Variable Capital Investment Company (SICAV)


Variable Capital Investment Companies (SICAV) are an investment instrument whose purpose is to acquire transferable securities and other financial assets. They are owned by at least 100 shareholders and require a minimum capital of 2.4 million euros.

This collective investment instrument is quite common in Europe, although rare in the rest of the world. For this reason, we are going to focus this article on SICAVs in Spain.

Due to the advantages that we will see below, SICAVs are the preferred option for large fortunes to manage their assets. Although other individuals can also benefit through funds that invest in this type of company.

This investment tool is seen by sectors of society as a tax evasion mechanism and they question whether the hundred required partners are real.

In fact, various groups demand to change their taxation but the approach is rejected since it is also stated that there could be a flight of capital to other more advantageous countries, such as Luxembourg.

Characteristics of the SICAV

Among the greatest advantages offered by the SICAV are its low taxation and the possibility of deferring the payment of the tax. That is, when money is in society, it is taxed at a very low rate. In Spain for example, it is taxed at 1% instead of 30% in Corporation Tax (as long as it is not carried elsewhere). However, when the capital is returned to the investor, it must be declared to the Treasury, taxed in the same way as some shares, that is, as a return on movable capital.

At the same time, in a SICAV, amounts can be transferred without having to pay for them as long as a certain amount is not exceeded, since it is considered that what is withdrawn is capital and not profits obtained from the investment. This is what is known as the FIFO (First In First Out) criterion or, in other words, “the first thing you invest is capital and the first thing you take out too”.

Other possibilities offered by the SICAV, beyond the fiscal ones, are specified in the control of the investment by the owners, something impossible to carry out in an investment fund, whose management is beyond the will of the participants ; and in a type of investment strategy tailored, adapted to the needs of the promoters.

In parallel, the SICAV allows the modification of the investment orientation and the type of assets with a minimum tax impact; Furthermore, it offers the possibility of buying or selling the shares at any time, given that the SICAV is listed on the MAB (Alternative Stock Market).

The company can also increase or decrease its initial capital by up to 10 times, which makes it possible to use the SICAV as an instrument to manage surpluses or cash needs; and, finally, there is the alternative of pledging - or pawning - the client's shares in the SICAV, as support for their financing needs.

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SICAV - Taxation

Tags:  Argentina derivatives Spain 

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