The rich are one of the fiscal objectives of the new Government of the PSOE and United we Can. The expected rise in income tax for top earners, the program of the coalition agreement contains other measures, notably a greater control of the investment companies of variable capital (sicav), that concentrates good part of the financial investment of large fortunes in spain. These investors of pedigree, surrounded by tax advisors and lawyers, are already working on a plan b that includes transferring money to Luxembourg or merge companies, among other measures.
The latest data from November of last year indicate that these savings instruments collective moved 29.294 million euros. To these societies, many of them belonging to the richest families in the country, always has been surrounded by controversy. In the first place, which paid 1% in corporation tax as the investment funds, taking advantage of the benefits of the savings group. And in addition, that many of them can be made in a fraudulent manner, since they require at least 100 shareholders, but it is common that the greater part of the investment is concentrated in a single person or a family. The rest of the shareholders, fill-in the financial world they have been baptized as a mariachi.
According to the agreement of the new Government, it is intended that the control of the sicavs pass the National Commission of the Market of Values (CNMV) to the Tax Agency and that the that check the compliance of the 100 shareholders. It also wants to establish a cap on percentage of capital that may have one shareholder or one family group, are natural persons or legal entities. Market sources indicate that around 75% of the sicavs have this structure of a large investor surrounded by his men of straw.
Paula Mercado, director of analysis of the Vdos, shows that the measure most relevant to the Governance agreement “was to grant to the inspection bodies of the Tax Agency the jurisdiction to declare for the sole purpose of tax non-compliance of the requirements for sicavs, as the control over the compliance can be more accurate than that until now could have exercised the CNMV”. Something that coincides Antonio Fernandez Vera, president of Renta 4 Gestora, which also points out the fact of establishing additional requirements such as the cap on the percentage of the capital of a shareholder to benefit from the type of the 1%.
James Zarco, director of high net worth individuals of ATl Capital, explains the incentives for large investors have sicavs: “The big advantage is to defer the payment of taxes, as within society, the taxation by the income and capital gains generated by the management of the portfolio will be at the reduced rate of 1%, and the shareholder will come alive your capital gains when you sell your shares of the sicav, advantage similar to that of the investment funds. In a society that ordinary would have to be taxed continuously at the general rate of 25% when you make purchases of assets (bonds, stocks, currencies),” he explains. “The other great benefit is that they get a personalized management of their investments, something that would be more difficult to achieve if you were to invest that money in a portfolio of investment funds”, adds Zarco.
it does Not seem, therefore, a problem of paying more or less taxes, but can defer to the time that you want. Angel Martinez-Aldama, chairman of Inverco, explains that “the sicavs are taxed at 1% in corporation tax, but in addition their shareholders (natural persons) are taxed at 19%, 21% or 23% in the personal income TAX, or 25% corporate tax (if they are legal persons), when they sell their shares, so that not only does not have tax privileged, but a double taxation (the 1%, plus the 19%-21%-23% personal income TAX for individuals, or 25% in companies for legal persons)”.
there are Currently in Spain 2.643 sicavs with data from the CNMV until the middle of last year, with 401.323 investors (touch 151 sicav). This represents 190 companies that are less than the end of 2017. In the first six months of 2019 were closed 40. The fear of a tightening in their current requirements is that drives these withdrawals, even if your joint estate is not suffering much due to the rise of the assets in which they invest.
“In 2019, the provisional data indicate refunds, net of 861 million euros in sicavs. The growth of heritage has been from the profitability of the portfolios (3.055 million euros), meaning that the equity increased by € 2,194 million, a 8,04%”, explains the expert of Vdos.
Flight to other latitudes
The fear of the financial industry is that the money in sicavs escape to other countries with less requirements. Martinez-Aldama explains that Portugal along with Spain are the only two countries of the 28 of the EU in the required 100 shareholders. “A modification of the taxation of sicavs would imply a relocation of the industry of asset management spain to Ireland and Luxembourg, where the corporate tax rate for these vehicles is the is the 0%”, indicates.
at the time, the high net worth study alongside their advisers to possible routes of escape if the controls are tight. Move the sicav Spanish to Luxembourg could be a solution if there are significant changes. But there are also other alternatives. For Zarco, “change of address is possible but not easy to implement, since it implies high costs and numerous steps. Almost would be easier to close the Spanish and open a new one,” indicates. But there are other solutions, such as merging with another sicav, which increases the number of shareholders and may dilute the participation if it sets a cap on capital. In addition, Zarco looks also very interesting to the investment in the unit linked portfolio of funds under the umbrella of insurance), which “are usually to do with insurance luxembourg or ireland, where, unlike Spain, the money is kept even if breaking the insurance”, he explains. The portfolios of investment funds that match the profile of the customer can be another remedy.
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it Is easy to know what to invest Alicia Koplowitz or the family Of the Pine, among others. These companies are required to publish the evolution of their portfolios and this fact becomes a guide to investment for many investors, even with effects on the trading of securities on the Stock exchange, rewarded when they buy and punished when they sell the most wealthy. All sicavs are open to the public, as indicates Antonio Fernández Vera, in Renta 4: “Negotiate their shares on the Alternative Stock Market (MAB), which is a public market and accessible to anyone, and, therefore, are a product of afree available to any investor, for a very small investment.” But this possibility of investing in the sicav of characters relevant, well-advised, is not so simple: there can be actions to the sale.
