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FISCAL REGIMES
BELGIUM: PUBLIC REGULATED REAL ESTATE COMPANY
(PUBLIC RREC)
The public regulated real estate company (RREC) has a status
similar to those existing in many countries: Real Estate Investment
Trusts (REITs) in the US, Fiscale Beleggingsinstellingen (FBI) in
the Netherlands, G-REITs in Germany, Sociétés d’Investissement
Immobilier Cotées (SIIC) in France and UK-REITs in the UK.
This status is currently governed by the Law of 12.05.2014 and the
Royal Decree of 13.07.2014, both relating to regulated real estate
companies1.
The main characteristics of the RREC are as follows:
•
closed-end company;
•
stock exchange listing;
•
activity consisting in making buildings available to users;
incidentally, the RRECs may invest their assets in securities;
•
possibility for the Belgian subsidiaries of the public RREC to be
approved as an institutional RREC;
•
diversification of risk: maximum 20% of the total consolidated
assets invested in properties forming a single real estate
development;
•
consolidated debt limited to 65% of the market value of the
company’s assets; the amount of mortgages and other securities
is limited to 50% of the total fair value of the properties and to 75%
of the value of the mortgaged property;
•
very strict rules governing conflicts of interest;
•
regular valuation of the asset portfolio by independent real estate
experts;
•
properties recognised at their fair value;
•
no depreciation;
•
results (rental income and capital gains on sales less operating
expenses and financial charges) are exempt from corporate tax;
•
at least 80% of the sum of the corrected result and the net gains
on realised disposals of real estate assets not exempted from the
compulsory distribution are subject to a compulsory distribution;
the decrease in debt during the year can however be subtracted
from the amount to be distributed;
•
withholding tax of 27% for physical persons residing in Belgium.
Companies applying for the public or institutional RREC status, or
which merge with an RREC, are subject to an exit tax, which is treated
in the same way as a liquidation tax, on net unrealised gains and on
tax-exempt reserves, at a rate of 16.5% (increased by a supplemen-
tary crisis contribution of 3%, giving a total of 16.995%). Cofinimmo
obtained its RREC status on 26.08.2014. From 01.04.1996 to that date,
its status was Sicafi/Bevak (Belgian REIT).
BELGIUM: INSTITUTIONAL REGULATED REAL ESTATE
COMPANY UNDER BELGIAN LAW
The Institutional RREC, governed by the Law of 12.05.2014 and the
Royal Decree of 13.07.2014, is a light version of the public RREC. It
enables the public SIR to extend the taxation characteristics of its
legal form to its subsidiaries and to undertake specific partnerships
and projects with third parties. The institutional RREC status is
acquired after approval from the FSMA.
The main characteristics of the institutional RREC are as follows:
•
non-listed company controlled by a public RREC;
•
registered shares held by eligible investors;
•
no diversification or debt ratio requirement (consolidation with
public RREC);
•
dividend distribution obligation;
•
owned jointly or exclusively by a public RREC;
•
purpose consisting in making buildings available to users;
•
no obligation to appoint a real estate expert, the real estate assets
being appraised by the public RREC’s expert;
•
company accounts drawn up in accordance with IFRS regulations
(same accounting scheme as the public RREC);
•
strict rules on operations and conflicts of interest;
•
subject to auditing by the FSMA.
FRANCE: THE “SOCIÉTÉ D’INVESTISSEMENTS IMMOBILIERS
COTÉE” (SIIC)
The “Société d’Investissement Immobilier Cotée” (SIIC) fiscal regime,
introduced by the Finance Law for 2003 No. 2002-1575 of 30.12.2002
authorises the creation in France of real estate companies subject to
a specific tax regime, similar to the RREC regime in Belgium.
Cofinimmo opted for the SIIC regime on 04.08.2008, Cofinimmo
Investissements et Services and its subsidiaries on 23.01.2009. This
regime allows Cofinimmo to benefit, for its French branch and for
its subsidiaries, from an exemption from corporate tax on its rental
income and realised gains in return for an obligation to distribute 95%
of the profits from its property lettings.
The main characteristics of the SIIC regime are as follows:
•
exemption from corporate tax on the fraction of the profit arising
from i) property lettings, ii) capital gains on property disposals, iii)
capital gains on disposals of shares in subsidiaries having opted
for the SIIC regime or in other companies with a similar activity, iv)
proceeds distributed by their subsidiaries having opted for the SIIC
regime, and v) shares in profits of companies engaged in a real
estate activity;
•
profit distribution obligation: 95% of the exempted profits arising
from rental income, 60% of the exempted profits arising from the
disposal of property, shares in partnerships and subsidiaries
subject to the SIIC regime, and 100% of the dividends distributed to
them by their subsidiaries subject to corporate tax having opted for
the SIIC regime;
•
when opting for the SIIC regime, payment over four years of an exit
tax at the reduced rate of 19% on unrealised capital gains relating to
properties and securities of companies not subject to corporate tax
held by the SIIC or its subsidiaries having opted for the SIIC regime.
NETHERLANDS: FISCAL COLLECTIVE INVESTMENT TRUST
(FISCALE BELEGGINGSINSTELLINGEN OR FBI)
The main characteristics of the Fiscale Beleggingsintelling regime are
as follows:
•
only public limited companies, limited liability companies and
mutual funds can be considered as FBIs;
•
the FBI’s corporate purpose and actual operations may only involve
the investment of assets;
•
investments that consist of fixed assets may be financed by
external capital up to no more than 60% of the book value of the
fixed assets;
•
all other investments may be financed by external capital up to no
more than 20% of the book value of these investments;
•
at least 75% of shares or ownership interests in an unlisted FBI
must be held by natural persons, entities not subject to income tax
and/or publicly traded investment companies;
•
natural persons (or their partner) may not directly or indirectly own
5% or more of the shares or ownership interests in an unlisted FBI;
•
entities established in the Netherlands may not own 25% or more
of the shares or ownership interests in an unlisted FBI through
non-resident companies or funds;
•
FBI profits are subject to a 0% corporate tax rate;
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STANDING DOCUMENT /
General information