The SOCIMI in Spain

SOCIMIs (Sociedades Anónimas Cotizadas de Inversión Inmobiliaria) look almost exactly like the entity known internationally as the REIT (Real Estate Investment Trust), a type of financial investment born in the USA during the 1960s. The regulations in Spain for the SOCIMI were approved in the year 2009. Years later this type of entity moved to Europe as a way to channel real estate investments through listed companies. The objective of the SOCIMI is the purchase, promotion, and rehabilitation of urban assets (offices, flats, commercial premises, shopping centers, logistics centers, etc.)promotion and, either for rent or as a means of participation in the capital of another SOCIMI.

This type of real estate corporation has a special tax regime. They are specifically focused on obtaining a return through the rental of properties. A good thing about them is that in addition to buying and selling properties, investors get to rehabilitate the properties, and even dedicate themselves to managing their property. The key of SOCIMIS is that they must be listed on the stock market. In addition to reporting great benefits, this feature implies a great amount of transparency.

Advantages:

• Just one property is required to set up this company.
• The obligation of an investment with a long commitment: a minimum of five years.
• Overall, taxation in a privileged tax regime: Corporate Tax: 0%. The Company will be subject to a special tax (it will be considered an IS fee): 19% on the full amount of dividends or profit shares distributed to the partners when:
  • The participation in the Social Capital of the company is equal to or higher than 5%

    or

  • Said dividends, at the headquarters of its partners, are exempt or taxed at a rate of less than 10%.

    The special tax is not applicable IF:

  • The partner receiving the dividend is a SOCIMI

    or

  • The dividends are received by non-resident entities
• Deduction for reinvestment of capital gains of 6% over the total quote.
• AJD exemption in constitution operations, non-cash contributions and capital increase.
• No financing limits with the new law.
• Exemption in local taxes and capital gains.

Requirements:

• The main company’s purpose must be:
  • Acquisition and promotion of urban real estate for lease

    or

  • Holding of shares in the capital of other SOCIMIs or in other non-resident entities registered in Spain with the same corporate purpose. These entities are subject to a similar regime of profit distribution. They may carry out other accessory activities (those that represent less than 20 percent of the income of the company during each fiscal year).
• The company must include in its name: "SOCIMI, S.A." (or without abbreviation).
• The company must make an investment of at least 80% of its assets in urban properties, offered in rentals or joint actions with other SOCIMIs.
• The listing must be on a regulated stock market, such as the Spanish or the European markets.
• Each property must be under lease for a minimum of 3 years of operation before they can be sold, or 7 years for the SOCIMI’s own developments.
• The minimum share capital is 5 million euros.
• Obligations regarding dividend distributions: 100% of dividends from other SOCIMIs; 50% of capital gains on real estate and 80% of the rest of benefits obtained.
• Company results must be submitted every 6 months.

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