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Sociedades Cotizadas de Inversión en el Mercado Inmobiliario (SOCIMIS) in Spain

Sociedades Cotizadas de Inversión en el Mercado Inmobiliario, better known as “SOCIMIS” in Spain, are companies whose main activity is the acquisition, development and rehabilitation of urban real estate assets for leasing. These entities are the Spanish version of the famous REITs (Real Estate Investment Trusts), an investment vehicle created in the United States in the 1960s and was later adopted in Europe.They arrived in Spain four years ago via Law 11/2009. However, their regulation underwent changes in 2012 due to their limited success among investors.The main characteristics of SOCIMIs can be summarized in the following points:

  • They are companies that must be listed on regulated stock markets or, alternatively, on multilateral trading systems, such as the MAB (Alternative Equity Market).

  • A minimum of 5 million euros is required in share capital, and they must have at least 50 shareholders.

  • At least 80% of their assets must be invested in urban real estate for leasing, in land for developing real estate destined for said purpose, or in shares in the capital or equity of certain entities.

  • They have the obligation to distribute profits obtained each year in the form of dividends to their shareholders, provided that the company is subject to the special tax regime provided by law.

The following explains the most important aspects of the SOCIMIs special tax regime:

  1. The corporate income tax rate for these companies is set at 0%.

  2. On the other hand, a special tax of 19% is applied to the full amount of the dividends or profit sharing distributed to shareholders with shares equal to or greater than 5%, when in the headquarters of these shareholders these dividends are exempt or taxed at lower than 10%.

  3. Regarding these dividends, it is worth noting that when the beneficiary is subject to corporate income tax, the exemption established in article 21 of the Law on Corporation Tax does not apply.

  4. On the other hand, when the beneficiary of the dividends is subject to personal income tax, these dividends will be considered as capital gains.

  5. Lastly, when the beneficiary is subject to Non-Resident Income Tax without a permanent establishment, their income will be made up of the full amount of said dividend.

Finally it is worth noting that SOCIMIs are subject to a series of reporting requirements.

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