Global Tax Alert | 28 February 2014

Spanish Tax Authorities issue ruling increasing eligibility to participate in Spanish REIT regime

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On 20 January 2014, the Spanish Tax Authorities issued a binding ruling taking a flexible approach regarding the requirements to be met in order to be eligible for the Spanish REIT (SOCIMI) tax regime.


Since 1 January 2013, the new legal and tax regime of the SOCIMIs provides an attractive and tax efficient vehicle to invest in Spanish real estate, similar to other REIT vehicles.

Under this regime, and provided that certain requirements are met, the taxation of the income of the SOCIMI is shifted to the shareholders:

  • SOCIMIs are taxed at a 0% corporate income tax rate in respect of rental income and capital gains on real estate assets where the dividends are paid either (i) to shareholders owning less than 5% of the share capital of the SOCIMI, or (ii) to shareholders that are taxed at a minimum 10% nominal tax rate on dividends paid by the SOCIMI.
  • In other cases, the SOCIMI only pays a special 19% tax on the dividends distributed to its shareholders, as opposed to the 30% general corporate income tax rate.

Dividends paid by the SOCIMI may be taxed in the hands of the shareholders, but may be eligible for domestic exemptions and/or treaty reductions, depending on the shareholders' residence, among other criteria.

SOCIMIs may be listed or unlisted vehicles.

The Spanish Tax Authorities have now issued a ruling where they make a flexible interpretation of some of the requirements to be met in order to apply the SOCIMI regime. In particular:

  • Non-listed SOCIMIs do not need to convert into joint stock corporations (sociedad anónima) or have the €5 million share capital (which is otherwise required for listed SOCIMIs).
  • Non-listed SOCIMIs are entitled to the special tax regime provided that they have a listed shareholder with a corporate purpose and a dividend distribution policy similar to that of a SOCIMI, regardless of the tax regime applicable to that shareholder in its country of residence.
  • SOCIMIs are eligible for the 0% corporate income tax even in the case where shareholders owning less than 5% of the SOCIMI's share capital do not meet the minimum 10% nominal tax test.
  • Real estate assets such as malls are deemed to be “leased” for the purposes of the SOCIMI regime even where certain premises of the mall may not be actually leased during certain periods of time.

Other binding rulings following this positive trend are expected to be released shortly.


Investors looking at entering the Spanish real estate market should consider the opportunity of forming a SOCIMI. The option to apply the SOCIMI tax regime, for investors with calendar fiscal years, must be notified to the Spanish Tax Authorities on or before 30 September, 2014, in order to be able to apply the benefits in 2014.

Likewise, investors with existing real estate interests in Spain should consider the option to convert their investment structures into SOCIMI vehicles, potentially improving the after-tax return on their investment. Required corporate reorganizations, if any, may be made tax free, under certain conditions.

For additional information with respect to this Alert, please contact the following:

Ernst & Young Abogados, Madrid
  • Jose Luis Gonzalo
    +34 915 727 334
  • Laura Ezquerra
    +34 915 727 570
  • José Gabriel Martínez Paños
    +34 915 727 624
Ernst & Young LLP, Spanish Tax Desk, New York
  • Cristina de la Haba
    +1 212 773 8692

EYG no. CM4213