Intermoney | The annulment of the tax regime for the REITs, previously agreed by the PSOE and Sumar, was not approved on Monday at the marathon meeting of the Finance Committee of the Congress of Deputies, which ended after midnight. This initiative was part of other tax reforms that were to accompany the transposition in Spain of the EU directive on the minimum percentages of profits that multinationals should pay in taxes.
Also rejected at the same meeting were proposals for, among others, tax increases (or cancellation of subsidies) on diesel fuel, as well as on private health insurance. The final form of the tax on banks and, if applicable, on energy companies is still up in the air, pending the vote in the plenary session of Congress next Thursday.
Assessment: The proposal to annul the REITs regime had raised quite a stir, as it was a possibility that had always been ruled out by the Socialist Party. Both Colonial (Buy PO, €8.5) and Merlin (Buy, PO €12) had already assessed last week the theoretical effect of this measure at between 2% and 8% of their net profit, respectively, as well as the negative impact it would have on real estate investment.
While it appears that this change will not be implemented, we believe that the very possibility, which now exists, that it could be implemented in the future is negative for the sector. It should be noted that this controversy has arisen precisely at a time when both REITs reported strong 9-month results.