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The advantageous tax regime of the spanish holdings: the ETVE

With the aim of attracting foreign investment flows, Spain has introduced an advantageous tax regime for those who want to invest in foreign markets (especially for those who want to invest in Latin America) through the establishment of a holding company called "Las Entidades de Tenencia de Valores Extranjeros ”(ETVE).

ETVEs have as their corporate purpose the holding of shares or equity interests in other non-resident companies, and are exempt from taxation on income obtained by foreign subsidiaries, regardless of their location.

The following diagram illustrates the requirements that the ETVEs must have, as well as their functioning:


a) The ETVEs must include, in the corporate purpose, the management and administration of representative values of the own funds of entities not resident in Spain. It is not necessary that this is the sole corporate purpose of the company (possibility for the Spanish company itself to act as both a holding and an operating company).

b) The ETVE holdings must be nominative (therefore the security-value must show the identification data of its owner).

c) ETVEs must rely on their own material means and the human resources necessary to carry out management and administration activities. The above requirement is deemed to have been fulfilled when a member of the board of directors (1) resident in Spain is in charge of the operational management and the management of the shares

d) ETVEs cannot be considered "equity entities": in summary, a company is considered a equity entity when it does not carry out any economic activity (2). The actual management of equity investments in foreign entities can be considered as an economic activity (see point c).

e) Prior notification to the Spanish Tax Agency (no authorization is required).


Capital gains resulting from participation in foreign companies are exempt from Spanish corporate income tax (Impuesto de Sociedades).

Often these incomes have a reduced withholding tax, in application of the Double Taxation Conventions.

The distribution of dividends by ETVE to non-resident shareholders (without permanent establishment in Spain), as well as the capital gains for the transmission of ETVE shares are not considered as income obtained in Spanish territory and therefore are exempt from taxation in Spain.


  • The investee company by ETVE is subject to and not exempt from taxation by its local tax system, for a foreign tax of an identical or similar nature to the type of tax envisaged for ETVE or (Corporate Income Tax, or IS), in subordinate subject to a tax rate of at least 10%. The aforementioned requirement is considered to be met if the subsidiary company has its registered office in a country with which Spain has signed a tax treaty providing for an information exchange clause.

  • The shareholding percentage is at least 5% of the capital of each controlled foreign entity or, alternatively, the value of the shares acquired exceeds 20 million euros (3).

  • The shareholder of ETVE or the investee entities are not resident in tax havens under Spanish law.

  • The share is held for a period of not less than one year from the date on which the dividend (or capital gain) to be distributed is payable, or from when the foreign entity makes the transmission.

It is important to underline that the instrument of the holding "ETVE" and the correlative tax advantages are aimed at facilitating investments abroad in operating companies, and also to attract foreign investors to Spain through the establishment of holding companies that carry out real investment management activities. (therefore not merely instrumental companies), and does not want to be an instrument of tax elusion.

In conclusion, ETVEs can constitute an advantageous system in favor of those who want to invest in Latin American countries.


(1) Either a sole director, or one of the directors (jointly or associated)

(2) The law states that “the autonomous management of the means of production and / or human resources with the aim of intervening in the production or distribution of goods or services will be understood as an economic activity”. We therefore return to point c)

(3) The legislation provides for additional requirements in the event that most of the income (70%) of the investee comes from dividends / from the transmission of equity investments or shares, etc.

Abogada Eugenia Ravagnan Venezze

This article is written by a licensed lawyer in Spain, member of our international network. The content of this article does not constitute legal advice, but has an informative function. For tailor made legal advice, contact the firm by e-mail to: or by phone +39 06 916505710. © Dong & Partners International Law Firm, All rights reserved.

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