Confianz

Etiqueta: Confianz

  • Middle market private equity in Spanish SMEs in 2025

    The relationship between entrepreneurs and middle market private equity remains complex. Many executives experience a natural resistance to opening their companies to external investors. However, recent data shows that this perception needs to be updated.

    The SpainCap 2025 report reveals growth patterns that contradict many long-held beliefs about private equity.  We are witnessing a structural transformation that is redefining how medium-sized companies grow in Spain. The evidence is compelling and deserves detailed analysis.

    Middle market private equity drives real growth in employment and turnover

    The report’s findings exceed even the most optimistic expectations. The 251 companies analysed that received middle market private equity generated 79,778 additional jobs during the first three years. This annual growth of 18.2% contrasts significantly with comparable companies that did not access this financing.

    The difference is sustained over time: by 2022, cumulative employment growth reached 87%. These are not temporary or artificial hires, but rather sustained expansion reflecting greater operational capacity.

    In terms of turnover, the advantage is even more pronounced. The investee companies improved sales almost eight times more than the control group during the first three years. Translated into concrete figures, we are talking about increases of around €20 million per company.

    These figures are in line with the sector’s superior performance. Private equity currently doubles the performance of the IBEX 35 and exceeds the Euro Stoxx 600 by more than 50%, demonstrating the structural strength of this type of investment.

    In addition to liquidity, middle market private equity provides operational expertise, international commercial networks and management methodologies that few companies develop internally. This combination explains why the results transcend the mere financial effect.

    The benefits of middle market private equity are sustained over the long term

    A frequent concern among entrepreneurs is the long-term sustainability of these benefits. The data categorically dispels this uncertainty.

    The companies in which investments were made reached 106,668 employees, confirming that growth does not slow down after the initial period. On the contrary, it consolidates and expands, creating a more solid foundation for future expansion.

    Total assets show similar patterns. Companies recapitalised by middle market private equity show much higher growth in efficiency and investment capacity compared to companies without this financing. This improvement in the equity base facilitates access to new markets and growth opportunities.

    Gross margins also experience sustained improvements. This is not only due to higher sales, but also to more efficient operating structures that transform revenue into margins more effectively.

    The industry faces 2025 with particularly favourable prospects after a period of consolidation in which managers focused on optimising their existing portfolios. Indicators suggest a very positive year for all relevant metrics.

    This stability is particularly valuable for companies seeking sector consolidation, preparation for external shocks, family succession processes or structured international expansion.

    When to evaluate middle market private equity in your company

    The decision to access middle market private equity requires careful assessment of the timing and business circumstances. Certain criteria can guide this reflection.

    Your company is in a favourable position if it has a turnover of between €10 million and €100 million, which is the typical range for the middle market according to SpainCap data. You also need transparent financial management, with audited financial statements and clear metrics to measure performance in terms of sales, margins and assets.

    Expansion is another determining factor. If your company is seeking internationalisation, geographical diversification or product line expansion, middle market private equity significantly accelerates these processes. The same applies when the competitive environment demands scalability and professionalisation to maintain competitive positions.

    However, certain mistakes can compromise the process. Many companies underestimate the effort required for preparation: inadequate documentation, lack of clear objectives or inconsistent metrics.

    Another common mistake is not adequately valuing the investor’s non-financial contribution. The operational management, network of contacts and international strategy provided by specialised managers can be more valuable than the capital itself.

    It is also counterproductive to negotiate without clarity on the level of control you are willing to transfer. Worse still is focusing exclusively on liquidity for existing partners rather than on medium- and long-term value creation.

    The macroeconomic context is particularly favourable for these transactions. Interest rates will continue to fall gradually throughout 2025 until they stabilise at around 2%, where they will remain in the medium to long term. This scenario boosts transactions in private markets.

    Confianz accompanies companies in this strategic assessment. Our approach diagnoses financial maturity, optimises corporate structure and prepares negotiation conditions that preserve business control while maximising the impact of middle market private equity. This specialised support avoids the most frequent and costly mistakes in the process.

