In the current international tax environment, simply registering your company in the Commercial Registry is no longer sufficient for you to operate with legal certainty. The tax authorities now require a “real life” behind each CIF. If your company does not demonstrate a solid operational structure, you run the risk of the AEAT ignoring your legal personality, eliminating any previous tax advantage.
Economic substance is the real operational capacity of a company to develop its corporate purpose. In Spain, it is demonstrated by the presence of qualified human resources, physical material assets (offices) and effective strategic decision-making by the directors from national territory.
International tax strategy
To guarantee access to the benefits of double taxation agreements, it is imperative that your Spanish subsidiary demonstrates management autonomy and verifiable physical presence before the Tax Agency.
- Protection of exemptions in the distribution of dividends and royalties to the parent company.
- Mitigation of the risk of qualification as a “shell company”.
- Proactive compliance with the proposed European directive ATAD 3.
Tax compliance and Spanish legal regulations
Economic substance is not a generic concept; it is an operational reality that you must demonstrate through human resources, material resources and local decision-making capacity.
The Spanish legal framework allows the inspection to lift the veil of artificial structures. This is especially critical if you have decided to create an ETVE holding in Spain to manage your international holdings.
Does your structure meet the minimum substance requirements?
| Analysis Factor | Company with Substance | Shell Company (Risk) |
|---|---|---|
| Governance | Local directors with real powers. | Directors who only execute orders. |
| Human Resources | Employees with local contract. | Non-existence of own personnel. |
Impact on your reporting and accounting
The lack of substance directly affects what you declare in Form 200 for Companies and the validity of your transfer prices. The Tax Agency could challenge your expenses if it does not detect economic rationality.
Strategic validation roadmap
- Phase 1: Indicator audit. We analyze your passive income and dependence on services.
- Phase 2: Material strengthening. We adapt your assets and support contracts.
- Phase 3: Governance documentation. We record minutes that prove decision-making in Spain.
