The Minister of Finance, Arcadi España, has defended the need to thoroughly review the tax framework applied to Listed Real Estate Investment Companies (SOCIMIs), with the aim of adjusting it to the general interest and the current housing emergency situation.
During the government control session in the Senate, Bildu senator, Idurre Bideguren, recalled that SOCIMIs were promoted by the Government of Spain after the real estate bubble burst, with the purpose of absorbing the large stock of empty housing left by the crisis.
"It was said at that time that with the promotion of SOCIMIs, the aim was to improve access to housing, lower housing rental prices, stabilize the residential market, but it is evident that these objectives have not been achieved," the senator denounced.
Bideguren warned that, in their current configuration, SOCIMIs are especially attractive to large fortunes, investment funds, and large real estate developers. "I understand the pressure they are exerting to maintain these privileges," she lamented, questioning the tax treatment enjoyed by these companies.
The head of the Treasury admitted that the tax regime of SOCIMIs is unique, as it is characterized by the absence of taxation in the company itself and the transfer of the tax burden to the shareholder's domicile.
"This does not constitute an unjustified privilege, but rather is in line with European models that have implemented this type of company," España pointed out, also emphasizing that in no case should they be automatically equated with so-called vulture funds.
However, the minister clarified that the current scheme can be subject to adjustments and improvements, and explained that the Executive is already working in that direction. At the same time, he warned that abruptly suppressing the special regime would have "counterproductive consequences in the housing market."
For this reason, the Government is studying changes in the regulations aimed at strengthening the contribution of SOCIMIs to the increase in the affordable rental housing stock, with measures that incentivize a greater part of their activity to be directed to this segment.
In this vein, España brought up the Socialist Group's bill registered in Congress, whose objective is to promote affordable housing rental.
In said initiative, it is proposed to raise the tax on undistributed profits of SOCIMIs from 15% to 25%, provided that said tax would be reduced by 50% when more than 60% of the housing stock is allocated to affordable rent and increased to 100% when undistributed profits are reinvested within three years in housing intended for this purpose.
"We will maintain a framework that favors investment and the development of the rental market, in addition to which we must review all taxation related to these companies so that they respond to the social interest and the emergency we are experiencing," the minister remarked, insisting that the tax reform must balance the promotion of investment with the protection of the right to housing.