Holding company in Spain: tax, the ETVE regime and when it pays off

A holding company in Spain is an ordinary SL that owns shares in other companies.

Under article 21 of the Corporate Income Tax Act, 95% of dividends and of gains on selling those shares are exempt if the holding owns at least 5% of the subsidiary for at least a year.

The tax is about 1.25% instead of 19–30% for an individual — as long as the money stays in the holding.

Below: how the exemption works in 2026, a worked comparison of selling a stake personally or through a holding at €1m, €5m and €20m, when a holding pays off, the ETVE regime for foreign companies, how to move shares into a holding tax-neutrally, holdings and moving to Spain, wealth tax, and the traps. There is a calculator on the page.

What a Spanish holding company is and who needs one

Spanish law has no separate “holding” legal form. It is an SL or SA whose main asset is shares in other companies.

The holding receives dividends from them, sells stakes and invests in new projects, and pays tax like any other company — with one key exemption for income from shareholdings.

A holding is useful when the money is not needed personally right now and is meant to be reinvested:

• a founder before selling a startup — the proceeds from the stake stay in the company almost tax-free;
• an angel investor with several stakes — money from one exit goes into the next round without personal tax on the way;
• an owner of several businesses — profit from one can fund another without passing through the owner’s hands;
• an owner of foreign companies — Spain has a dedicated regime for this, the ETVE (see below).

If all the profit is paid out to live on, a holding adds little: personal tax is paid on the way out, and the company costs money to run.

How the article 21 exemption works

Conditions: 5% and one year

Dividends and gains on selling shares are exempt if the holding owns at least 5% and has held it for at least a year without interruption.

For dividends, the year can be completed after the payment, provided the stake is kept until it runs out.

If the subsidiary earns more than 70% of its income from dividends of its own subsidiaries, the 5% test also applies at the lower tiers.

For a foreign subsidiary there is one more condition: corporate income tax in its country at a nominal rate of at least 10%.

It is deemed met where Spain has a double tax treaty with that country that includes exchange of information.

Income from tax havens is not exempt (except EU companies with genuine activity).

Why 95% and not 100%

Since 2021, 5% of the exempt income is treated as the cost of managing the shareholding and taxed at the company rate.

At the general rate of 25% that is 5% × 25% = 1.25% of the dividend or gain. The rule applies equally to dividends and share sales.

The alternative “acquisition cost above €20m” threshold no longer exists.

It was abolished in 2021, and the transitional regime for stakes bought earlier ended with the 2025 tax periods.

In 2026 only the 5% test applies — many guides in the search results still say otherwise.

Withholding on dividends paid to a holding

When a Spanish company pays dividends to an individual it withholds 19%.

On payments to a holding that meets article 21, there is no withholding: the holding tells the payer the conditions are met and provides supporting evidence.

100% for three years on new subsidiaries

Small groups have a narrow extra relief: dividends from a subsidiary set up after 1 January 2021 are 100% exempt for its first three years.

Conditions: the holding’s turnover is under €40m, it is not a passive company (entidad patrimonial), before setting up this subsidiary it was not part of a group and held no stakes of 5% or more, and it has owned 100% of the subsidiary since incorporation. The relief covers dividends only, not share sales.

Worked example: selling a stake personally or through a holding

A hypothetical example: a founder invested €50,000 in a startup and sells the stake.

We compare two cases — the stake held personally and the stake held by the founder’s holding.

An individual’s gain is taxed on the savings scale: 19% up to €6,000, 21% up to €50,000, 23% up to €200,000, 27% up to €300,000 and 30% above.

At a 25% rate the holding pays 1.25% on the gain, so on a €5m sale €1.4m more stays at work than the individual would have in hand.

But this is a deferral, not an exemption: pay everything out as dividends and personal tax falls on the full amount, so together with the holding’s tax the total is even higher than selling directly.

So a holding pays off exactly to the extent that the money stays in it and keeps working: new stakes, funds, company property, or gradual payouts in the lower bands of the scale.

The example leaves out running costs and the tax on contributing the shares — the calculator below includes them.

Calculator: personally or through a holding

Enter your sale price, what you invested and how much you plan to pay out to yourself.

The calculator shows the tax in both cases, how much stays at work and what the holding costs to run.

When a holding pays off

A holding is a separate company with its own costs: setting up the SL, bookkeeping and annual accounts, corporate tax returns, a notary when shares are contributed and — if you need the ETVE regime or protection from passive-company status — real resources: a person and a place where decisions are taken.

