with Latin America, Spain operates as a natural bridge between both, Latin America and Europe. The advantageous  tax features of these relationships, a substantial Spanish treaty network with Latin America, and the European connection make Spanish companies very efficient vehicles through which European groups can channel Latin American expansion, as well as a tax-efficient exit route for EU capital investments by non-EU companies or vehicles through which Latin American Groups can invest in Europe. In fact, Spain has signed tax treaties with almost all of the most significant Latin American, European, and Asian countries and as a state member of the European Union can benefit from the European Directives. Furthermore, the Spanish special holding company regime has passed the “harmful tax competition” test of the European Union authorities and is not included in the Code of Conduct black list.

The ETVE is an ideal vehicle for investments in Europe, Latin America, North America and Asia. Spain offers a tax efficient jurisdiction to hold foreign investments, with exemptions granted for dividends and capital gains, and over 93 Double Taxation Agreements with other jurisdictions. In addition to this benefits, for Latin American clients the use of  the Spanish language, familiarity with the legal system as Latin American corporate law is based on Spanish law, and Spain’s membership of the European Union, make Spain a more appealing jurisdiction.

The ETVE is a regular legal entity in the form of a limited corporation (SA), or in the form of a private limited company (SL). It is therefore fully subject to the normal corporate tax rate applicable in Spain of 25%, with the sole distinction of providing an exemption for dividends and capital gains deriving from foreign subsidiaries. If certain requirements are met, these types of income will be fully exempt from entering into the taxable base of the company and also this income could be repatriated to the shareholder's country without being liable for Spanish withholding tax.

The ETVE is protected by EU Directives such as the Parent-Subsidiary Directive and the Merger Directive. It is regarded as a Spanish resident for tax purposes regarding the application of Spain’s tax treaties.

The main tax benefits of a Spanish holding company are:

  • Total participation exemption for dividends and capital gains realized on the disposal of shares;
  • Absence of a withholding tax on distribution of non-Spanish source dividends;
  • Full deductibility of interest payments;
  • No capital duty on share-for-share contributions and on the issue of share capital for entities established in certain provinces;
  • Exemption of overseas branch income;
  • Spain allows interest relief on borrowings to finance the acquisition of shares in foreign subsidiaries; and
  • Availability of pre-transaction rulings.

Investment structures can utilize different parent companies to optimally suit the investor’s needs. Provided the foreign shareholding receiving the distributions from the ETVE are not located in tax havens, distributions may flow through this jurisdiction and out again to another jurisdiction.

ETVE regime at a glance

  • Corporate purpose and substance: (a) Management and administration of participations in foreign subsidiaries (requires an effective presence) (b) can perform any other activities (c) Majority of directors are Spanish tax residents; the receipt by an ETVE of dividends and capital gains from a sale of participation shares are tax exempt provided:
    • The ETVE:
      • Holds a 5% or greater direct or indirect participation in the distributing foreign (non-EU) affiliate or if the acquisition cost of the shareholding of the Spanish subsidiary exceeds EUR 20 million if certain other requirements are satisfied; and
      • Holds the participation share for 12 consecutive months.
    • The participation is:
      • Subject to income tax analogous to the nature of that in Spain of 10% minimum nominal. This is satisfied where the participation is resident in a tax treaty country which includes an exchange of information clause
      • Entities subject to transparent or attribution to regimes can qualify. Territorial tax systems do not qualify.
      • Is not resident in a tax haven (except if resident in EU and economic reasons and operative activity are accredited);
  • Real estate, finance/credit related income qualifies given sufficient operational substance;
  • Capital losses are deductible. Interest expenses incurred in connection with the acquisition of a foreign participation are deductible.
  • Even if the above requirements are met, as from January 1st 2015, the Spanish WHT exemption provision includes an anti-abuse rule which requires that, when the majority of the voting rights of the EU parent entity are directly or indirectly held by individuals or entities that are not tax resident within the EU, the incorporation and operation of the EU shareholder must be grounded on sound economic purposes and business reasons.

  • For further information, please contact:

    Maria Eugenia Hernandez

    Maria Eugenia Hernández

    Director – Amicorp de España
    +34 932 417 563