At the end of last August the Board of Ministers passed the Bill for the Act on Measures for the Flexibilization and Promotion of the Rental Housing Market which, among other measures, includes the following of a tax nature:

  1. REIT. Real Estate Investment Trusts (of the Spanish, SOCIMI)

The Bill flexibilizes some of the requirements for application of the special regime for its simplification.

  • The period for maintaining the property in lease for promotion by the trust will be reduced to 3 years.
  • The requirements for diversification will be eliminated (currently a minimum of 3 properties without any one representing more than 40% of the assets).
  • The minimum share capital will be decreased to 5 million euros.
  • The tax rate would be 0% for income from the development of its corporate and specific purpose, and the shareholders would be taxed at 19%.
  • The obligation to distribute profits from its activity would be decreased to 80% (90% at present).
  • It would allow the listing on a multilateral trading system (for example, the Alternative Stock Market).
  • The restriction on outside financing would be eliminated (current limit: 70% of the assets).
  1. Special regime for entities devoted to the rental of dwellings

The main measures to be implemented would be the following:

  • The minimum number of dwellings rented or offered would be 8 (currently: 10).
  • The requirement for the maximum surface area of the dwelling (135 m2) would be eliminated.
  • The dwellings should remain rented or offered for at least 3 years (currently 7 years).
  • The special tax regime would be applicable to those entities with activities that are complementary to the main rental activity, if at least 55% of the rents could generate income with the right to a rebate.
  1. Non-resident Income Tax. Special tax on real estate of nonresident entities

The Bill would limit the submission to such tax exclusively to those entities residing in a country or territory deemed as a tax haven.

The Bill is still being processed in Parliament whereby the measures that may ultimately be approved could differ from those listed, making the final version the subject of a new publication by us.