     

  • Corporate Tax 2025: key strategic points

    Corporate tax 2025 has become the procedure that determines the competitive advantage of Spanish companies. Those who master its new rates, deductions and obligations will gain margin, cash flow and peace of mind. However, the reform brings nuances that cannot be summed up in a simple headline. That is why we break down the essentials here, with a practical approach.

    New corporate tax rates for 2025

    The general rate remains at 25%, but everything below that has changed.

    Micro-SMEs with a turnover of less than one million will be taxed at 21% on the first €50,000 of taxable income. For the rest, a rate of 22% applies, two points less than in 2024.

    Medium-sized SMEs will see an intermediate step with a rate of 24%, while small entities will move to 20%.

    Start-ups and newly created companies will maintain the 15% rate for the first four years of profitability, a key respite for early liquidity.

    Meanwhile, the minimum rate of 15% for groups with sales exceeding twenty million remains in force. It is advisable to review deferred adjustments so as not to lose deductions.

    The reduction for micro-SMEs will not stop in 2025. The government plans annual reductions until the first tranche reaches 17% and the rest 20% in 2027. Therefore, bringing forward profits to this financial year may be advantageous.

    Consolidated tax groups must calculate their minimum tax on the sum of individual tax payments. It does not apply to the consolidated result, which may increase the tax if there are companies operating at a loss.

    Corporate tax deductions and incentives

    The deduction for R&D&I carries more weight than ever. It now covers the purchase of intangible assets developed by third parties, provided that the project has a report from the Ministry of Science. The Supreme Court has confirmed that this report is binding on the tax authorities and guarantees deductibility.

    Green projects receive further support. The freedom to amortise renewable self-consumption installations up to five hundred thousand euros is maintained. In addition, accelerated amortisation is introduced for electric vehicles and charging points.

    The capitalisation reserve is being strengthened. The reduction is now 20% of the increase in equity. It even reaches 30% if the average workforce grows by more than 10%.

    Finally, the deduction for donations is increased from 35% to 40%. Ticking the ‘Solidarity Company’ box costs taxpayers nothing and multiplies the social impact.

    The digital revolution also reaches corporate tax in 2025. A ten per cent tax credit is created for expenditure on advanced data analysis and cybersecurity software. This incentive is compatible with the innovation deduction and can be combined with accelerated depreciation of hardware.

    The limitation on financial expenses remains anchored at 30% of EBITDA, but is relaxed for certified green infrastructure projects. In these cases, an additional threshold of five million is allowed, which, when calculated correctly, reduces the tax base without altering the debt ratio.

    Formal obligations and strategy

    The 2025 corporation tax return must be filed between 1 and 25 July, or 22 July if you pay by direct debit. Form 200 includes a section on beneficial ownership that requires the identification of the individuals who control the company.

    Corrective self-assessments simplify the correction of errors. Simply submit a new Form 200 and calculate the interest yourself without waiting for a request.

    In compensation for negative bases, the old brackets reappear. The general limit of 70% drops to 50% between twenty and sixty million in income and to 25% above that amount.

    The 2025 corporation tax rewards early action. Those who combine smart investment with compliance control obtain real reductions and reduce risks.

    Remember that the 2025 corporation tax interacts with the minimum supplementary tax approved by the OECD, which will be settled in 2026. Anticipating accounting adjustments this year will ease the global double tax burden of Pillar Two.

    Request a free meeting with one of our specialists.

  • How company spin-off are managed

    Understanding how to manage company spin-offs requires distinguishing between a full spin-off, a partial spin-off and a segregation. A full spin-off divides all assets into several companies and extinguishes the original company. Partial spin-off transfers an economic unit to another created or existing one, without extinguishing the original one. Segregation is similar to partial segregation but involves a more specific transfer of assets.

