Governance of a real estate investment vehicle: company, bodies and compliance
Nextica Law & Tax organises the governance of the companies used to invest in property: choosing between a passive holding company and one carrying on an economic activity —with the employee requirement of art. 27.2 of the Personal Income Tax Act when letting—, the Spanish REIT regime of Law 11/2009 where size justifies it, the bodies, minutes and directors' duties of each vehicle, and the internal whistleblowing channel of Law 2/2023 in groups that reach the headcount threshold.
Each development is a separate company. Once there are eight, what decides whether the group survives a review is not the investment: it is the minutes.
What's included
1. Mapping the real structure
asset-holding company, developer, project vehicle and, where relevant, a listed real estate investment company, each with its own regime.
2. Checking the special regime's requirements where it is used
qualifying assets, minimum holding period, mandatory distribution of profits and admission to trading.
3. Written rules for transactions between group companies
cross leases, participating loans and management services, with their valuation documented.
4. Bodies and powers per vehicle, setting out who can commit land, sign financing and execute deeds in each one.
5. Anti-money-laundering in purchase and sale transactions
identifying the beneficial owner, the source of funds, and retaining the documentation.
6. A decision protocol with investors and co-investors, with reinforced majorities to sell, refinance or change the use.
7. An annual review of how the articles, what the directors actually do and what the company declares fit together.
ONE VEHICLE PER PROJECT AND A DIFFERENT REGIME IN EACH
The structure is built to ring-fence risk, and then governed as if it were a single company. That is where the regime is lost.
Electing the special regime for listed real estate investment companies and neglecting its conditions: it requires qualifying assets, a minimum holding period for the properties, mandatory distribution of profits and admission to trading. Losing any one of them means taxation under the general regime.
Law 11/2009 on listed real estate investment companiesCross leases and management services between group companies without valuation or documentation: these are related-party transactions, must be valued at arm's length and documented, and in a group with several vehicles they happen daily.
art. 18 Corporate Income Tax ActClosing a sale without identifying the beneficial owner or evidencing the source of funds: real estate activity is an obliged entity under anti-money-laundering rules, and the duty does not end at the notary.
Law 10/2010 on the prevention of money launderingMOST COMMON CRIMES IN THE BUSINESS FIELD
| Crime | CP Precept | Sectors with the highest exposure |
|---|---|---|
| Crimes against the Public Treasury and Social Security | Art. 305-310 bis | All sectors |
| Money laundering | Art. 301-304 | Financial services, real estate, jewelry, casino |
| Corruption between individuals (bribery) | Art. 286 bis | Pharmaceutical, food, construction, distribution |
| Fraud and misappropriation | Art. 248-254 | Services, technology, finance |
| Crimes against worker safety | Art. 316-317 | Construction, industry, logistics |
| Environmental crimes | Art. 325-331 | Chemical industry, food, agriculture |
| Cyber crimes | Art. 197 bis et seq. | Technology, digital services, telecommunications |
Crimes against the Public Treasury and Social Security
Money laundering
Corruption between individuals (bribery)
Fraud and misappropriation
Crimes against worker safety
Environmental crimes
Cyber crimes
Frequently asked questions
Passive holding company or a company with an economic activity?
The difference is not just a label: it changes the vehicle's tax regime and the treatment of its shares. For letting property to count as an economic activity, art. 27.2 of the Personal Income Tax Act requires at least one full-time employee under an employment contract devoted to managing it. Meeting that requirement only in appearance —a contract with no real work behind it— is one of the most reviewed points, so it is set up with substance or not at all.
Do I need a separate company for each development?
It is common practice, because it ring-fences each asset's risk and makes it easier to sell or finance separately. The cost is governance: every vehicle has its own accounts, bodies, minutes and formal obligations, and that work multiplies. What solves the equation is not having fewer companies but having a shared corporate calendar and accounting that does not mix them up.
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