Using a Spanish Holding Company for Latin American Investments

By Victor Cabrera, Antonio Lobon and Marc Skaletsky (KPMG LLP)

Excerpt from Practical Latin American Tax Strategies published by WorldTrade Executive.

Spain has emerged as one of the most attractive jurisdictions for multinational corporations (MNCs), including U.S. MNCs, to establish a holding company for Latin American operations. In 1996, Spain enacted into law its holding company regime (Entidad de Tenencia de Valores Extranjero, or "ETVE").

Key factors in the attractiveness of an ETVE having business substance include (i) Spain's extensive tax and investment treaty network with various Latin American countries, and (ii) Spain’s European Union (EU) membership and the resulting coverage by the EU Parent-Subsidiary and Merger Directives.

Because of Spain’s treaty network and the European character of the ETVE, it has become an interesting vehicle for channeling capital investments into Latin America as well as a tax efficient repatriation route for EU capital investments by non-EU companies. Additional benefits include Spain’s cultural, linguistic, and historical business ties with the region.

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