Foreign businessmen who want to invest in Spain can choose from a large set of investment vehicles, addressed to various types of investors. Spain, a member state of the European Union (EU), applies in its national legislation the rules imposed by the European directives for the registration of an investment fund. Our team of specialists in company formation in Spain can offer an in-depth presentation on the types of funds available to foreign investors and can also help in complying with all the requirements imposed for setting up this type of entity.
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Alternative investment funds in Spain
One of the ways in which an investor can open a company in Spain is by setting up an alternative investment fund (AIF), regulated by two types of legislations, set out in accordance with the AIF type. The Spanish legislation distinguishes between closed-ended AIFs, where the investors are allowed to issue only a limited amount of shares, and open-ended AIFs, which do not have any restrictions in this sense.
AIFs in Spain are regulated under the Alternative Investment Fund Managers (AIFM) directive, imposed by the EU. Spanish AIFMs are required to register at the Spanish National Securities Market Commission (CNMV), the main regulatory body.
The following video offers a short presentation on the registration of a Spanish investment fund:
However, it is important to know that a foreign AIFM which have received an authorization issued by a similar institution in another EU country is not required to receive a new approval from the Spanish authorities; our agents in company incorporation in Spain can offer more details on the AIFM directive.
Receive CNMV authorization for Spanish AIFs
All investment funds set up in Spain have to be registered at the CNMV, but the registration procedure depends on the type of fund chosen by the businessmen.
An important provision referring to EU AIFs is that they won’t need further approval when registering in Spain, as they have received it from a recognised institution. The investors will have to submit several documents, such as information on the fund administrator or data attesting the compliance with the applicable regulations.
Hedge funds in Spain
Investors can also set up a hedge fund, a type of fund especially addressed to professional investors. They offer many advantages to investors, as there are no restrictions referring to the investment policies applied by the businessmen.
Businessmen interested in receiving more details on the investment funds can address to our consultants in company formation in Spain.
What are the statistics on the Spanish investment funds?
The latest data gathered by the Organization for Economic Cooperation and Development (OECD) provides information on the value of the funds registered in Spain. The data collected by the institution divides the Spanish investment funds into two main categories, namely the non-money market funds and money market funds. The following information is available for the activity of such funds at the level of 2018 and it takes into consideration the financial assets of institutional investors:
- in 2018, the total value of the assets held by institutional investors investing in Spain stood at EUR 292,476 million;
- the total value of the non-money market funds in Spain stood at EUR 285,656 million;
- the value of non-money market funds incorporated as open-ended vehicles accounted for EUR 285,248 million;
- closed-ended non-money market funds in Spain had a much lower value, of only EUR 408 million;
- the total value of money market funds in Spain accounted for EUR 6,819 million.
What is the law for foreign fund managers in Spain?
Investment funds in Spain, regardless of their type, must usually be managed by a fund manager, who can be represent by a natural person or a legal entity. When appointing a fund manager for an investment fund in Spain, investors also have the possibility of delegating this task to a foreign fund manager.
Foreign fund managers are allowed to manage funds in Spain if they have obtained an authorization in a EU member state, prescribed under the regulations of the Directive 2009/65/EC. In Spain, the legal framework is given by the Law 35/2003 and it refers to the foreign fund managers managing open-ended funds activating in this country.
With regards to the management of a closed-ended fund, the regulations of the Law 22/2014 will apply. In this case, investors can appoint foreign fund managers, as long as they have been authorized in another EU member state by the same Directive. However, in this situation, they need to file a request for approval with the CNMV. Our team of consultants in company registration in Spain can offer information on the documents fund managers should submit with the institution.
Collective investment funds in Spain
The Spanish collective investment schemes (CIS) can be registered under three main categories: financial CIS, non-financial CIS and private equity CIS. Furthermore, each of these categories is comprised of different legal entities. The financial CIS can be set up as a financial company with variable capital (SICAV) or as an investment fund in which the assets of the fund belong to various investors participating in the fund and our team of agents in company formation in Spain can provide more details referring to the specifics of this type of vehicle.
Non-financial CIS can be set up as closed-ended investment companies in the real estate field or as investment funds established in the same industry. Private equity CIS can also be registered either as a fund or as an investment company. Businessmen interested in receiving more details on the main types of investment funds available in this country are invited to contact our team of consultants in company incorporation in Spain.
Taxation of the alternative investment funds in Spain
Those who are interested in company formation in Spain can also register an investment fund, which is registered following other incorporation procedures than the one available for commercial companies. Also, the taxation system is different, in accordance with the type of the vehicle. In the situation of the alternative investment funds (AIFs), there are two types of taxes.
AIFs set up as open-ended funds, in which the investors have no restrictions for the issuance of shares, fall under the rules of the Spanish Corporate Income Tax, which prescribes a tax applicable at the rate of 1% and our team of company formation agents in Spain can provide more details on how the payment is performed.
AIFs registered as closed-ended funds are regulated by the same legislation, but the investors have to pay a tax applicable to the fund’s income at the rate of 25%. Although the income tax is rather high compared to the one available for open-ended AIFs, the closed-ended funds can benefit of the following exemptions:
- the capital gains tax deriving from the sale of subsidiaries is exempted at a rate of 99%;
- dividends are exempted 100% of taxation.
Taxation of Spanish collective investment funds
Collective investment undertakings in Spain are taxed following the above mentioned law, if they fall under the category of the Law 35/2003. The law stipulates that such entities are to be taxed regardless if they are registered as companies or as investment funds.
The tax is applicable at the rate of 1% for the corporate income, as well as on the capital gains, under specific conditions.
Businessmen who need further details on the taxation of the Spanish investment funds are invited to contact our team of company incorporation consultants in Spain.