HOLDING COMPANIES IN SPAIN (ETVEs)

The distribution of profits by a holding company to non-resident corporate or individual shareholders is exempt from withholding tax, unless the recipient is resident in a listed tax haven.

The holding company regime is not available to certain passive entities whose main business is to manage movable or inmovable property, where, for at least 90% days in the financial year:

• more than 50% of their capital stock is owned directly or indirectly by ten or fewer shareholders (or by a family group) and
• their assets consist mainly of movable or immovable property not used for business purposes.

 CONTROLLED FOREIGN COMPANY IN SPAIN

Under the "international fiscal transparency" regime, equivalent to CFC regime, a Spanish-resident company may be subject to corporate income tax on certain types of passive income of certain non-EU resident entities, or certain Cypriot and Gibraltar entities as well as Luxembourg exempt holding companies, in which it owns (directly or together with any associates) 50% or more of the capital, equity, results or voting rights. These entities must be situated in countries where the corporate income tax paid by the CFC in connection with the attributed positive income is less than 75%  of that which would have been payable under Spanish corporate income tax rules.

 CONTROLLED FOREIGN COMPANY IN THE UK

CFC legislation exists to make a charge on UK resident shareholders of companies resident in low-tax jurisdictions. The charge is made on a proportionate interest of that company's profits, but not its capital gains.

The legislation applies if the UK shareholder has an interest of at least 25% in the foreign company. Interest held by associated or connected persons is taken into account.

A foreign company is "controlled" if UK shareholders have an interest of more than 50% in that company.