Ministry of Finance Welcomes SIFs From Luxembourg

20/03/2014 – Expansion

Tax authorities permitted that a Spanish company coud have a sicav (an open-ended investment company) in Luxembourg, the so-called SIF (specialized investment fund). While a SIF contributes with 0.01% of net asset value, Spanish sicavs pay 1% of their profit, according to reference material published by the Directorate General for Taxation (DGT).

By now, application of a SIF has been disputable in terms of international fiscal transparency but the publication indicated a way of use for such a vehicle (especially for legal persons).

A SIF is a Luxembourg-based company (not included in the Agreement with Spain) that allows a legal person to create this kind of structure without fear of the international fiscal transparency. The system requires adding to the Personal Income Tax all the benefits drawn from a company set up outside of Spain but owned by a Spanish resident.

In order to file for such system, a legal person, alone or with family members or other related entities, must own at least a half of a foreign company that is bringing non-entrepreneurial income.

Likewise, a company based outside of Spain has to pay less than 75% Corporate Tax inside the country. Thus, only 30% has to be paid for the Spanish tax authorities. Moreover, a SIF will be protected by the Treaty to Prevent Double Taxation (CDI in Spain). (…).

The information is particularly relevant for those who placed their property portfolios outside of the country due to the recession. (…) SIF system will be applicable in case of  valid commercial reasons and vivid business activity. (…).

There are 1550 SIFs operating in Luxembourg treasuring €2.615,363 million (most of them from the USA: €594.145 million). In Spain, there are 3.040 sicavs that advanced by 10% in 2013 and overcame €26.000 million. (…).

Original article: Expansión (Mercedes Serraller)

Translation: AURA REE