    First the spin-off project is prepared: it identifies the companies involved, assets, liabilities, valuations, spin-off balance sheet, exchange fees and accounting effect date. It also defines special rights and examines how they fit into the tax neutrality regime. The existence of an «economic unit» is key to the partial spin-off.

    2 Legal approval and tax neutrality

    Once the project has been drafted, an independent expert’s report is required if a company is a public limited company. A shareholders’ meeting is then convened for approval. If approved unanimously, the resolution is published in the BORME or provincial newspaper.

    It is then notarised and registered in the Mercantile Register. It is also communicated to employees and creditors who may be affected.

    In order to qualify for the tax neutrality regime, it must have a valid economic rationale and comply with corporate income tax requirements. This regime does not allow latent income from tax-value differences to be included.

    3 How company spin-off are managed, operational effects and monitoring

    After registration, tax and labour formalities are carried out. The spun-off company is deregistered with the tax and social security authorities and the beneficiaries are deregistered and registered as appropriate.

    The new balance sheets and accounting records must also be incorporated. The spin-off balance sheet may differ from the last approved balance sheet and include adjustments for real value. However, its contestation does not suspend the spin-off.

    Operationally, it is essential to plan the transition. Confianz facilitates integration between separate units, defines governance structures, independent systems and technological supports. This ensures operational continuity and avoids duplication.

    What we do at Confianz

    • Strategic design of the spin-off project with identification of business units, valuations and operational objectives.
    • Fiscal neutrality management, verifying economic purpose, avoiding tax risks and guaranteeing access to the FEAC regime.
    • Legal and vocal coordination: expert reports, meetings, public deeds, registration and official announcements.
    • Internal and external communication plan, informing employees, creditors and affected parties, managing expectations.
    • Operational implementation, with separation of functions, technology and accounting appropriate for each new company.
    • Post-decision monitoring, to verify tax and legal compliance, ensuring the effectiveness of the new business model.

    At Confianz we design and execute each step, with a practical and human approach, facilitating a business transformation that brings stability and value. If you need to structure a spin-off, we can help you do it with confidence and vision. In our restructuring playlist you can find more information on this topic.

  • Impact of the Complementary Tax on Mergers and Acquisitions in Spain

    The impact of the Complementary Tax (Pillar 2) is a new tax figure affecting mergers and acquisitions in Spain. Since its implementation by Law 7/2024 of 20 December, this tax is levied on the difference between the 15% and the effective rate of taxation on profits in each jurisdiction.

    For those involved in M&A transactions, this tax is not just a technicality. It can change the valuation of a company, generate unexpected costs and complicate the tax structuring of a purchase or merger. Crunching the numbers before and after considering this tax is not the same. Let’s review the main problems it can bring and how to reduce risks.

    How Complementary Tax affects M&A

    The Complementary Tax applies to corporate groups with a consolidated turnover of 750 million euros in at least two of the last four financial years. What does this mean for companies in M&A? There are three possible scenarios:

    • Joining forces, but also taxes. Two companies that separately do not reach 750 million can exceed the threshold by joining forces. In that case, tax comes into play and changes the accounts.
    • One step further and under the radar. If a company is already close to that threshold, an acquisition can push it over the threshold and make it subject to the tax. That forces a rethink of the whole operation.
    • New rules. If the buyer is already subject to tax, adding a company in a jurisdiction with a tax rate of less than 15% may involve an additional payment. What appeared to be a profitable transaction may not be profitable if the calculation is not done properly.

    It is not just a question of accounting, but of strategy. There is no room for surprises in M&A.

    Fiscal due diligence.  Better to be safe 

    Due diligence deadlines are often tight, but this tax makes it more important than ever to scrutinise accounts closely. Some points to bear in mind:

    • Where every euro is. Not all jurisdictions are taxed equally. If the target company has operations in countries with a rate of less than 15%, it is necessary to calculate what impact this will have on the final bill.
    • Information in dribs and drabs. It is not always possible to obtain all the necessary documentation within the due diligence deadlines. If there is no transparency in the numbers, the risk skyrockets.
    • Future impact. If after the purchase the structure of the group changes, the tax rules may also change. And that means unexpected additional costs.