Market guide figures: set-up including the share contribution €1,500–4,000, running costs €4,000–10,000 a year; more with staff and an office for genuine activity.

A simple rule: a holding pays off when the tax it defers on reinvested money clearly exceeds its running costs over the years you hold it.

With a gain of several hundred thousand euros and plans to reinvest, that is usually the case; with small dividends that are paid out to live on anyway, it is not.

The decision is best made on the numbers of the specific project: a group financial model shows how much money you will need personally and when, and how much will go into new investments.

ETVE: when you need the special regime

The ETVE (entidad de tenencia de valores extranjeros) is a regime for a Spanish holding that manages stakes in foreign companies.

Dividends and gains are exempt under the same article 21 rules; the main difference is for shareholders of the holding who do not live in Spain.

• Profit the ETVE distributes to a non-resident out of exempt foreign income is not Spanish-source income: no non-resident tax and no Spanish withholding. The same applies to a non-resident’s gain on selling shares in the ETVE.
• These rules do not apply if the shareholder is resident in a tax haven.
• The ETVE’s own shares must be registered (nominative), and managing the foreign stakes requires an organisation with people and material resources.
• A passive company (entidad patrimonial) cannot use the regime.
• The regime is elected by notifying the tax agency (AEAT) and applies from the period ending after the notification.

Who it suits: owners of companies in Latin America and other countries who want to group them under a Spanish holding, and foreign investors entering those countries through Spain.

If all subsidiaries are Spanish and the shareholders are Spanish residents, an ordinary holding is enough.

How to move shares into a holding without tax

Selling your own shares to your own holding means paying personal tax on the gain immediately.

So the shares are contributed to the holding’s capital under the tax-neutrality regime (Chapter VII of the Corporate Income Tax Act): the tax is deferred, and the holding takes the shares at their old tax value and original acquisition date. There are two routes:

• Share exchange (canje de valores). The holding obtains a majority of the voting rights in the company (or increases a majority it already has); any cash top-up is no more than 10% of nominal value.
• Non-cash contribution (aportación no dineraria). Where there is no majority: after the contribution the individual owns at least 5% of the holding, the contributed shares are at least 5% of the company and have been owned for at least a year, and the company is not passive.

Both require a genuine business reason beyond saving tax, and a notification to the tax agency within three months of registering the transaction — missing it carries a €10,000 penalty.

There is also a trap few people mention: if the holding sells the contributed shares within two years, the exemption does not cover the gain accrued before the contribution.

That is why a holding is set up well in advance, not a month before the deal.

Holding companies and moving to Spain

For people relocating, the order of steps matters: a structure created before and after becoming tax resident is taxed differently, and the share contribution must make business sense and survive an inspection.

Exit tax on a future departure from Spain: if a person has been resident for 10 of the last 15 years and their shares are worth more than €4m (or a stake above 25% is worth more than €1m), the unrealised gain is taxed on leaving; for moves to the EU or EEA it can be deferred.

Tax deferred on contributing shares also becomes payable if the person loses Spanish residence.

A holding is compatible with the Beckham regime: since 2023 a company director can apply it, and for an ordinary company there is no limit on the director’s stake; a stake below 25% is required only if the company is passive.

Under the Beckham regime Spanish dividends are taxed on the 19–30% scale, while foreign dividends are not taxed.

The regime itself and tax residence are covered in detail in the Relotus journal — “Beckham Law in Spain” and “Spain tax residency”.

Wealth tax and the family business exemption

A Spanish resident pays wealth tax (Impuesto sobre el Patrimonio) and, for large fortunes, the solidarity tax on large fortunes, which remains in force in 2026. Shares in a family business are exempt from both if:

• the company is not passive — more than half of its assets are used in a business activity (for a holding, voting stakes of 5% or more in operating companies, managed with real resources, count as activity);
• the stake is at least 5% individually or 20% together with family;
• the person performs management functions and is paid more than 50% of their earned and business income for them.

The exemption applies in proportion to the assets used in the activity.

The main risk is the period after selling a subsidiary: if for more than 90 days a year the holding sits on money not invested in an activity, it may become a passive company.

The tax authority (DGT ruling V2218-25) treats proceeds from selling a qualifying subsidiary as linked to the activity for 10 years, but how this applies depends on the facts — have a reinvestment plan before the deal.

