HOW TO PROCEED
The ETVE (Entidad de Tenencia de Valores Extranjeros) is a regular Spanish company which falls within the scope of general tax law and therefore benefits from the double taxation treaties and the European tax directives.
Its object is to administer and manage participations in non-resident entities.
An ETVE company can be constituted either as a “sociedad de responsabilidad limitada” (private limited company- SRL) or a “sociedad anónima” (public limited company- SA).
The minimum share capital for incorporation of an ETVE is €3.006 for a private limited company and €60.121 for a public limited company.
For a company incorporated as a private limited company the share capital must be fully paid up, while for companies incorporated as public limited companies only a minimum of 25% of the share capital must be paid up.
An ETVE is fully subject to tax on its worldwide income at a normal rate of 30%.
Companies with yearly sales of less than €8 million may qualify for certain tax incentives:
Corporate income tax is charged on the annual financial statements prepared under generally accepted accounting principles subject to adjustments.
As a member of the EU Spain is governed by the provisions of the EU’s parent/Subsidiary directive with the effect that where a Spanish Holding Company holds a minimum of 5% of the shares of the EU subsidiary for a period of not less than one year any dividends remitted by the EU subsidiary to the Spanish Holding Company are free of withholding taxes.
Shares to have been held for a minimum of one year.
The subsidiary must be:
Capital gains from the sale of shares are exempt from tax if the same conditions that apply to dividends are met.
See income above.
Besides the common advantages of a holding company, the ETVE may also enjoy from the following:
Dividends and capital gains from foreign source paid to non-residents by an ETVE are exempt from withholding tax provided the recipient is not located in a tax haven.
Outgoing dividends paid by an ETVE to its non-resident parent company are free of withholding taxes in Spain.
The standard rate of withholding tax for non qualifying companies is 19% on outgoing dividends unless a double tax treaty applies which will reduce the rate from between 5% and 15%.
Double Tax Treaties
1Losses carry forward may only be offset against 75% of the profits of the year.
2If conditions are met.
A bespoke 'offshore' solution can be complex and requires careful planning and execution. We
therefore encourage our clients to contact us directly, without obligation.
While all of our consultants in our offices provide a Free Initial Consultation, the office and consultant listed below have particular expertise in this area and will gladly assist with advice on how to approach your unique challenge.
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