    Poor planning here can be costly. It is key that the seller has a detailed tax impact analysis ready before entering into negotiations.

    How to structure the operation to avoid surprises

    Avoiding problems with the Complementary Tax is not just a question of numbers, but of how the operation is designed from the start. Some useful strategies:

    • Clarify who pays what. In procurement contracts, it must be precisely defined who bears the fiscal responsibilities. It is not enough to assume this, it must be written down.
    • Price adjustments. If due diligence does not provide an accurate picture of the impact of the tax, clauses can be included to adjust the price according to the actual costs after the purchase.
    • Find the best structure. In some cases, making the purchase through an entity in a country with a tax rate higher than 15% may reduce the impact of the tax.

    An important detail: at present, guarantee insurances do not cover the risks arising from this tax if they have not been identified beforehand. There is no safety net if something goes wrong.

    Beyond theory, at Confianz we help companies to reduce risks and design structures that avoid problems with this tax. If you are in the process of M&A and want to avoid surprises, let’s talk and see how to approach the operation with clarity.

  • How to plan an effective exit strategy for business owners

    Planning an effective exit strategy for business owners looking to sell or transfer their business is non-negotiable. This process not only ensures a smooth transition, but also maximises the value realised by the business. Let’s explore the main exit strategies and how to implement them effectively.

    Sale to an external third party

    One of the most common strategies is to sell the business to an external buyer. This can be an attractive option if you are looking to raise a significant amount of money and completely disassociate yourself from the business. However, it is necessary to prepare the business properly to attract potential buyers. This involves professionalising the structure of the business, diversifying the customer base and ensuring that internal processes are not dependent on one person. It is essential that critical processes do not depend on a single person, but on a strong team to ensure business continuity.

    Transfer to family members

    Another strategy is to transfer ownership of the business to family members. This option is ideal for those who want the business to remain in family hands and continue its legacy. However, it will be necessary to assess whether family members are ready and willing to take on the responsibility and to establish a clear plan detailing how the transition will be carried out and how potential family conflicts will be handled. External advice can be beneficial in facilitating this process and ensuring a smooth transition.

    Sales to key employees or partners

    Selling the business to key employees or current partners is another viable alternative. They already know the business and are committed to its success, which can facilitate a smoother transition. However, it is important to ensure that these employees or partners have the necessary financial resources to acquire the business. One option is to finance the sale, allowing buyers to pay in instalments over time. This strategy can maintain the business culture and ensure operational continuity.

    Implementing an Employee Stock Ownership Plan (ESOP)

    An Employee Share Ownership Plan (ESOP) allows employees to become owners of the company. This strategy can increase motivation and staff engagement, as they benefit directly from the success of the company. However, implementing an ESOP can be complex, requiring detailed planning and expert advice to ensure its feasibility and success.

    Initial Public Offering (IPO)

    Taking the company public through an Initial Public Offering (IPO) is an exit strategy that can generate significant capital and increase the company’s visibility. However, this process is complex and requires compliance with strict regulations. In addition, the company will be subject to market volatility and the expectations of public shareholders. This option is generally more suitable for larger companies with a strong track record of financial performance.

    Liquidation of the company

    Liquidation involves closing the company and selling its assets. This strategy is often seen as a last resort, as it generally does not maximise the value obtained and may adversely affect employees and customers. However, it may be appropriate if the business is not viable or if no interested buyers can be found. It is essential to carefully evaluate this option and consider its impact before proceeding.

    Preparing for the exit strategy

    Regardless of the strategy chosen, it is necessary to prepare the company for the transition. This includes professionalising management, documenting processes, diversifying the customer base and ensuring that the business is not overly dependent on one person. In addition, it is important to conduct an accurate valuation of the business to set realistic expectations about its value in the market.

