• Business & Tax

    Holding Companies & SPVs – Spain (ETVE) & UK

    The Spanish Holding Company regime (ETVE) offers an efficient and fully compliant way to structure international investments through Spain. Established in 1995, it has become one of the most effective mechanisms for multinational groups with interests in Latin America, thanks to Spain’s extensive network of double taxation and investment treaties.

    An ETVE is a standard Spanish company subject to Spanish Corporate Tax on domestic income, but exempt from taxation on qualifying foreign-source dividends and capital gains. This makes it a key vehicle for groups seeking tax-efficient structures within the EU.

What is an ETVE?

The Entidad de Tenencia de Valores Extranjeros (ETVE) is a Spanish-resident company engaged in managing and administering securities issued by non-resident entities. It operates as an international holding company, commonly used by UK and global corporations to channel investments into Latin America through Spain.

The ETVE structure complies with all EU and OECD standards, benefiting from:

EU directives such as the Parent-Subsidiary and Merger Directives

Spain’s wide double tax treaty network, particularly with Latin America

The advantages of being located within the EU for legal and fiscal protection

Because of these characteristics, the ETVE is considered a tax-efficient investment platform and a reliable route for both inbound and outbound capital flows.

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How an ETVE works

An ETVE functions as a regular Spanish company for domestic operations. However, foreign-source dividends and capital gains that meet the qualifying conditions are fully exempt from Spanish Corporate Tax. Key operational features include:
● Disclosure and notification to Spanish tax authorities (no prior authorisation required)
● Ability to carry out trading activities in addition to holding functions
● Full exemption on qualified foreign dividends and capital gains
● Shares must be nominative to ensure shareholder transparency
● Compliance with all corporate and accounting obligations in Spain
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Tax benefits of an ETVE

The ETVE regime provides a combination of participation exemptions and treaty-based reliefs, offering one of the most efficient international holding frameworks in Europe. Main benefits include:
● Exemption from Spanish Corporation Tax on qualifying foreign dividends and capital gains
● No withholding tax on dividend distributions to non-resident shareholders
● 0% withholding tax on dividends received from EU subsidiaries under the Parent-Subsidiary Directive
● Reduced withholding tax rates under Spain’s extensive double tax treaty network
● Tax-efficient repatriation of profits and exit structures for non-EU investors
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ETVE requirements and considerations

To qualify for the ETVE regime, several legal and tax conditions must be met:
● The foreign subsidiaries must carry out active business activities outside Spain (not purely asset management).
● The ETVE must have a board of directors that meets regularly and manages participations in non-resident entities with at least a 5% equity stake or a minimum acquisition cost of €6 million.
● The company must have the necessary material and human resources in Spain.
● Shares must be registered and nominative.
● The option for the regime must be formally notified to the Ministry of Finance.
● Foreign subsidiaries must be located in countries with tax systems comparable to Spain’s and with information exchange clauses.
● The subsidiary cannot be resident in a blacklisted or tax-haven jurisdiction.
● There must be a minimum one-year holding period to apply the exemption.
● Transactions between related entities are subject to transfer pricing and market value rules.
These requirements ensure that the ETVE operates as a genuine business structure aligned with EU transparency and anti-avoidance principles.
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ETVE rules and complementary provisions

Additional aspects to consider under the ETVE regime include:
● Financial costs related to participations are generally deductible for corporate tax purposes.
● Stamp duty of 1% on capital contributions is typically exempt in share-for-share transactions.
● ETVEs can hold shares in Spanish entities without restriction, although only up to 15% of assets located in Spain may be included when selling shares.
● If the participation was acquired under special tax regimes for mergers or exchanges, the exemption applies only to the gain exceeding the deferred tax value.
● Losses from the sale of foreign participations may be adjusted if other group entities obtained exempt gains on related holdings.
The Spanish ETVE regime has demonstrated stability and effectiveness over more than two decades, competing successfully with other international holding structures.

Why use an ETVE for Latin America investments

Spain’s geographic, cultural and linguistic proximity to Latin America, combined with its broad double taxation treaty network, makes the ETVE structure especially suitable for investment in the region.

It allows international investors to:

  • Consolidate and manage Latin American subsidiaries from within the EU
  • Benefit from treaty protection and reduced withholding taxes
  • Optimise profit repatriation in a compliant and transparent framework

How we can help set up an ETVE

Del Canto Chambers advises clients on the design, creation and management of Spanish ETVE holding companies. We provide a full service covering:

  • Tax and legal structuring
  • Company formation and registration
  • Accounting and annual compliance
  • Tax planning and reporting obligations
  • Directorship and management services

A partner remains involved throughout the engagement, ensuring continuity, expertise and proactive guidance.

We have advised European, American and Middle Eastern clients on ETVE projects, offering turnkey solutions in collaboration with local partners and auditing firms.

Please contact us for more information about the advantages of establishing a Spanish holding company (ETVE) and how it can optimise your international tax structure.

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