From Spain: The Spanish Holding Company (aka ETVE) as a Tax Efficient Vehicle to Structure Cross-Border Investments

Javier Vinuesa - Andersen Tax & Legal in Spain, a member firm of Andersen Global

The Spanish holding regime (aka ETVE in Spain) has been in force for more than 20 years and it may be, still today, one of the most tax efficient holding regimes in the world. To summarize, Spanish corporates can benefit from a full participation exemption of qualifying (i) dividends and (ii) capital gains provided that certain conditions are met (5% shareholding or Euro 20 Million investment value, one year holding period, foreign subsidiary subject to tax at a nominal rate of at least 10%, etc.). In order to elect the ETVE regime, the Spanish entity should have an active and capable Board of Directors that regularly meets in order to manage its investments.

Likewise, the Spanish holding company can distribute dividends without any Spanish source taxation, provided that the recipient of those dividends is not blacklisted in Spain. Consequently, structuring cross-border investments through Spanish holding companies should not trigger any Spanish tax leakage if all these conditions are met. 

Spain has a wide Tax Treaty network (with aproximately 94 Tax Treaties currently in force), especially in Latin America. The full list is available here. Any structuring cross-border investments using Spanish holding companies should consider all the BEPS regulations in all the jurisdictions involved.