What are SOCIMIS?
The term SOCIMIS is commonly used in the financial and real estate sectors, as it is basically an anonymous type of company of a commercial nature, which is why its acronym stands for “Sociedades anónimas cotizadas de inversión en el mercado inmobiliario” (Listed Public Limited Companies for Investment in the Real Estate Market).
The concept is defined in Law 11/2009, of 26 October 2009, which regulates Listed Public Limited Companies for Investment in the Real Estate Market, specifically in Article 1 and 2, which clarifies one of its main and fundamental objects: “The acquisition and development of urban real estate for leasing”.
Likewise, Law 16/2012, of 27 December, which adopts various tax measures aimed at consolidating public finances and boosting economic activity, introduces new modifications in terms of facilitating fiscal and tax requirements and advantages.
It has its origin in the REITs (Real Estate Investment Trust) from the USA with the aim of providing investors in the real estate sector with the same tax treatment as the existing listed investment funds. After its consolidation, the same concept was transferred to the European continent, arriving in Spain in 2009.
At present, they play an increasing role as real estate investment vehicles not only in Spain but also internationally, some of the most outstanding examples are: Merlin Properties, Colonial, Hispania, Lar,….etc.
Requirements for SOCIMIS
Having seen the concept and its purpose, in order to carry out this activity, the legislator requires that certain minimum requirements, both formal and substantive, be met:
- As a company, it must meet all commercial requirements, including a minimum capital of €5,000,000 divided into registered shares of one class only.
- The obligation to be listed on an organised market, in this case a stock exchange.
- 80% of the asset value must be invested in real estate for renting, land for the development of real estate for renting and participation in other entities with the same corporate purpose.
- 80% of the income must come from leasing of real estate, shares or dividends from the main corporate purpose.
- Investments in real estate must be held for at least three years, as must shares and participations in the capital of other entities since their acquisition.
- Distribution as dividends is mandatory: 100% of profits from other investees, 80% of rental income from real estate, 50% from the transfer of assets, the remaining percentages are to be reinvested in the company.
Advantages of SOCIMIS
At this point, and knowing the various requirements that are needed for its incorporation, we wonder if it is really worth it?
For this reason, we are going to see all the advantages that it has in comparison with other similar companies or mercantile entities, a general principle is going to stand out and it is nothing less than the great tax advantages, and it is for this aspect that the majority of investors opt for this entity, some examples of this are:
- The taxation in the IS (corporate tax) will be 0%, it has a special levy of 19% in the corporate tax on dividends distributed among the partners with a percentage greater than 5%.
- It has a 95% rebate on transfer tax and legal acts on the acquisition of homes and land.
- Total exemption from transfer tax and legal acts on incorporation, capital increase and non-monetary contributions.
- Exemption from municipal tax and capital gains tax.
With all this we can deduce that SOCIMIS are the present and future in terms of entities in the financial and real estate sectors, which have come to settle and stay as one of the main investment vehicles, offering a very interesting option for both large investors and small investors, as they have greater security, backed by different control bodies and their great tax advantages.
Therefore, if you have any doubts or queries regarding real estate or financial investments and their management, the QUIKPROKUO team is familiar with offering you this service, please do not hesitate to contact us.