    It is critical to assess which of the strategies best aligns with personahttp://www.confianz.es/contactol objectives and specific business circumstances. Expert advice, such as that offered by Confianz, can be invaluable in this process and ensure a successful transition.

  • Labour developments in Spain 2025: what companies and workers need to know

    Labour developments in Spain are impacting both companies and workers. These include shorter working hours, the right to digital disconnection and new leave for adverse weather conditions. These measures aim to improve work-life balance, productivity and job security.

    We look at how these changes are affecting businesses and what steps companies are taking to adapt successfully.

    Shorter working hours less hours same productivity

    The reduction of working hours is one of the most relevant labour novelties in Spain 2025. It establishes a progressive reduction from 40 to 37.5 hours per week without affecting workers’ salaries.

    How it will affect business

    • A reorganisation of shifts and tasks is expected to maintain productivity.
    • Collective agreements must be adapted by the end of 2025
    • Incentives are foreseen for companies that implement the measure in advance

    This reform follows models in European countries where shorter working hours have improved efficiency and welfare at work.

    Right to digital disconnection work-life balance

    Another of the new labour developments in Spain 2025 is the consolidation of the right to digital disconnection. This regulation protects employees outside working hours by preventing them from receiving emails or calls outside their working day.

    Keys to the right to disconnect

    • Companies should establish clear internal protocols
    • Clauses on this right will be included in employment contracts.
    • The Labour Inspectorate will be able to sanction those who do not comply with the rule.

    This is a key measure in an increasingly digitalised world with more and more teleworking.

    New adverse weather permit

    The Workers’ Statute includes paid leave of up to four days when weather conditions prevent safe travel to work. This is one of the new labour developments in Spain 2025 that seeks to ensure the safety of employees.

    Key points of the measure

    • To be activated in situations of official weather warnings
    • Telework will be encouraged where possible.
    • Companies will be able to claim compensation in particularly affected sectors.

    The conditions for activating this permit are subject to specific regulation and must be verified by competent authorities.

    How companies can prepare

    Labour developments in Spain 2025 require companies to adapt their internal policies. To this end, it is essential

    • Review and update collective agreements.
    • Implement tools to record the working day.
    • Design digital disconnection protocols.
    • Prepare contingency plans for extreme weather conditions.

    It is essential that companies approach these changes with proper planning and strategies to ensure an orderly and efficient transition.

    Confianz provides the expert advice companies need to adapt to the new labour regulations, ensuring legal compliance, operational efficiency and a smooth transition.

  • A holding structure for SMEs is desirable

    What is a holding structure?

    More and more SMEs are considering transforming their business structure into a holding company to take advantage of the many tax and organisational advantages it offers. A holding company is a grouping of companies where a parent company owns the majority or all of the shares of other companies, with the aim of running and managing the business group in a unified manner.

    This structure is not only valid for large corporations, but is also beneficial for small and medium-sized companies seeking to optimise their management and taxation.

    A holding structure consists of a parent company that controls and manages the shareholdings of several subsidiaries. The holding company is usually not directly involved in the day-to-day operations of the subsidiaries, but focuses on the strategic and financial management of the whole. This configuration allows for a centralisation of decisions and better coordination between the different business units.

    Advantages of a holding structure 

    Implementing a holding structure can offer multiple benefits to SMEs, including the following:

