The Spanish REIT’s, locally called “SOCIMI” (Sociedades Anónimas Cotizadas de Inversión Inmobiliaria) are enjoying a significant boom in Spain due to important tax benefits and the economic rebound of the Spanish property market.
The SOCIMI’s are listed corporations investing directly or indirectly in the real estate market. SOCIMIs are the Spanish equivalent of the well-known REIT, Real Estate Investment Trust, which started 50 years ago in the United States. In Spain, this special regime was introduced in 2009 (Law 11/2009) but the Spanish Government has approved a new SOCIMI regime, with effect from January 1st 2013, softening its legal framework and offering very attractive fiscal advantages.
The objectives of the SOCIMI is to provide stable yields to investors, to provide liquidity to real estate investments and to boost the Spanish real estate lease market. This sector is well below its potential according to European standards (15% Spain vs 50% Germany).
The main business activity of the SOCIMI must be:
1. The acquisition and development of urban real estate assets (including any type of properties such as dwellings, commercial premises, hotels, garages or offices, etc.) for their lease (development activity includes restoration of buildings under certain conditions).
2. Holding of the shares of other SOCIMI or non-resident entities with the same corporate purpose and analogous profit distribution regime.
3. Holding of the shares of other entities resident or not whose main corporate purpose is the acquisition of real estate assets for their lease with an analogous profit distribution regime and asset company profile.
4. Holding of stake of Spanish real estate collective investment institutions.
This special tax regime is built on the basis that Corporate Income tax is taxed at a zero rate (0%), provided that certain requirements are met and the shareholders are subject to the corresponding Personal Income tax, Corporate Income tax or non-resident income tax as appropriate. The investor enjoys higher profitability as this special tax regime establishes the obligation to distribute dividends in a significant percentage.
SOCIMI must adopt the form of a Public Limited Company with a minimum share capital of 5 million euros fully paid, shares must be nominative and the company shall be listed on a regulated stock exchange market or multilateral trading system (MAB, “Mercado alternativo bursátil”) in Spain, in the European Union, or in the European Economic Area or in any other regulated market in a country or territory with effective tax information exchange with Spain.
DM&A is the one stop shop to incorporate a Socimi, being able to take care of every single stage of its creation
The incorporation of a SOCIMI requires the intervention of five essential agents expert in their fields: Fiscal and legal advisors, Corporate services, Real Estate experts, Registered advisors and Liquidity provider.
With our own fiscal and legal departments, its real estate division, its trust & corporate branch (PRIVATIA CONSULTING SL), David Mülchi & Asociados will also designate and work directly with the registered advisors and will introduce the financial institutions. Our 360º full service, will coordinate all aspects from the market analysis, the incorporation, the requirements compliance, its listing to the daily property management.
Contact our DM&A experts to enquire about the investments requirements, the formal requirements, the shareholder tax regime, the Socimi tax treatment, the dividend distribution, other excellent tax benefits and the possible application of Double tax treaties and EU Directives.
