Uncertainty in the Spanish real estate sector due to potential tax changes for Socimis.

The growing nervousness surrounding Listed Real Estate Investment Companies (Socimis) has begun to resonate within the real estate investment sector in Spain, affecting both domestic and foreign investors. The recent threat of an increase in taxation on these entities by the government of Pedro Sánchez and Sumar has raised serious concerns among industry experts, who warn that this situation could lead to a reduction in housing investment, just as the country faces a significant deficit of half a million homes, according to calculations from the Bank of Spain. During the recent edition of the OBSERVATORIO FISCAL EXPANSIÓN, experts in tax law expressed their alarm regarding the high legal uncertainty surrounding Socimis. Javier Hernández Galante, a partner at Ashurst, emphasized that the possibility of modifying the taxation of these entities ceased to be mere speculation following the agreement between the PSOE and Sumar. The reaction from investors was immediate and negative, with concerns about the reputational damage this could inflict on Spain, recalling past situations where abrupt regulatory changes led to legal conflicts and distrust among investors. Francisco Conde Rivas, a partner at Garrido, emphasized that between 40% and 60% of the capital flowing into Socimis comes from foreign sources. An increase in the tax burden could lead to capital flight, as investors would seek more profitable options in other markets. The situation is particularly critical, as Socimis represent a key vehicle for housing investment, and their weakening could further exacerbate the housing access crisis in Spain. Ernesto Grijalba from Bufete Barrilero y Asociados drew attention to the populist approach underlying the criticisms of Socimis, which are often portrayed as a refuge for wealthy individuals evading taxes. However, he argues that these entities allow small investors access to real estate opportunities that would otherwise be unavailable to them. The structure of Socimis functions similarly to crowdfunding, but with the added advantage of liquidity, making them an accessible investment vehicle for a broader audience. The peculiarities of the tax regime for Socimis have been a subject of debate. Despite the criticisms, experts agree that these entities do contribute to the treasury, as they are required to distribute at least 80% of their profits. This means that while the tax regime for Socimis is attractive, it does not imply a total exemption from taxes. Furthermore, the fact that dividends received by investors cannot offset double taxation, as is the case with other companies, presents an additional burden that must be considered. Conde also highlighted that Socimis play a crucial role in wealth management, facilitating the integration of inheritances and allowing families to manage their real estate assets more professionally. This professional management capability is an additional attraction for investors, who seek not only profitability but also the security of proper asset management. However, experts believe that while a modification of the regulations governing Socimis may be necessary, it should not focus on increasing the tax burden. Hernández suggests that a goal could be set to promote minority capital distribution, which could facilitate housing investment by small savers, although this would require a long-term approach. The need for a broader review of the regulations governing Socimis was also underscored by Grijalba, who criticized the obligation to distribute a high percentage of profits. This dynamic may limit the ability of Socimis to invest in improvements or property acquisitions, which in turn could harm the overall growth of the real estate sector. With an economy already impacted by various factors, the potential modification of the tax regime for Socimis could have notable consequences for housing access in Spain. Capital flight and decreased investment could intensify the housing crisis, a problem affecting thousands of citizens across the country. The investing community is closely watching how events will unfold in the coming months, aware that political decisions can have a lasting impact on the real estate market and, consequently, on the quality of life for many people in Spain.