    1. Tax optimisation: Holding companies can benefit from the tax consolidation regime, which allows the losses of some subsidiaries to be offset against the profits of others, reducing the overall tax burden of the group.
    2. Wealth protection: By separating assets into different companies, the risk of financial problems in one subsidiary affecting the rest of the group is limited, thus protecting the overall wealth.
    3. Operational efficiency: Centralising functions such as human resources, finance or marketing in the holding company generates economies of scale and synergies that improve efficiency and reduce costs.
    4. Ease of diversification: A holding structure facilitates the acquisition or creation of new subsidiaries in different sectors or markets, allowing the company to diversify its activities and reduce risks associated with a single business.
    5. Simplifying business succession: In family businesses, a holding company facilitates the transfer of ownership and control to the next generation, ensuring business continuity.
    6. Access to more favourable financing: A holding structure allows for better financial planning and makes it easier to obtain financing on more advantageous terms by consolidating the group’s results.
    7. Greater operational flexibility: If one company within the group has financial difficulties, more agile strategic decisions can be made without compromising the whole group.
    8. Reducing the tax burden on the transfer of assets: When a holding company sells a subsidiary, in many jurisdictions it can benefit from tax exemptions on the capital gains realised.
    9. Ease of international expansion: Holding companies make it possible to structure expansion to other countries more efficiently, avoiding double taxation and adapting to local legislation.

    Disadvantages of a holding structure 

    Despite the advantages, it is important to consider the potential disadvantages of adopting a holding structure:

    1. Administrative complexity: Managing multiple companies implies an increased administrative burden and the need to comply with various legal and fiscal obligations.
    2. Additional costs: The creation and maintenance of a holding structure entails expenses for legal, accounting and tax advice, as well as possible costs for auditing and filing consolidated accounts.
    3. Loss of corporate identity: By centralising management, there is a risk that subsidiaries lose their autonomy and corporate culture, which can affect employee motivation and customer perception.
    4. Monopoly risk: If the holding company acquires a dominant position in the market, it could face legal problems related to competition and antitrust regulations.
    5. Difficulties in decision-making: While centralisation of management is an advantage in many respects, it can lead to internal conflicts when strategic decisions do not coincide with the interests of each subsidiary.
    6. Double taxation risk: Depending on the country, the distribution of profits between the parent company and its subsidiaries could be subject to double taxation if not properly structured.
    7. Increased tax scrutiny: Tax authorities often pay particular attention to holding structures, so a well-planned tax strategy is crucial to avoid penalties.

    Is a holding structure advisable for your SME?

    The decision to adopt a holding structure should be based on a detailed analysis of the company’s needs and objectives. Not all SMEs require this transformation, but those seeking to optimise their tax burden, improve their operational capacity and protect their assets can benefit significantly.

    Expert advice is essential to properly structure the holding company, ensuring that all tax regulations are complied with and associated risks are minimised.

    If you are considering this option, contact us and we will advise you every step of the way, as we have already done with more than 400 companies in Spain.

     

  • How much your company is worth

    The million-dollar question: «How much is my company worth? Many believe the answer is simple. «My company has a turnover of €10m, so it must be worth at least €15m. But in mergers and acquisitions (M&A), the value of a company is much more than a simple multiplication.

    Most common methods for valuing a company

    There is no magic formula for calculating the value of a company, but there are methods that help to obtain a more realistic estimate. Let us look at the most commonly used ones:

    1. EBITDA multiple

    The most commonly used in M&A. EBITDA is multiplied by a coefficient that varies according to sector, growth, risks and other factors. In general:

    • Industrial companies: 5x – 8x EBITDA.
    • Technology companies: 8x – 12x EBITDA.
    • Growing startups: Can exceed 15x EBITDA.

    2. Sales multiple (EV/Ventas)

    It is used when EBITDA is volatile or negative. It consists of multiplying sales by a factor that depends on the sector:

    • Retail: 0.5x – 1.5x sales.
    • SaaS software: 5x – 15x sales.
    • Pharmaceutical industry: 3x – 6x sales.

    3. Book value

    It is calculated by subtracting liabilities from assets. Most used in sectors such as banking and insurance, but less relevant in businesses with intangible assets.

    4. Discounted Cash Flow (DCF)

    It is based on projecting future flows and discounting them to present value. It is technically more accurate, but also more sensitive to changes in growth and risk assumptions.

    Factors that can increase or decrease valuation

    Regardless of the method used, certain factors influence the final valuation:

    Value-enhancing factors

    • Steady growth: Companies with recurring revenues and stability are more attractive.
    • Diversification of clients: Not relying on too few customers minimises risk.
    • Barriers to entry: Intellectual property, long contracts or competitive advantages may justify higher multiples.

