International Holding Company in Spain: Structuring a Multinational Group After the 15% Global Minimum Tax

For decades, one of the key questions in international tax planning for large business groups has been:

In which country should profits be located?

Ireland, Luxembourg, the Netherlands and certain low-tax jurisdictions have traditionally played a prominent role in international structures.

But the landscape has changed.

Spain has now implemented Pillar Two, which establishes a global minimum tax system for large multinational groups.

The consequence is significant:

For large groups, simply moving profits to a jurisdiction with a low corporate income tax rate is no longer enough.

If the effective taxation calculated under the new rules falls below 15%, the system may trigger a top-up tax designed to make up the difference.

This does not mean international tax planning has disappeared. It means something more interesting: its nature has changed completely.

Which companies are affected by the global minimum tax?

In Spain, the new system is governed mainly by Law 7/2024 of 20 December, which transposes Directive (EU) 2022/2523.

As a general rule, it applies to multinational groups—and certain large domestic groups—whose consolidated revenue reaches at least:

€750 million

in at least two of the four immediately preceding tax periods.

We therefore need to distinguish between two situations.

A Spanish international group with revenue of €100 million, €200 million or €500 million may be subject to traditional international tax rules but remain outside Pillar Two. A group exceeding the €750 million threshold may also fall within the new minimum tax system. That difference can radically change the optimal tax structure.

A simple Spanish multinational

Imagine a group whose parent company is in Spain:

Spanish holding company

It owns:

• an industrial subsidiary in Germany;

• a sales company in France;

• a technology company in Ireland;

• an operating company in Mexico;

• a US subsidiary; and

• a company holding certain intangible assets in a low-tax jurisdiction.

Traditionally, the tax analysis would have focused on four key flows:

dividends, interest, royalties and capital gains from the sale of shareholdings.

That analysis remains essential today. But we must add another layer:

What is the effective tax rate in each jurisdiction for Pillar Two purposes?

Spain remains an interesting place for a holding company

This may seem paradoxical, but Spain has features that can make it possible to structure an international headquarters efficiently.

One of the most important is Article 21 of the Corporate Income Tax Law (LIS).

Subject to the statutory requirements, dividends from Spanish or foreign subsidiaries and positive income from the disposal of shareholdings may qualify for an exemption. In general, a direct or indirect shareholding of at least 5% and a minimum holding period of one year are required.

However, the exemption is normally no longer 100%. The exempt amount is reduced by 5% for management expenses. In simplified terms, the effective exemption is 95%.

This means that a Spanish holding company receiving dividends from a subsidiary may bear relatively low Spanish tax on that distribution, provided all requirements are met.

Example: €100 million of profit distributed to Spain

Suppose a foreign subsidiary distributes:

€100 million

to its Spanish holding company.

If the requirements of Article 21 LIS are met, 95% will generally be exempt. The amount included in the tax base will be:

€5 million.

Applying the general 25% corporate income tax rate purely for illustration, the associated Spanish tax would be:

€1.25 million.

That is approximately:

1.25% of the dividend received.

Of course, another key issue must be analysed before reaching this result:

withholding tax in the source country.

This is where double tax treaties, EU rules where both companies are in the EU, and the specific features of the structure come into play.

Why placing a subsidiary in Ireland is no longer enough

Suppose a significant part of the group’s profit is generated by a company in a low-tax jurisdiction. Historically, the logic might have been simple: if that company pays 8% tax, the group bears 8% tax.

With Pillar Two, the question changes. For a group within the new regime, we need to calculate the jurisdiction’s GloBE effective tax rate. If, after applying the system’s specific rules, that rate is below 15%, a top-up tax may arise.

In an extremely simplified illustration:

GloBE income: €100 million

GloBE covered taxes: €8 million

Effective rate: 8%

Minimum rate: 15%

Initial difference: 7 percentage points.

A top-up tax could therefore arise. But it would be wrong to say automatically that the group must pay another €7 million. The actual calculation is considerably more complex.

It includes adjustments to accounting profit, specific rules for covered taxes, temporary differences, allocation mechanisms and a substance-based income exclusion based mainly on certain payroll costs and tangible assets.

