Corporate group tax optimization

The Challenge

Grupo Inversiones Iberia was a family holding that had grown over two decades through successive acquisitions, accumulating five subsidiaries with activities spanning construction, property development, asset management, hospitality, and auxiliary services. Each acquisition had retained the original corporate structure, creating a conglomerate with administrative redundancies, inefficient internal flows, and a consolidated tax burden far higher than necessary.

Dividends between subsidiaries were taxed redundantly, tax losses in some entities did not offset profits in others, and centralized services such as accounting, human resources, and legal advisory were invoiced without a coherent transfer pricing policy. The group chairman was aware of the inefficiency but lacked a roadmap to resolve it.

Our Approach

We conducted a comprehensive diagnostic of the group’s corporate and tax structure, mapping all economic flows between entities and calculating the actual tax cost of each internal transaction. We identified that two of the five subsidiaries could be merged without operational impact, eliminating administrative redundancies and enabling the offset of tax losses.

We designed a new group architecture based on three entities: the holding as the parent company under a tax consolidation regime, one operating subsidiary integrating real estate and construction activities, and a third dedicated to hospitality and services. We implemented a documented transfer pricing policy and optimized intragroup dividend and loan flows to minimize tax friction. The entire process was executed leveraging the tax-neutral regimes provided under Spanish legislation for mergers and spin-offs.

Results

The new structure generated annual tax savings of 28%, equivalent to 340,000 euros, through tax consolidation, the elimination of redundant dividend taxation, and efficient offset of tax losses. The reduction from five to three entities also simplified administration, reducing compliance and audit costs by over 60,000 euros annually.