That’s why, in this monthly alert, we outline the essential criteria to help you decide whether it is the right time to create a holding company.
When should you not set up a holding company?
Setting up a holding company purely to benefit from tax exemptions on share sales or dividend distributions is a high-risk practice.
Both the AEAT and TEAC agree that the special regime for share transfers is not applicable if:
The holding company lacks real activity and has no independent structure.
Its sole purpose is to channel short-term sales of shares or participations.
It has no employees or material resources assigned to an actual business.
There is no real business plan behind it—only a tax-saving objective.
In such cases, the Tax Agency may reclassify the operation and tax the income under the personal income tax (IRPF) of the individual shareholders. This is what is known as the “consummation of abuse”—which occurs when shareholders receive dividends or sell shares under an exemption they are not truly entitled to.
Therefore, if there is no solid business project, no sustained operational activity, and no real management of the subsidiaries, forming a holding company is not only unjustified—it may trigger significant tax adjustments and penalties.
When is it justified to create a holding company?
At LEIALTA, we believe setting up a holding company is not only appropriate, but highly advisable when it aligns with a legitimate, well-structured, and medium- to long-term business or estate strategy.
Examples where it makes clear strategic sense include:
Business restructuring with economic substance: consolidating entities, spin-offs or internal reorganisations aimed at achieving greater efficiency and operational clarity.
Active management of shareholdings: the holding company plays a real role in strategic decisions, financial oversight, and coordination of subsidiaries.
Independent structure: at least one employee under a general employment contract, physical resources, a functioning board of directors, and demonstrable activity.
Clear economic purpose: centralising management, enabling future acquisitions or disposals, supporting succession planning, and protecting family wealth—all within a framework of genuine business activity that allows for legitimate tax efficiency.
The key is not the legal form, but the substance and coherence of the business project.
Current tax authority approach: stricter than ever
Recent rulings suggest a tightening of the criteria. The tax authorities now thoroughly examine the actual operation of holding companies, requiring evidence such as:
Service agreements between the holding company and its subsidiaries.
Board minutes, financial reports, and documented strategic decisions.
Employees who can prove they perform real business services.
Expenses directly linked to group management.
The absence of supporting documentation, infrastructure or actual business activity will nullify the expected tax benefits and may lead to fines and interest.
A strategic, not fiscal shortcut
To sum up, a properly structured holding company can be an outstanding tool for protecting family assets, managing group companies efficiently, and planning for generational transition.
But forming one is not enough. It must be built with substance, activity and legal coherence—from its legal structure to its organisational implementation.
Therefore, creating a holding company is not a tax shortcut—it’s a strategic decision.
In today’s legal and fiscal environment, only a structure with genuine substance and a clear economic purpose can deliver the advantages permitted under the law—and withstand future tax inspections.
At LEIALTA, we help ensure your holding company is more than just a legal shell—it becomes the central pillar of a modern, efficient, and legally robust business structure. Our team of experts will guide you through the key question: when to set one up and when not to.