Holding company traps

• Passive company (entidad patrimonial). If more than half of the assets are securities, cash or property not used in a business, the holding pays the general 25% rate with no reduced rates, loses the wealth tax exemption and cannot be an ETVE. And on selling a stake in such a company, only the part of the gain equal to profits accumulated during ownership is exempt.
• No genuine activity. A holding with no people or resources that exists for a single deal can be treated by the inspectors as artificial (article 15 of the General Tax Act) and the tax recalculated as if the individual had sold.
• The two-year rule on contributed shares and exit tax on changing country — see above.
• Capital under €3,000. An SL can be set up with €1 of capital, but then it must put at least 20% of profit into a reserve, and on liquidation the members are jointly liable up to €3,000. How to set up an SL and what it costs: “How much does it cost to set up an SL in Spain”.
• Rates below 25% are for operating companies only. The 15%, 19/21% and 23% rates in 2026 do not apply to passive companies, so holding calculations usually start from 25%.

Before selling a stake through a holding it is worth checking the deal itself: the valuation, the exit terms and how the stake appears in the cap table.

See “How to value a startup” and “Cap table and dilution”.

Frequently asked questions

How much tax does a holding company pay on dividends in Spain?

If the holding owns at least 5% of the subsidiary for at least a year, 95% of the dividends are exempt. The remaining 5% is taxed at the company rate — at 25% that is 1.25% of the dividend.

Does the €20m threshold for the exemption still apply in 2026?

No. The alternative “acquisition cost above €20m” test was abolished in 2021, and the transitional regime for older stakes ended with the 2025 periods. In 2026 a stake of at least 5% is required.

Can I set up a holding right before selling my startup?

You can, but it is risky. If the holding sells the contributed shares within two years, the gain accrued before the contribution is not exempt, and a contribution with no business reason other than tax can be challenged. A holding is best set up well in advance.

How is an ETVE different from an ordinary holding?

An ETVE manages stakes in foreign companies, and its non-resident shareholders receive profit distributed from exempt foreign income with no Spanish tax or withholding. It requires registered shares, resources to manage the stakes and a notification to the tax agency.

Do I need a holding if I pay all the profit out to myself?

Usually not. A holding defers personal tax while the money stays in the company. When it is paid out as dividends, tax on the 19–30% scale is paid anyway, and the holding adds running costs.

Can a holding be combined with the Beckham regime?

Yes. A company director can use the Beckham regime with no limit on their stake if the company is not passive; for a passive company the stake must be below 25%. Spanish dividends are still taxed on the 19–30% scale.

What is the minimum capital for a holding SL?

One euro. But while capital is below €3,000 the company must put at least 20% of profit into a reserve, and on liquidation the members are jointly liable for the shortfall up to €3,000.

Will my holding become a passive company after selling a subsidiary?

It can, if for more than 90 days a year over half of its assets are cash and securities not used in a business. Then tax is at 25% and the wealth tax exemption is lost, so the investment plan needs to be in place before the deal.

Key points on holding companies in Spain

• A holding is an ordinary SL or SA; 95% of dividends and gains on stakes of 5% or more held for a year are exempt — about 1.25% tax.
• There is no €20m threshold in 2026, and no 19% withholding between a holding and its subsidiary.
• The benefit is deferral of personal tax on money that is reinvested; if everything is paid out as dividends, a holding saves nothing.
• Shares go into a holding tax-neutrally by exchange or non-cash contribution — in advance and with a business reason; mind the two-year rule.
• The ETVE is for foreign subsidiaries and non-resident shareholders.
• The main trap is passive-company status: 25% rate, wealth tax, no ETVE.

Sources

• Corporate Income Tax Act (Ley 27/2014, LIS) — arts. 5.2, 21, 29, 76, 80, 87, 89, 107, 108, 128; transitional provisions 40 and 44.
• Corporate Income Tax Regulation (RD 634/2015, RIS) — arts. 48, 51, 61.
• Personal Income Tax Act (Ley 35/2006) — arts. 66, 76, 93, 95 bis, 101.
• Wealth Tax Act (Ley 19/1991) — art. 4.8; Ley 38/2022 — solidarity tax on large fortunes.
• General Tax Act (Ley 58/2003) — art. 15; Capital Companies Act — art. 4.
• Tax authority (DGT) rulings V0937-26, V2218-25, V1649-25, V0807-24 — rulings database.