Sicavs in the line of fire

Spanish Sicavs are under scrutiny following allegations that wealthy individuals are obtaining tax advantages through this type of investment vehicle.

Resident Spanish taxpayers typically pay capital gains tax rates of between 19% to 23%. However, those investing through a Sicav typically pay just 1%. Given this premise, all major political parties in Spain have pledged to revise regulation of Sicavs, which have become associated with tax avoidance strategies for wealthy individuals.

Sicavs, however, offer the same tax benefits as investment funds, which are used by more than 8 million investors, according to fund industry association Inverco. Thus, those fiscal advantages are not enjoyed by just a handful of wealthy families.

Investors using Sicavs or investment funds pay 1% tax on capital gains as long as they hold their investment, but when they sell their holding – whether in a Sicav or fund – they pay the same progressive tax rate of 19% (€0-€6,001), 21% (€6,000-€50,000) or 23% (over €50,000).

Sicavs in this case do not offer more tax advantages than popular investment funds – the difference is instead centred on operational issues. For example, major shareholders of a Sicav control strategic decisions on investments, while an investment fund is managed by a management team.


The minimum capital threshold for Sicavs in Spain is €2.4m, and it requires at least 100 shareholders. However, there is no maximum percentage a single shareholder can own. This supposedly collective investment vehicle can be therefore be controlled by a single family or wealthy individual by naming a series of surrogate investors, commonly known as “mariachis”.

Jorge Sarró, partner and head of Tax at Barcelona-based legal firm Rousaud Costas Duran (RCD) agrees that there are more Sicavs used as a tool for large fortunes rather than as an instrument of collective investment.

“The figure of the Sicav, for its flexibility, taxation and low cost, is used as an investment vehicle from €2m or €3m to large fortunes,” Sarró says.

Spain’s Sicavs are generally linked to family groups, says Luis Rodríguez-Ramos, partner of the Tax Department at Ramón y Cajal Abogados.

“This doesn’t mean these vehicles are not collective investments. In theory, you can buy Sicavs shares [on Spain’s alternative market MAB] and if there’s nothing available maybe the best solution, instead of demonising Sicavs, is to force them to issue paper so anybody can subscribe,” Rodríguez-Ramos argues.

As Sicavs are widely used by wealthy individuals and families to channel their savings, the collective nature of these investment vehicles has been questioned.


Spain’s main political parties have all announced changes in regards to Sicavs, so this investment vehicle is facing increasing legal uncertainty.

While anti-austerity party Podemos has pushed to eliminate Sicavs, the largest opposition party PSOE and centrist Ciudadanos have opted instead for increased control. The ruling conservative
PP party, for its part, has suggested only those with a minimum participation of 0.55%, based on a minimum number of 100 shareholders will count as Sicav investors.

But this proposal has been criticised by industry players who say this measure is going to raise the minimum investment to the point of limiting private investor access to Sicavs.

“This formula will punish Sicavs that are genuine collective investment vehicles,” Sarró says.

As a result of this situation, more than 120 Spanish Sicavs have merged with an investment fund so far this year, compared to just three over the same period a year ago. However, recent binding responses from Spain’s General Directorate of Taxes (DGT) are limiting the investor advantages seen stemming from mergers, which seems to have slowed the merger momentum.

According to law firm Ashurst, Spanish Sicavs are planning to move to other jurisdictions for fear of greater tax pressures in Spain and also with the aim of finding more legal certainty.

“Luxembourg has been chosen as the best destination, because its tax regime is advantageous. Luxembourg Specialised Investment Funds (SIFs) are taxed at a 0.01% CIT rate on net assets,” pinpoints a report from the firm.

The transfer to Luxembourg is usually done through a merger with a Luxembourg fund but, Sarró says, this alternative poses the risk of international tax transparency, especially following the final draft for the OECD Base Erosion and Profit Shifting (BEPS) tax plan.

Alicia Villegas
Alicia Villegas speaks Spanish and Italian and is Iberia Correspondent for InvestmentEurope. She was shortlisted for the Rising Star Award at the British Media Awards 2017 and Writer of the Year at the PPA Independent Publisher Awards 2016. Previously, she worked for almost three years at the seafood business website Undercurrent News as a market reporter. In Spain, she also worked for more than five years for several media outlets.

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