That is why Pillar Two is not simply:

15% minus the local nominal rate = additional tax.

Three mechanisms to ensure the minimum tax

Spanish legislation is built around three main mechanisms.

1. Domestic top-up tax

Spain may impose a top-up tax on Spanish entities that are insufficiently taxed under the system’s rules. Its purpose is to allow Spain to collect, in accordance with the law, any top-up tax relating to profits generated in Spain.

2. Income Inclusion Rule — IIR

The Income Inclusion Rule allows a parent entity to bear the top-up tax attributable to certain undertaxed group entities.

Conceptually:

If a subsidiary pays too little tax, the tax may move up the corporate chain to the relevant parent.

3. Undertaxed Profits Rule — UTPR

The Undertaxed Profits Rule acts as a backstop where the top-up tax has not been collected under the primary rule.

This combination makes it much harder to use the traditional strategy of locating profits in a very low-tax jurisdiction and expecting them to remain there indefinitely subject only to that tax.

Has international tax planning therefore come to an end?

No. Probably the opposite is true. It has become much more sophisticated.

In the past, great attention could be paid to the nominal corporate income tax rate. Today an efficient international structure must consider all of the following at the same time:

• the GloBE effective tax rate;

• withholding taxes on dividends, interest and royalties;

• double tax treaties;

• EU directives;

• the location of assets and personnel;

• transfer pricing;

• intra-group financing;

• intellectual property;

• controlled foreign company rules;

• permanent establishments;

• limits on the deduction of financing expenses;

• economic substance;

• anti-abuse clauses; and

• administrative compliance costs.

The objective is no longer simply:

“find the country with the lowest taxes”.

Economic substance takes centre stage

This change is fundamental. International rules developed in recent years increasingly share one idea:

profits should be taxed where the economic activities that create value are carried out.

As a result, it is increasingly difficult to defend a foreign company that has only a postal address but receives millions of euros in royalties or interest.

A sound international structure must be able to answer questions such as:

Where are the employees? Who actually makes the decisions? Where are the key functions carried out? Who controls the risks? Where are the assets? Who develops and exploits the intellectual property? Does the company earning the profit really have operational capacity?

Taxation is beginning to follow economic reality much more closely.

Transfer pricing: probably more important than ever

Imagine that the Spanish subsidiary develops all the group’s technology. A foreign company is then created, becomes the owner of the intellectual property and charges royalties to all the subsidiaries.

The question is no longer only:

What tax does the foreign company pay?

There is a prior question:

What profit is that company actually entitled to earn, given the functions it performs, the assets it uses and the risks it controls?

Transfer pricing rules require transactions between related entities to be valued in accordance with the arm’s length principle. It is therefore not enough to sign a contract that legally allocates certain income to a foreign subsidiary. The economic allocation of profit must be consistent with the activities actually carried out.

Intra-group financing: another tool that requires care

Another traditional instrument is to centralise group financing. A finance company lends money to the different subsidiaries and receives interest. This can still make sense, but the following must be analysed:

• the finance company’s tax residence;

• its substance;

• the interest rate applied;

• withholding taxes at source;

• international treaties;

• the company’s real financial capacity;

• transfer pricing rules; and

• limits on the deduction of financing expenses.

In Spain, Article 16 LIS generally limits the deduction of net financing expenses to 30% of operating profit, without prejudice to other applicable rules and special cases.

Artificially financing a Spanish subsidiary with large amounts of intra-group debt is therefore no longer an automatic way to erode its tax base.

Treaties cannot be used mechanically either

For years, a common planning practice was to interpose companies in jurisdictions with extensive treaty networks.

For example:

Country A → intermediate holding company → Spain.

The aim might be to reduce withholding tax on dividends, interest or royalties.

Today we must also consider the Principal Purpose Test (PPT), widely introduced through the BEPS Multilateral Instrument.

In simplified terms, treaty benefits may be denied where it is reasonable to conclude that obtaining them was one of the principal purposes of an arrangement or transaction, unless granting them would be consistent with the object and purpose of the relevant treaty provisions.

