Corporate structures, the constitution of holding company with the contribution of goods

Companies are under a lot of pressure in their day-to-day life, and on many occasions, they must change to adapt to the market, to the existence of new competitors or the use of new technologies. For this change, business restructurings are carried out, among which the constitution of corporate structures through the constitution of a business holding company can be highlighted.

Corporate structures: What is a holding company?

A business holding is a form of a grouping of companies in which a parent company and other companies depend on it; that is, the main company has control over the subordinate companies.

This type of corporate structures are regulated in article 42 of the Commercial Code, which establishes the following:

A group exists when a company holds or may hold, directly or indirectly, control another or others. In particular, it will be presumed that there is control when a company, which will be classified as a parent, is about another company, which will be classified as a dependent, in any of the following situations:

• Hold the majority of voting rights.
• Has the power to appoint or remove the majority of the members of the administrative body.
• May have, by agreements concluded with third parties, the majority of voting rights.
• Has designated with their votes the majority of the members of the administrative body, who will carry out their duties at the time when the consolidated accounts are to be drawn up and during the two immediately preceding fiscal years. </ li>

Constitution of holding company through non-monetary contributions

Based on current legislation, it is possible to create a business holding or corporate structure of a group of companies, through non-monetary contributions, without current tax cost (or at the time of the contribution.).

In this case, the regime established in Article 87 of the Corporation Tax Law establishes the following requirements:

• The entity that receives the contribution must reside in Spain.
• The person contributing must participate in the company’s equity that receives said contribution by 5%.
• If the contributor is a natural person, the companies whose shares or participations are contributed must be domiciled in Spain and not have the management of movable or real estate assets.
• If the contributor is a natural person, the shares or participation transferred from the companies must represent 5% of their own funds and have that person during the previous year.
• The existence of economic reasons is necessary to be able to carry out the operation.
• It is mandatory to comply with formalities such as the granting of a public deed.

What is the special regime for non-monetary contributions?

The special regime consists of the income originated by the transmissions not considered in the taxable base of the Corporation Tax.

The regime also applies to contributions from branches of activity made by income taxpayers and IRNR who are residents of the European Union, in the case that they keep the accounts according to the Commercial Code or an equivalent regulation.

As a consequence of the foregoing, if you intend to create corporate structures through a business holding company, you must consult with an expert tax advisor to guide you on your Fiscal obligations.