Pooled real estate investment vehicles (Organismes de Placement Collectifs Immobilier non cotés, OPCI)
At the end of 2016 (from IEIF / ASPIM)
- 290 OPCI were trading;
- among the accreditations obtained, 13 relate to so-called « Public » and 101 Sociétés de gestoin (SGP);
- overall assets and liabilities worth approximately 78 billion Euros.
The OPCI was initially inspired by Germany’s open-ended funds, which were intended to encourage non-professional investors.
The OPCI was supposed to be even more transparent than the SCPI and, above all, to be able to ensure its own liquidity by always having the option of buying back its own shares from the bearer, without the latter needing to find a buyer in the market (in the case of SCPI, this liquidity results from a “second market”).
2 legal vehicles have been created:
- the FPI (Fonds d'investissement immobilier or real estate investment fund) ; and
- the SPPICAV (Société de Placement à Prépondérance Immobilière et à Capital Variable or Open-ended investment company dealing mainly in real estate).
ðFPIs do not have their own legal identity and are comparable to a fonds commun de placement (investment trust) dedicated to real estate business.
ðSPPICAV are companies (SA or SAS) that may be compared to a unit trust dedicated to real estate business.
In both cases, these vehicles are accredited by the AMF and run by a management company, which is itself accredited. Their activity is strictly limited to the purchase or construction of buildings with a view to renting them out (purchase / resale is not allowed), either directly or via subsidiary companies.
Another distinction results from the investors at whom these vehicles are aimed:
- so-called “public” vehicles, whose shares are intended to be subscribed by individuals and are usually distributed on behalf of banking networks, asset management companies, etc. Tighter constraints apply to these vehicles in terms of the diversification of assets, levels of debt and liquidity, etc.;
- so-called “professional” vehicles, which are limited to investors authorised for “club deal” type operations (where a handful of professional investors join forces to purchase one or more assets) and are subject to fewer constraints in terms of their assets, debt, organisation, etc.
In practice, the FPI regime, which is particularly transparent both from a legal and a tax viewpoint, has not been well-received and only one FPI is in existence at the present time. On the other hand, SPPICAV have developed widely in the market.
Given that the FPI is scarcely used, we shall not examine its tax regime in greater depth here.
In tax terms, the SPPICAV is tax-exempt under Article 208 3° nonies of the FTC, as its AMF accreditation and the intervention of the management company and the depository bank act as guarantees for the tax authorities regarding the structure’s activity.
In return for this tax exemption, the SPPICAV is obliged to distribute:
- 85% of its net rental income;
- 50% of any net capital gains realised on its real estate assets or shares in subsidiary real estate investment companies;
- 100% of any dividends received from "SIIC" subsidiairy companies.
This distribution obligation normally results in income being received by the SPPICAV’s holders, who then pay income tax on it.
Thus, at an economic level, the arrangement is not one of straightforward tax exemption, but rather a transfer of taxation from the SPPICAV to its holders.
Taxation of holders
Investors have to pay tax on the dividends paid out by the SPPICAV, as follows:
- individuals: flat tax of 30%;
- legal entities liable for corporation tax: CT applicable under ordinary law, without the benefit of the parent-subsidiary regime (see hyperlink: Structuration > Unregulated structures > Companies liable to pay corporation tax);
- for non-residents: dividends are subject to a - 12.80% / 30% / CT applicable under ordinary law - withholding tax (retenue à la source or RAS), unless a more favourable tax treaty applies (see hyperlink: International > Institutional investors / Companies > Taxation of income).
The SPPICAV can hold assets either directly or via subsidiary companies, which can enjoy the status of a CT-exempt SCI (benefiting from the SPPICAV’s exemption from corporation tax thanks to its transparency) or of a SA / SAS which, if they are 95% owned, will have the option of benefiting from the SIIC regime, which provides exemption for rental income and capital gains ( Structuration > Regulated structures > SIIC).
Disposals of shares
Disposals of shares in SPPICAV are subject to the following regime:
- capital gains on disposal liable for CT under ordinary law in the case of shareholders liable to pay corporation tax;
- registration fees at the rate of 5% where the purchaser owns or will own, following its purchase, more than 20% of the shares (10% if the purchaser is an individual).