What are they?

E.T.V.E. stands for Entidades de Tenencia de Valores Extranjeros and, as the name indicates, they are Spanish companies holding shares or participations of foreign companies or entities.

An ETVE per se is not a type of company different from a Spanish corporate enterprises, but a tax regime or system to which they can apply if they meet certain requirements.


Regime and tax advantages

The tax regime for ETVE is regulated in Articles 107 and 108 of the Spanish Corporate Tax Law.

Basically, the regime involves two tax exemptions that apply to:

– The distribution of dividends in the ETVE from foreign companies or entities.

– The capital gains obtained by the ETVE from the transfer of shares or participations of foreign companies or entities.

Until 31 December 2020, the exemption was total, i.e. 100% of the dividends or capital gains indicated were exempt from taxation in the ETVE. However, as from 1 January 2021 the exemption has been reduced to 95%, i.e. 95% of the dividends or capital gains will be exempt, and the ETVE will be taxed on 5% of such income.


“Collateral” benefits

Independently of the tax regime of the ETVE, which is obviously very interesting and essential to be able to attract Holdings of foreign corporations to Spain, doing it in Spain implies other benefits, in some cases almost more important than taxation, mainly for groups coming from Latin America:

    1. The advantage of the language and the similarities that we share in the legal framework make these groups feel very comfortable and, from the first moment, they understand the operation and mechanisms of our system.
    2. Being located in a country within the European Union gives them, on the one hand, legal certainty and, on the other, a new horizon of countries in which to develop their activity or business.
    3. Access to financing with interest rates much lower than those that bank financing in their countries of origin can offer them.
    4. It is also very attractive for the borrower or the target company to be based in Spain in order to obtain private financing or for the entry of some type of fund in the capital of the group or even for the sale of the group.
    5. The multiple options and the tax neutrality regime for corporate reorganisations offered by Spanish legislation.
    6. The possibility also of establishing in Spain the partners of the ETVE that are legal entities, with a tax exemption regime for dividends and capital gains, which is known as double ETVE structures.
    7. The attraction for the Holding company of talent residing abroad through the tax regime known as Beckham“.
    8. The possibility that the Holding company may also carry out commercial or business activities in addition to the management of the foreign shares or participations.
    9. The ETVE can apply the Double Taxation Agreements signed between Spain and other countries.


How to create an E.T.V.E. and what are its requirements?

As indicated above, an ETVE is not a different type of company, but a tax regime applicable to different types of corporate enterprises. That is to say, from the corporate law point of view, the establishment of an ETVE will not have particularities additional to those that a limited liability company or a joint stock company may have.

An ETVE can be created ad hoc from the incorporation of the type of company chosen (original ETVE) or, on the contrary, it can be a company that has been created and operating for several years and that, by the different possible ways (capital increases, purchase…), has been acquiring participations or shares of foreign entities and it is interested in the application of the tax system of the ETVE (derivative ETVE).

In both cases, whether it is an “original” or “derivative” ETVE, the requirements to be met in order to apply the regime are as follows:

1. Its corporate purpose must include the activity of management and administration of shares or securities representative of the equity of non-resident entities in Spanish territory by means of the corresponding organization of material and personal resources. As I mentioned, the fact that its corporate purpose must include this activity does not prevent it from also including other activities inherent to the business or commercial activity. If we are dealing with what I have called a “derivative ETVE”, and it does not include this requirement in its corporate purpose, it will be necessary to make the corresponding amendment to its bylaws in order to include it and thus be eligible for the regime.

2.The ETVE will be required to have its own organization of personal and material resources to carry out management and administration activities. That is to say, it would not be enough to outsource a provider of this type of services, but it would have to be integrated into the company. In this respect, by having an active Board of Directors that actually manages and administers, this requirement would be covered.

3.”The securities or shares representative of the participation in the capital of the entity holding foreign securities must be nominative, this requirement must be complied with in the ETVE, and the corresponding statutory adjustments must be made. In the Limited Companies this requirement would be complied since they are nominative.

4.The ETVE must be resident in Spain, but it is not required for it to be of Spanish nationality, so the possibility remains open for a foreign company that is resident in Spain to apply the ETVE regime as long as it complies with these requirements.5.

5.Regarding the participation in foreign entities, the following requirements are established: 

    • The percentage of participation of the ETVE in such entities must be at least 5%.
    • In order for the exemption on dividends and capital gains to apply, that 5% (or more) must be held uninterruptedly for at least 1 year before the dividend is payable (with some exceptions) or before the date of the transfer. 
    • The foreign entities must have been subject to and not exempt from a tax of a similar nature to the Spanish corporate income tax of at least 10% nominal rate.

The above requirements have been clarified on the basis of case law and there are exceptions or particular details that would have to be analysed for specific cases.

6.The communication to the Spanish Treasury that the Holding opts for the application of the ETVE tax regime.



As we can see, establishing a Holding company in Spain under the ETVE tax regime can be very profitable for both those residents in countries with greater political and legal instability, and those seeking a specific advantage, and even for entrepreneurs who are just starting out and foresee international growth. In all cases and regardless of the detailed tax analysis that would have to be made of each specific project, starting with an ETVE will provide them with stability and an orderly and efficient growth.


This article includes general information and it does not provide professional o legal advice.

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