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Creation of holding companies in Spain: the advantages of the ETVE

holding-spainThe Spanish ETVE  is a holding company even  more advantageous than traditional Dutch and Luxembourgish holding companies.

Dividends remitted to a Spanish holding company by foreign subsidiaries are exempt from   taxation.  Be   aware   that  this kind  of   company  takes   advantage   of  the   most attractive European tax system with an exemption on profits from foreign subsidiaries which may arise from the  distribution of dividends or capital gains from the sale of investments.

Which kind of company for an ETVE ?

In order to create an ETVE, two solutions are possible:

  • “Sociedad  de responsabilidad limitada” (limited liability company) with a minimum capital of constitution of 3 006 Euros. The capital must be totally paid up.
  • “Sociedad anónima” (public limited company) with a minimum capital of constitution of 60 101 Euros. For this kind of company, only a minimum of 25% of the capital must be paid.

What are the conditions necessary to take advantages of the ETVE?

In order to take advantages of the tax exemptions on profits from foreign subsidiaries, you need to meet some conditions:

  • A management center located in Spain;
  • The management of foreign investments should appear in the social object;
  • Shares should not be issued by the holder, but by way of registration;
  • The holding company must  have a  real presence in Spain who may be a manager or an employee.

The dividends remitted to the  ETVE holding company and capital gains realized on sales of investments are exempt from corporate income tax if:

  • For the holding company: holding a 5% participation in the subsidiary during at least one year. Any dividends paid by this European subsidiary to the holding company are exempt from Spanish withholding;
  • For  the   subsidiary:  no activity in Spain, profits must come from 85% of business activities, be subject to a tax similar to the Spanish corporate tax, and not be registered in the blacklist of tax havens.


In addition to the exemption of dividends, capital gains from the sale of shares  are exempt  from tax  if the same conditions apply to  dividends are found.

Another significant advantage, non-residents (excluding tax havens) are not subject to  income tax on dividends  received by the  ETVE. They are only  required to report the amounts earned to their respective countries of residence.

If you want to know more about ETVE, do not hesitate to contact us.

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