Sicafi

Sicafi

The Sicaf Immobilière ("Société d'Investissement Immobilière à Capital Fixe publique" - fixed capital real estate investment trust) regime was introduced into Belgian law on 04.12.1990. It permitted property investment organisations to be created in Belgium, such as those that already exist in numerous other countries:

  • Real Estate Investment Trusts (REITs) in the US
  • Fiscale Beleggingsinstellingen (BI) in the Netherlands
  • G-REITs in Germany
  • Sociétés dInvestissements Immobiliers Cotées (SIIC) in France
  • UK-REITs in the UK

This new company form was enacted by the Royal Decree of 10.04.1995, last modified by the Royal Decree of 21.06.2006. The law of 23.12.1994 regulated the effects on the tax obligations faced by existing companies who transform themselves into a Sicaf Immobilière.

Why invest in a Sicafi?

  • +/- 1% transaction costs versus 12.5% in direct property investment
  • Low risk and high dividend yield
  • Indirect property investment is an alternative to buying direct property with better liquidity, easier transaction and lower management costs than direct property
  • Low correlation between real estate market and common shares
  • The property portfolio of the Sicafi is diversified and specialised.

Main characteristics of a Sicafi

  • Closed end company
  • Stock Exchange listing
  • Activity limited to real estate investment - if necessary, the company can invest its assets in listed securities; no more than 20% of total assets invested in a single property
  • Borrowing limited to 65% of the market value of the company's assets; the granting of sureties and mortgages is limited to 40% of the total assets and 75% of an individual building
  • Very strict rules governing conflicts of interest
  • Regular valuation of the asset portfolio by an independent real estate valuer
  • Properties carried at their fair value - no depreciation
  • Results (rental income and capital gains on sales less operating expenses and financial charges) are tax exempt at the Sicafi level but not for subsidiaries
  • At least 80% of the sum of the corrected result and the net gains on realised disposals of real estate assets not exempted to the compulsory distribution are subject to compulsory distribution; the decrease in debt during the year can however be subtracted from the amount to be distributed
  • Withholding tax of 15%, giving relief for physical persons residing in Belgium. No withholding tax is deducted for non-resident investors who are not engaged in a profit-making activity.

Companies applying for approved Sicaf Immobilière status, or which merge with a Sicaf Immobilière, are subject to an exit tax, treated in the same way as a liquidation tax, on net unrealised gains and on tax-exempt reserves, at a rate of 16.5%. This rate is increased by a supplementary crisis tax uplift of 3%, meaning the total tax levy is 16.995%.

Cofinimmo obtained its approved Sicaf Immobilière status on 01.04.1996.