An intermediate company with no genuine economic function, created solely to access a favourable treaty, therefore presents a considerably greater risk.

Two Spanish groups may need completely different strategies

Consider the following example.

Group A

Consolidated revenue:

€500 million.

It has subsidiaries in six countries and does not meet the general Pillar Two threshold. Its international tax planning will continue to focus mainly on:

• treaties;

• withholding taxes;

• Article 21 LIS;

• transfer pricing;

• financing;

• intellectual property;

• controlled foreign company rules; and

• economic substance.

Group B

Consolidated revenue:

€1.5 billion.

It operates in exactly the same countries. A new dimension now comes into play. In addition to all the above, it must calculate the Pillar Two effective tax rate jurisdiction by jurisdiction and determine whether any top-up tax is due.

A structure that is optimal for Group A may therefore produce a different result for Group B.

2026 marks a particularly important point in Spain

This is no longer a theoretical reform awaiting development. Spain introduced the tax through Law 7/2024 and subsequently approved its implementing regulations through Royal Decree 252/2025.

The Spanish Tax Agency (AEAT) also has specific forms:

Form 240: notification by the filing constituent entity.

Form 241: information return for the Top-Up Tax.

Form 242: self-assessment of the Top-Up Tax.

The 2026 Annual Tax and Customs Control Plan expressly identifies the Top-Up Tax—Pillar Two—as a new area of action. For large Spanish groups, global minimum taxation has therefore moved from planning into actual tax administration.

How should an efficient international structure be designed today?

There is no universal architecture. But a sound structure should follow a logical order.

First: the business.

Identify where the markets, employees, assets, management, financing and intellectual property are actually located.

Second: the corporate structure.

Decide where it makes economic sense to locate regional holding companies, operating companies, finance centres or entities that own particular assets.

Third: international flows.

Analyse dividends, interest, royalties and capital gains, taking withholding taxes and treaties into account.

Fourth: transfer pricing.

Allocate profits in accordance with the actual functions, assets and risks.

Fifth: anti-abuse rules.

Check substance, controlled foreign company rules, the PPT and other domestic and international provisions.

Sixth: Pillar Two.

If the group exceeds the threshold, calculate the GloBE effective rate in each jurisdiction and any resulting top-up tax.

Only then can the most tax-efficient structure be identified.

The new paradigm: optimise without separating tax from business

The main conclusion of Pillar Two is not that every multinational will pay exactly 15% in every country. Nor does it mean that Ireland, Luxembourg, the Netherlands or other jurisdictions have automatically ceased to be useful.

Their appeal may still stem from many factors:

• treaties;

• legal certainty;

• financing;

• markets;

• talent;

• infrastructure;

• company law;

• access to investors;

• intellectual property; or

• genuine regional business centres.

What is progressively losing its rationale is something else:

artificially locating profits in a jurisdiction solely because it has low taxes, without moving real economic functions there.

For large groups, the nominal tax rate is no longer enough to make decisions.

Conclusion

The 15% global minimum tax has not ended international tax planning. It has ended part of the simple international tax planning.

A Spanish multinational should no longer design its structure by asking only:

“Where can I pay less tax?”

The right question is much more complex:

“How can we allocate our functions, assets, financing and risks so that profits are taxed efficiently where value is actually created, while making legitimate use of treaties, exemptions and tax regimes without triggering top-up taxes, unnecessary withholding taxes or anti-abuse risks?”

For groups with revenue below €750 million, traditional tools remain decisive.

For large groups subject to Pillar Two, a new boundary appears:

a structure that reduces local tax below 15% may simply shift taxation to another part of the group.

In today’s international tax environment, an efficient structure is therefore not necessarily the one with the lowest nominal tax rate.

It is the one that sustainably minimises the group’s global tax burden, has genuine economic substance and can be defended before the tax authorities of every country in which the group operates.

Read the original article in Spanish.

Official sources

• Law 7/2024 of 20 December (BOE)
• Council Directive (EU) 2022/2523 (EUR-Lex)
• Royal Decree 252/2025 of 1 April (BOE)
• 2026 Annual Tax and Customs Control Plan (BOE)