The increasingly strict controls on jurisdictions traditionally used in wealth and business planning schemes, and the limitations that extend to the low taxation of offshore profits, lead companies to rethink the organization of their holding structures through jurisdictions that offer legal certainty and tax efficiency.
Spain, due to its excellent network of treaties to avoid double taxation and investment
protection, offers a real alternative for the relocation of holding companies of business groups, or as a jurisdiction to be considered in an estate planning structure with some Latin American component.
The tax regime of the Foreign Securities Holding Entities or Entidades de Tenencia de Valores Extranjeros (ETVE), becomes a figure to be considered in international corporate restructuring schemes. It was introduced in Spain in 1995 to attract foreign investment with benefits similar to those established in other jurisdictions, such as Luxembourg and Holland.
In Portugal, the Sociedades Gestoras de Participações Sociais (SGPS) are the equivalent of the Spanish ETVEs. The special tax regime applicable to SGPSs is characterized by one of the most favorable tax exemption regimes in Europe.
The advantages applicable to these special tax regimes consist of considering as exempt in Spain or in Portugal, as the case may be, income from (i) the distribution of dividends by investees and (ii) capital gains generated by the transfer of shares in non-resident entities, provided that certain requirements are met.