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Spanish REITs law enacted to support property market
Publication in Spain's Official Gazette of a new Act to legalise Real Estate Investment Trusts brings the nation into the European group offering the tax-favoured pass-through listed property investment vehicles. Unlike other regimes, Spain will subject its REIT/SOCIMI vehicles to a corporate tax rate of 18%, which shifts taxation to shareholders. But global accountant PricewaterhouseCoopers noted this is still more attractive than the regular Spanish corporate tax rate of 30% - and dividends attract withholding tax exemption. Ignacio del Val, partner at Madrid-based tax consultant R÷dl & Partner, said the Spanish government sees REITs as a way to promote the rental market and boost the sector overall. In contrast to real estate investment funds, which have to invest at least 50% of their portfolio in residential properties in Spain, SOCIMIs can invest in all types of real estate. It can also include regeneration projects and development. (See upcoming PFE/PIE issues for full story)