Neither have the sicavs disappeared —although there has been a considerable cleanup—, nor has the much vaunted flight of capital occurred, as the most doomsayers predicted. The year 2022 opened with an important tax change for the favorite investment vehicle of the great Spanish fortunes. Specifically, a modification of the anti-fraud law requires these companies to prove that they have 100 partners with a minimum investment of at least 2,500 euros each in order to benefit from the 1% tax on corporation tax.
The measure was adopted to end the figure of the mariachi, investors that appeared in many of these instruments only to complete the minimum number of shareholders required by law in order to pay taxes advantageously. Despite this tightening, the legislator, in order to prevent the flight of money abroad, has offered an advantageous way out to the owners of these vehicles. Specifically, if they choose to reinvest in a fund with Ucits format (the European standard), the assets accumulated in the sicav will not have to pay taxes on the capital gains that they have accumulated in it.
“I think that the fiscal treatment of the law is good, because the companies will be able to transfer to the new vehicles without fiscal penalty”, argues Juan Carlos Ureta, president of Renta 4. Santiago Satrústegui, president of Abante, is of the same opinion: “After After years of regulatory uncertainty surrounding these vehicles, I think the formula that has been chosen has been a good one. I hope that from now on that permanent questioning of the privileged treatment of sicavs, which I have never shared because they are taxed the same as a collective investment fund, will be eliminated.
As of December 31, there were 2,283 sicavs on the market, with assets under management of 28,500 million. After the entry into force last January of Law 11/2021, of July 9, the National Securities Market Commission (CNMV) asked the managers of the companies to communicate to the market what decision they were going to make. With the data at the end of the first quarter of 2022 —the last one provided by the stock market supervisor—, 1,756 vehicles (76% of the total) had reported their next deregistration as a sicav to merge with a fund or be liquidated, while 467 had communicated their continuity, and the remaining 63 were still pending a response on the policy they were going to follow.
Demagoguery and political debate
“Sicavs exist in a very similar form in most of the jurisdictions around us. I think that in Spain there has been an excessive demagoguery about this figure. They have become the object of political rather than fiscal debate. The collection effect of this change is going to be irrelevant,” says Jacobo Zarco, director of large assets at atl Capital.
Both the PP and the PSOE governments have repeatedly stirred up the debate on the taxation of sicavs for years. Some proposals that were put on the table were even more radical than the one that came into force in January. Then it was said that touching the tax regime of these vehicles would mean an exodus of capital to other more fiscally friendly jurisdictions. However, the experts consulted acknowledge that, with few exceptions, the entry into force of the new law has not meant a materialization of that risk.
Another of the lessons left by the regulatory change is that, despite the fact that the vast majority have decided to stop operating and switch to another regime, the largest companies on the market will continue to function as a sicav. Specifically, 467 entities, representing 20.4% of those registered and 43.6% of total assets, plan to continue as a sicav. Within this group, 384 will continue to pay taxes at 1%, with 11,925 million euros, and 83 remain as sicavs, but pay taxes at 25% (because they do not meet the new criteria), with 740 million assets.
“The largest sicavs have an easier time gathering those 100 investors with at least 2,500 euros in shares. In fact, any small saver can give an order to buy shares of a sicav to its intermediary since they are listed on the Stock Exchange like any other company”, reflects Ureta. “A large family has well-tested patrimonial schemes and changing them usually generates problems. For this reason, many have sought out those 100 partners before contemplating other alternatives”, adds the president of Renta 4.
The largest sicav in the Spanish market, Gesprisa, owned by the founder of Pronovias, Alberto Palatchi, with assets at the end of the first quarter of 929 million euros, has announced its decision to continue operating without changes. They will also continue under the Torrenova sicav regime, of the March family, with 926 million assets; Arbarín (239 million) and Inversiones Naira (109 million), by Juan Abelló; Soixa (391 million), from the Hernández family, the largest shareholders of Ebro Foods, and Allocation (409 million), from Joaquín del Pino, among others. The latter recognizes that there is a risk that “due to unexpected causes” it will have to pay the general corporate tax rate instead of 1% if its shareholders with more than 2,500 euros invested fall below 100.
Morinvest, Alicia Koplowitz’s famous sicav, has not yet communicated its decision to the CNMV. At the end of the first quarter of the year, Morinvest had assets of 569 million euros and 241 shareholders.
The Ortega family opts for other formulas
When a millionaire decides to create a sicav, he knows that he has some tax and management advantages, but in return he also incurs certain transparency easements. That the rest of the mortals know how much money you have and where you invest it is not usually a tasteful dish for great fortunes. That quarterly scrutiny —the sicavs have to send the CNMV a detailed report on all the assets they have in their portfolio— was one of the reasons that led Amancio Ortega to close his companies (Keblar and Alazán) in 2011. From that moment, the richest person in Spain decided to concentrate the juicy dividends that he receives for his majority stake in Inditex in the real estate sector through his family office Pontegadea.
Just over a decade after this decision, it is now Ortega’s eldest daughter, Sandra, who has taken advantage of the tax change to bolt down her sicav, Soandres. “The council has proposed to the general meeting of shareholders that it adopt the appropriate legal agreements in order to transform it into a limited liability company”, she communicated to the CNMV on February 4. Soandres was managed by JP Morgan and had 225 million assets.