Just as a UK MOT test is only valid on a UK registered vehicle so a Spanish ITV is only valid on a Spanish registered car.
A Spanish ITV test is a certificate of roadworthiness for a Spanish plated vehicle. It would mean that the insurance company would be happy to accept a claim in the event of an accident.
However, it has no validity on a foreign plated vehicle in terms of insurance cover. All it does is give the owner of the car peace of mind that the vehicle is roadworthy. Unfortunately, it also tells the Police that the car has been in Spain for more than six months and should have been re-registered!
The ITV station will happily take your money but should really point out that the ITV test is only the first stage in re-registering your car and has no validity on a UK plated vehicle.
If you are in any doubt you should ask your insurance company to provide you with a letter stating that they are fully aware that you are living in Spain full time and that your car is UK registered with no valid MOT or road tax but with a Spanish ITV sticker, and that they are fully prepared to carry on providing you with comprehensive cover.
Once you have that letter, carry it with you at all times.