     Factors that reduce value

    • Dependence on few customers: If a single customer accounts for more than 30% of revenue, the risk is high.
    • Disorganised finances: Lack of clarity in numbers generates mistrust among buyers.
    • Legal or tax problems: Hidden litigation or debts affect the valuation.

    Practical example: how does the valuation change depending on the factors?

    Let’s assume two companies with a turnover of €10M and EBITDA of €2M:

    • Company A: Stable growth, diversified clients, contract with large corporations. Valued at 8x EBITDA → €16M.
    • Company B: High dependence on a single customer and revenue fluctuations. Valued at 5x EBITDA → €10M.

    Same EBITDA, but different value. The difference is in the perception of risk and sustainability.

    Negotiation: key to the final price

    The theoretical value is only a starting point. In practice, negotiation and buyer perception greatly influence the final price.

    Some key points in the negotiation:

    • Due diligence: Financial, legal and operational review can uncover hidden risks and adjust the price.
    • Synergies: If the buyer sees opportunities to reduce costs or improve revenues, it may pay more.
    • Competition between buyers: If there are several interested parties, the price rises.

    Knowing how much your business is worth is only the first step. Selling on the best terms requires strategy, negotiation and a partner who knows the market.

    If you are considering selling your company or simply want to know its real value in the current market, contact us. Our team of experts will guide you through every step of the process.

     

  • Advantages of asset-holding companies in 2025

    Wealth management companies are essential tools for managing financial and real estate assets efficiently. In 2025, understanding how they work and their tax advantages can make all the difference in optimising your wealth. This article will guide you through the key aspects you need to know.

    What are asset-holding companies?

    Holding companies are defined by their focus on asset management without direct economic activity. More than 50% of their assets must consist of securities or real estate not used for economic activities.

    These vehicles are common among individuals and families with significant wealth who wish to protect their assets and benefit from more favourable tax treatment.

    Examples of assets under management include

    • Real estate for rental or personal use.
    • Financial investments such as stocks or bonds.
    • Family estates seeking succession efficiency.

    Tax and structural advantages of asset-holding companies

    1. Favourable taxation

    One of the main reasons for setting up an asset-holding company is its tax treatment. Instead of paying personal income tax as an individual, asset-holding companies are taxed at the general corporate income tax rate of 25%, which can result in significant savings. In addition:

    • Property maintenance costs are deductible for corporate income tax purposes.
    • Non-productive real estate is not subject to this tax, although it is subject to personal income tax.
    • The sale of assets within the company allows for optimised tax planning by deferring taxes.

    2. Protection of family assets

    The creation of an asset-holding company allows personal assets to be decoupled from business activities or personal risks. This minimises the impact of potential debts or litigation.

    For example, a family property company facilitates the generational transition by allowing shares to be inherited instead of direct assets. This simplifies succession and reduces potential conflicts.

    3. Flexible and professionalised structure

    Wealth management companies offer a structure to manage assets in a professional manner. This is especially relevant for financial investments or diversified portfolios, where centralised management improves efficiency and control.

    For example, in a property rental holding company, rental income can be reinvested directly into new assets, generating a sustainable growth cycle.

    Key considerations before setting up an asset-holding company

    While the advantages are clear, it is also important to bear in mind some aspects:

    • Administrative and legal costs: The incorporation and management of these companies involves notary, registry and accounting fees.
    • Tax limitations: As these companies do not carry out any economic activity, they cannot benefit from tax incentives such as small company tax credits.
    • Strict legal requirements: It is essential to ensure that the company meets the criteria of an asset-holding entity under the Corporate Income Tax Act.

    A tax advisor can be crucial in assessing whether this structure is suitable for your objectives.

