The tax regime for socimis draws in large fortunes from Spain and abroad. After eleven years since their launch, Spain now hosts well over a hundred socimis, or real estate investment trusts. These entities are designed for collective investment in property assets and are widely used by investment funds and family offices. Their main advantage is that they do not pay corporation tax, though they must distribute most of their profits as dividends to shareholders, where the tax is due.
For family fortunes, the socimi structure guarantees everyone a stake in a transparent business. Socimis are required to be listed on the stock market, audited, and to disclose milestones, asset valuations, shareholder identities, and property purchases or sales. For funds or investors who channel their money through socimis, the motivation is fiscal, with no obligation to have multiple participants inside the company since the governing law does not mandate it, according to experts in the field.
For example, a French investor recently bought a villa on Ibiza valued at over €6 million. If purchased personally, transmission tax would apply at the regional rate, amounting to about 11.5% of the purchase price in the Balearic Islands. That would require almost €700,000. Instead, the investor created a bespoke socimi, which will debut soon on the Euronext Access market to benefit from a 95% discount on this tax, paying under €35,000. Additionally, with a socimi, the investor avoids wealth tax for non-residents in many cases.
Shareholders in socimis may also reduce dividend taxes. The rate for savings income under income tax ranges roughly from 21% to 28%. This could be lowered if the stake is held by a foreign company, since many European jurisdictions exempt intercompany dividends, such as the Netherlands. In any event, the minimum tax payment is 10%, and if not paid directly, the socimi must settle it in its name and verify compliance, according to the same experts.
The ecosystem of socimis in Spain
Today, Spain has 117 socimis trading on various exchanges with a combined market capitalization of about €22.9 billion as of the end of 2023. Most of this capital is concentrated in four companies listed on the Madrid Stock Exchange and BME Growth: Merlin Properties, valued at €4.42 billion; General de Galerías Comerciales, at €3.69 billion; and Colonial, at €2.8 billion. Data from the VIII Estudio SOCIMI by Armanext shows four companies trading on the Continuous Market, one on Luxembourg’s Saint Croix, 75 on BME Growth, 32 on Euronext Access, and five on Portfolio Stock Exchange.
In the past year, nine companies entered the markets: Miciso Real Estate, Milepro Logística, Asticko XXI, Elix Rental Housing, Montepino, OK Business Property, Primero H, Rav En7, and Round Robin. The total value of these assets amounts to €1.532 billion, with Montepino alone accounting for more than €1.2 billion as the owner of logistics facilities that bring together numerous private banking investors from Bankinter.
“2023 marked a year of consolidation and transition after rate increases. The number of IPOs did not stall, and substantial activity persisted. Yet there was one standout entity that represented most of the volume. Excluding that company, the rest of the market involved valuations around €323 million. The socimi market has eleven years of history, indicating a stable regulatory framework that reassures investors,” stated Carlos Cervera, head of the SOCIMI division at Armanext.
Over the past year, migrations between markets occurred as companies aimed to optimize operations. Ktesios moved from Euronext to BME, while Elix Vintage and P3 Logistics shifted from BME Growth to Portfolio Stock Exchange. General de Galerías Comerciales and several Corpfin vehicles left the socimi regime, and four companies were delisted from the markets.