Complete Guide to the ETVE Tax Regime in Spain

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Despite the global economic challenges of the post-Covid era and the war in Ukraine, 2022 was a great year for foreign investment in Spain, with more than 34 billion euros injected.

2023 is also expected to be very positive in this regard.

The introduction of the specific regime for ETVE-type holdings (Entidad de Tenencia de Valores Extranjeros) in December 1995, is not unrelated to this success. Indeed, this regime and the major fiscal innovation it represented, has encouraged Spanish companies to invest in foreign companies and has significantly favored international investment. Its goal: to make Spain more competitive against other tax jurisdictions. Mission accomplished.

What is an ETVE holding?

What is the role of a holding?

Holdings emerged in the United States after the second industrial revolution, towards the end of the 19th century, to control the concentration of companies and capital. In Europe, Luxembourg and the Netherlands were the first to adopt this type of entity (since 1929).

For those unfamiliar with the business world, holdings are legal structures that hold shares or stakes in other companies to control their management and strategic decisions: creating a portfolio of businesses, asset management, receiving dividends, interests, and capital gains from the sale of stakes, etc.

ETVE: the Spanish holding

In Spain, Foreign Securities Holding Entity (Entidad de Tenencia de Valores Extranjeros, ETVE) is a corporate structure, mainly engaged in the acquisition, ownership, and management of financial stakes in companies based outside the country. Its central function is to oversee and administer these investments. The goal of the ETVE is to promote and facilitate cross-border investments for Spanish companies, providing them with a tax-friendly environment for the efficient management of their foreign placements. Introduced in the mid-90s thanks to the Law 43/1995 of December 27, 1995, ETVEs are recent but have quickly gained popularity due to their advantageous tax framework.

Today, they are a strategic tool for multinationals and companies making significant profits, and increasing their competitiveness in the international market.

Eligibility conditions for the ETVE regime

You want to know if your company is eligible for this advantageous tax regime? Check the following conditions:

The company must be a resident company in Spain, subject to Spanish Corporate Tax.

The foreign entity in which the stake is held must be subject to a tax similar to Spanish Corporate Tax and not be resident in a tax haven.

Its activity must include the management and direction of stakes in non-resident entities.

The company must hold, directly or indirectly, at least 5% of the capital of the foreign entity or have invested an acquisition amount of 20 million euros or more.

This participation must be held for at least one year.

The holding must have professional means (such as an office and staff) in Spain, but must not engage in direct commercial activities.

Finally, the company must notify its intention to apply the ETVE regime to the Spanish tax administration.

If you have any doubts, contact our team of specialists. They will respond in English.

Tax advantages of ETVE holdings

Exemptions and tax reductions

Here is what you need to know about the tax aspects and specific advantages of ETVEs:

  • Reduced taxable base: ETVEs have a reduced taxable base for corporate tax, especially concerning the income from stakes in non-resident entities.
  • Exemption of dividends and capital gains: These incomes are often exempt from tax, under certain conditions (local tax rate of at least 10%, a stake of at least 5%, or the value of the shares being more than 20 million euros).
  • Deduction for double taxation: The distributed profits may allow deductions for double taxation, for both resident and non-resident shareholders, with certain conditions for residents.
  • Treatment of non-resident profits: The profits obtained by non-residents are not taxed in Spain, unless the beneficiary resides in a tax haven.
  • Rules in case of withdrawal or liquidation: In the event of a shareholders withdrawal or the liquidation of the ETVE, certain rules apply, particularly the exemption of gains in the value of stakes in non-resident companies.

No doubt, the ETVEs are therefore very advantageous from a tax perspective.

Indirect taxation of ETVEs

Regarding the rules of indirect taxation, note that:

The “pure” holding, which holds stakes in other companies but does not itself conduct commercial or operational activities, is exempt from VAT.

The “mixed” holding, which combines the possession of stakes in other companies (like a pure ETVE) and the conduct of its own commercial or operational activities, is not exempt from VAT.


It is important to note that the “ETVE” status and the tax advantages associated with it aim to facilitate foreign investments in operational companies and also to attract foreign investors in Spain through the creation of holding companies that conduct real investment management activities.

➔ Under no circumstances should the ETVE become an instrument of tax evasion.

Process of creating and managing an ETVE holding

Creation steps

ETVEs can be established as a public or private company. Here are the steps to create an ETVE:

  • Reservation of the name in accordance with the requirements of the commercial code.
  • Subscription of the share capital: minimum of €3,000 for a Limited Liability Company (SL in Spanish, LLC in English) and €60,000 for a Public Limited Company (SA in Spanish, PLC in English).
  • Legal and tax formalities: Need for official registration and compliance with tax standards.

Management and control

Once established, the holding must maintain an active and compliant presence in Spain. It must manage its investments and comply with tax regulations. A wise management of these structures is crucial to maximize their benefits. You can ask for advice from our team by clicking here.

Legal and commercial considerations

Legal aspects

ETVEs are governed by specific laws, particularly chapter 14 of the Corporate Income Tax Law in Spain. These regulations define the eligibility criteria and tax obligations of the holdings.

Commercial implications ETVEs significantly alter the international business landscape for Spanish companies.

They offer growth and expansion opportunities by reducing the tax burden on foreign income, which can be a determining factor in the strategic planning of companies.


ETVE holdings in Spain represent a significant opportunity for companies seeking to optimize their tax structure and expand their international reach. Understanding this regime means taking advantage of considerable benefits.

Contact our experts to learn more.

FAQ on the ETVE regime

What is an ETVE in Spain?

An ETVE is a special structure in Spain that allows managing foreign investments with tax advantages.

What are the advantages of ETVEs for foreign investors?

ETVEs allow exemptions from tax on dividends and capital gains from foreign stakes.

What is the difference between a pure ETVE and a mixed ETVE?

A pure ETVE, holds stakes in other companies but does not itself conduct commercial or operational activities, is exempt from VAT. A mixed ETVE, unlike a pure holding, combines the possession of stakes in other companies (like a pure ETVE) and the conduct of its own commercial or operational activities.

Are ETVEs subject to VAT?

It depends on the nature of the structure. Pure ETVEs are exempt from VAT. Mixed ones are not.

What are the steps to create an ETVE?

This involves reserving the name, constituting the share capital, and complying with legal and tax formalities.

What are the eligibility conditions for the ETVE regime?

To be eligible for the ETVE regime in Spain, a company must be a Spanish tax resident, subject to Corporate Tax. It must manage stakes in non-resident entities, holding at least 5% of the capital or having invested at least 20 million euros for a minimum duration of one year. These foreign entities must be taxed in a manner similar to Spain and not be based in tax havens. The company must also declare its intention to adopt this tax regime to the Spanish administration.


  • Double TaxationTaxation of the same income in two jurisdictions (i.e., two different countries.)
  • ETVEEntidad de Tenencia de Valores Extranjeros, Foreign Securities Holding Entity. It is a company that specializes in holding (holding) financial stakes in companies located outside its country of origin. In this case, it is a Spanish company holding stakes in foreign companies. The main role of this entity is to manage these stakes, including the purchase, holding, and sale of shares or shares of non-resident companies.
  • Mixed ETVEA mixed ETVE combines holding stakes in foreign companies with conducting its own commercial or operational activities.
  • Pure ETVEA pure ETVE is specialized in holding stakes in non-resident companies without its own operational activities.
  • HoldingEntity holding stakes in other companies.
  • SAPublic Limited Company.
  • SLLimited Liability Company.

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