Editor’s note: This article was first published in July 2011. All figures are for the first quarter of 2011, including assets of 26,332 million euros, 388,206 shareholders and 3,158 SICAVs in total. The 1% tax rate and the political debate reflect 2011; Spain has since tightened the SICAV regime, with stricter shareholder requirements from 2022.
SICAVs (Sociedades de Inversión de Capital Variable, Spain’s variable-capital investment companies), or, put another way, the investment product of the very rich, are in governments’ sights. A SICAV requires minimum start-up capital of 2.4 million euros. Because they are companies, they are subject to corporate income tax, though at a rate far below the usual one.
These entities are taxed at 1%, which is why every so often they become a target for those who want to raise their tax rate. Private banks, however, insist that if that happened investors could look for other investment options, so it would not be a good idea. Even so, SICAVs are currently a profitable business in Spanish private banking, with strong demand from both Spanish and foreign clients.
SICAVs have kept on growing. According to VDOS, by the end of the first quarter they had grown in assets, returns and number of shareholders, and new companies had even been set up.
Total assets managed through these products reached 26,332 million euros, 1.02% more than at the end of 2010. The total investment is spread among 388,206 shareholders. Between January and March, 15 new companies were created, bringing the current total to 3,158.
As for returns, investors who chose the right investment company have obtained an average return that few products have managed to deliver during a crisis that has, at times, shaken the markets violently.
Featured image: Benjamín Núñez González, CC BY-SA 4.0, via Wikimedia Commons.
