Real estate companies that pay 0% corporate tax

BarcelonaThe housing crisis and the rising cost of both rentals and purchases have cast doubt on a significant part of the taxation of real estate companies due to the low level of taxes they pay compared to other sectors of the economy. One of the targets of criticism for this low taxation are SOCIMIs, publicly traded real estate investment companies.

These types of companies, which are obliged to be listed on the stock market, have a different and much more favorable tax regime than what the vast majority of companies in Spain pay, a result of the context in which they were created. SOCIMIs are a type of company based on the Real Estate Investment Trusts (REITs), a very similar figure that has been operating in the United States since the 1960s and, contrary to what one might think, these types of companies played no role in the real estate bubble of the early 2000s, which eventually burst completely in 2008. They are precisely a response to the crisis that resulted from it – the law creating them was approved in 2009 – and which brought the Spanish housing market to its knees.

"The purpose of these collective investment instruments is the direct or indirect ownership of real estate assets for rent," summarized the Bank of Spain in 2020 in the article "Recent Evolution of SOCIMIs in Spain", by economists Víctor García-Vaquero and Irene Roibás. In fact, the objective was twofold. "To boost the rental market and reactivate collective real estate investment, which had been falling continuously since the crisis began in 2008," the report points out.

Initially, however, they had little success: the first SOCIMI was not registered until 2012. In fact, in December of that same year, Congress approved a reform of SOCIMIs that favored their creation, promoted by the People's Party, which was then governing with an absolute majority. Among the changes introduced were the reduction from 15 million to 5 million in the initial investment in the company's capital by shareholders, the reduction from three to one in the number of properties it must own, the elimination of any debt limit (until then it was restricted to 80% of the company's asset value), and permission to list on stock exchanges outside the European Union and the US, as long as they are from countries with an exchange of tax information with Spain.

But the most notable changes were in the tax field. Between 2009 and 2012, SOCIMI profits paid 18% corporate tax. There was also a 20% exemption for income from housing rentals as long as the housing represented more than half of the company's real estate portfolio. With the 2012 reform, corporate tax for SOCIMIs became 0%.

It should be noted that, in December 2012, the State's finances had been intervened by the troika (European Commission, European Central Bank, and International Monetary Fund) for six months following the loan of 40,000 million euros requested by Mariano Rajoy's government to cope with the rescue of Spanish banks. Therefore, in a period of austerity, the executive imposed a special tax of 19% on dividends distributed by the company among its shareholders, provided that they were taxed below 10% in income tax (IRPF).

That change had a significant effect, as SOCIMIs began to multiply to 157 by the end of last year, with a market value exceeding 31,000 million euros, 18% more than in 2024. Most are listed in Spain: for example, Merlin Properties and the Catalan company Colonial are two of the companies on the Íbex-35, the index that groups the largest companies on the Spanish stock market.

Without legislative changes

The fact that they are large companies operating in a market that is under scrutiny by large segments of society due to the escalating housing prices has led to the tax advantages of SOCIMIs being the target of all kinds of criticism in recent years.

Critics, including the current government and unions –UGT has been calling for "modification of the tax regime" for years–, highlight that the tax benefits have not served to make rent more affordable. On the other hand, the real estate sector laments being blamed for the housing sector's problems when the majority – such as Colonial itself – concentrate their investments in other sectors, such as the rental of offices, industrial warehouses, or commercial premises.

Despite this, even with the PSOE entering the government, the tax regime of these companies at the state level has not changed in almost fourteen years, although it has changed timidly in Catalonia, with the increase in 2025 of the tax on property transfers and documented legal acts (ITPi AJD). The last attempt in Congress was last November, when Esquerra Republicana did not obtain the necessary votes to pass a bill that included a new tax on individuals or companies that accumulated more than three homes. In that case, all left-wing parties voted in favor, and only the PP and Vox voted against it, but the abstention of Junts, the PNB, and Coalición Canaria prevented the law from progressing.