    Case studies of asset-holding companies

    Family property company

    A family with several properties and a financial portfolio decides to set up an asset-holding company. This step allows them to:

    • Centralise asset management.
    • Reduce the tax burden on rental income.
    • Simplify generational succession by transferring shares rather than specific assets.

    Holding company for holding securities

    An investor with a diversified portfolio of stocks and bonds creates a holding company to:

    • Manage investments in a professional manner.
    • Reducing taxation by reinvesting profits.
    • Protect your assets from potential personal risks.

    Property rental holding company

    A landlord with several rented properties forms an asset-holding company in order to:

    • Take advantage of the deduction of expenses related to the maintenance of real estate.
    • Simplify the financial management of rents.
    • Optimise taxation on the profits obtained.

    Wealth companies are strategic tools for those seeking to optimise the management and taxation of their wealth. Their creation allows them to protect assets, reduce risks and plan for the long term, especially in a tax environment such as that of 2025, where efficiency and compliance are key.

    If you are considering the next step in managing your wealth and need expert advice. You can count on our help.

     

  • How corporate restructurings have shaped 2024

    Corporate restructurings in Spain in 2024, especially spin-offs and holding companies, are booming strategies that companies are using to optimise operations and compete. Corporate restructurings, which have already grown by 15% in the first quarter of 2024. And we are not just talking about numbers, but about decisions that transform businesses, improve operations and prepare companies for what lies ahead.

    Why so many firms are turning to restructuring

    The reasons are clear and each company has its own reasons. Some of the factors driving these decisions are:

    • Accelerated digitisation: Failure to adapt means falling behind.
    • Regulatory changes: new laws require more efficient and clearer structures.
    • Competitive pressure: competing globally means optimising every resource.
    • Search for tax savings: the right structure can make a big difference to your taxes.

    What is important is that these restructurings are not just responses to problems. They are also a way of discovering opportunities and improving.

    Splits. When dividing means winning

    Sometimes a company works best when it is broken up into more manageable parts. This is what we call spin-offs, a growing trend that has increased by 22% this year. But why make this decision?

    What are splits?

    • Full demerger: a company is split up completely, with its parts forming new companies.
    • Partial spin-off: a part of the business is spun off, but the main company continues to exist.

    What are the advantages?

    • Specialisation: each part of the business focuses on what it does best.
    • Attracting investors: some areas are more attractive if presented independently.
    • Conflict resolution: Dividing may be the best way to resolve differences between partners.
    • Tax optimisation: a clearer structure usually means fewer tax complications.

    Splits are not a retreat, but a strategy to move forward with more strength.

    Holding companies: are increasingly popular structure

    Another big trend this year is holding companies, which have grown by 18%. This type of structure allows a company to control several subsidiaries, centralising management and reducing risks.

    Why do companies choose a holding company?

    • Centralisation: facilitates decision-making for business groups.
    • Equity protection: if something goes wrong in one subsidiary, it does not affect the rest of the group.
    • International growth: this structure is ideal for companies that want to expand outside Spain.
    • Tax optimisation: tax consolidation can save a lot of headaches (and money).

    New trends in corporate restructuring

    1. Commitment to sustainability

    Companies are restructuring with a more sustainable approach. By 2024, 65% of restructurings in Spain will include sustainability-related objectives. This is not just a trend, but a necessity.

    2. Digitisation does not stop

    78% of companies are investing in automation and digital transformation as part of their structural changes. Going digital is not an option, it is a must.

    3. Hybrid work as a standard

    More and more companies are incorporating flexible working models in their restructurings. Seventy per cent of companies that have restructured this year have implemented telework or hybrid working policies.

    4. Focus on what matters

    Many companies are selling assets they no longer consider essential in order to concentrate on what really generates value for them. By 2024, 55% of restructurings have included the sale of non-strategic business units.

    Restructuring is not a decision to be taken lightly. They involve legal, tax and labour changes that, if not handled well, can be costly. This is where the support of an expert team comes in.

    At Confianz, we accompany our clients and design tailor-made solutions, adapted to the needs of each client.