Establishing a holding company in Spain: Legal Requirements

Before establishing a company, it is necessary to apply for an exemption certificate on the planned company name in the Spanish Commercial Registry.

The founding contract must be signed by the partners/shareholders before a notary and officially certified. The minimum deposit required for establishing an S.L. is 3,000 euros and for establishing an S.A. is 60,000 euros.

After the establishment of the company, a tax identification number must be requested from the tax authorities and the company shall be registered in the Spanish Commercial Registry. Furthermore, as indicated above, the desired ETVE-assessment form must be presented to the Spanish Treasury, so that this form of investment can be used in the current assessment period.

In the case of the participation of foreign shareholders, it is necessary that the capital contribution performed be communicated to the Spanish Ministry of Finance. Foreign companies request the establishment of certain types of Spanish company special rights in relation to insufficient capital contribution and tax benefits in respect to the depreciation of investments, which are considered by us in this given case.

In the case that the company employs workers, it is obliged to join the Spanish Social Security.

During the inventory of the ETVE company, as with other companies, it is necessary to carry out the statutory books. The financial statements must be approved by the shareholder or shareholders’ meeting and be deposited in the Registry, at their notice.

In addition, the ETVE company must indicate the dividends and capital gains from their foreign sources which benefit from the special assessment and the tax liabilities paid abroad in its annual accounts.

Shareholders and stockholders of ETVEs

Both domestic and foreign individuals and legal entities may contribute to an ETVE. This includes a single shareholder or stockholder. A legal limit on members or shareholders does not exist.

Management of the ETVE Company

The administration of an ETVE may be either an individual agent or several representatives. For practical reasons, we advise that the manager or managers be established in Spain or that a power of attorney granting the necessary administrative powers be granted to a resident of Spain.

Activities of the ETVE Company

An ETVE may not pursue any other activity besides the track management of investments in a none-Spanish based company.  New profits are not subject to tax privileges, but instead are regularly subject to tax in Spain.

Conclusion

An ETVE is an attractive and proven form of investment for Spanish companies that hold interests in companies abroad. Through the Spanish ETVE, companies achieve a tax-free profit transfer on their interests in companies at home and abroad.

Alexander Rabes & Karl H. Lincke

This article is not considered as legal advice

Karl H. Lincke

As an Abogado & Rechtsanwalt, Karl H. Lincke is a Partner at Mariscal Abogados and specialises in M&A, Company law, TMT law and Real Estate law. Working languages: Spanish, German and English. For any further enquiries please Contact us