Spanish SICAVs (open-ended investment companies) are a special type of collective investment undertaking. Their main advantage is that their corporate income tax is just one per cent, instead of 25% for other Spanish companies.
However, SICAVs must have at least one hundred shareholders and in practical terms that has led to a certain degree of abuse by some investors or high-wealth individuals.
To avoid that abuse, a number of regulatory changes have been introduced this year. It is still necessary to have at least 100 shareholders but every single shareholder needs to hold shares with a minimum value of 2,500.00 euros for at least nine months in every year.
So, if you have a client who created a Spanish SICAV taxed at just 1%, you should verify that the new requirements are being met.
Alternatively, the SICAV company can be liquidated and fully closed with no taxes payable by its shareholders if they re-invest those amounts in another SICAV company, decide in 2022 to close and liquidate the previous SICAV and fully complete the liquidation process by 30 June 2023.
(Author: Lexunion España, Barcelona)