Corporate-Tax Updates 1-2012
LISTED CORPORATIONS FOR INVESTMENT IN THE REAL ESTATE MARKET (SOCIMIs)
One of the most important new pieces of legislation in the new Tax Measures Law (Law 16/2012, of December 27, 2012), published in the Official State Gazette of December 28, 2012 is the overhaul of SOCIMIs (Sociedades Anónimas Cotizadas de Inversión en el Mercado Inmobiliario which translates as listed corporations for investment in the real estate market), which seeks to simplify and add flexibility to their tax and legal regime and bring them into line with the REITs (Real Estate Investment Trusts) existing in Spain’s neighboring countries.
Readers will recall that SOCIMIs are an investment vehicle aimed at the real estate market, created by Law 11/2009 with the aim to kick-start the rental market in Spain and give citizens access to investment in urban rental properties. Faced, however, with the scant success in the use of SOCIMIs to date—primarily as a result of the financial and real estate crisis that accompanied the appearance of these companies and of their tax regime, which is very different from the tax treatment of REITs in neighboring countries—Spanish lawmakers found it necessary to undertake a major overhaul of the regime governing these entities in light of the current climate, with the goal to kick-start the Spanish real estate market generally, and property leasing, in particular.
Given its importance, in this news bulletin we will review the new SOCIMI regime in force for tax periods commencing after January 1, 2013.
The other changes introduced by the Tax Measures Law were analyzed in our news bulletin number 11/2012.
1. COMMERCIAL/CORPORATE LAW REQUIREMENTS FOR SOCIMIS
1.1 Corporate form
1.2 Corporate purpose
1.3 Distribution of dividends
2. INVESTMENT REQUIREMENTS FOR SOCIMIS
2.1 Assets requirement
2.2 Income requirement
2.3 Asset holding period requirement
3. BORROWINGS OF SOCIMIS
4. THE TAX REGIME FOR SOCIMIS
4.1 Corporate income tax treatment of SOCIMIs
4.2 Withholding tax treatment applicable to the dividends distributed by SOCIMIs
4.3 Tax treatment applicable to the SOCIMI’s shareholders
4.4 Start of application of the special regime: entry rule
4.5 End of the application of the special regime: exit rule
5. MAKING THE ELECTION TO APPLY THE SPECIAL SOCIMI REGIME
5.1 Formalizing the election to apply the regime
5.2 Transitional period for fulfilling the requirements under the regime
6. REPORTING REQUIREMENTS FOR SOCIMIS