Rodamco Europe N.V., the largest publicly listed property investment and management company in the retail sector in Europe, has completed the election of the SIIC status for its total real estate portfolio in France. In 2004 Rodamco Europe already elected the SIIC status for approximately one third of its French portfolio.
The SIIC regime is often compared with Rodamco Europeâs status as Fiscal Investment Institution under Dutch tax law. âSIICâ stands for âSociÃ©tÃ©s dâinvestissements immobiliers cotÃ©esâ. The SIIC regime entails a tax exemption for current income from French real estate and also for capital gains.
The SIIC status requires the distribution of dividend of at least 85% of the tax exempt property income and of 50% of tax exempt capital gains. The SIIC regime also requires the parent company to have a listing of its shares in France. Rodamco Europe has a listing on Euronext Paris since several years.
Since the beginning of the year 2004, Rodamco Europe already elected the SIIC regime for one third of its French portfolio, representing a value of â¬ 320 million. As of January 1, 2005, the SIIC regime is applied to the remaining part of the portfolio with a value of approximately â¬ 850 million.
CEO Maarten Hulshoff: âTo test the waters, we elected the French SIIC regime only for a portion of our French portfolio last year. Although the amount of the so-called exit tax for the remaining portfolio in France is quite substantial, the net present value of the election is positive and it will positively contribute to our future earningsâ
The tax cost of opting for the SIIC status for the remaining French portfolio amounts to just over â¬ 100 million, the greater part of which is the so-called exit tax of 16.5% on the difference between market value and fiscal book value of the property. The tax cost is covered by the (nominal) deferred tax provision at the IFRS opening balance sheet as per January 1, 2005 and results in a release of this provision of approximately â¬ 30 million in the second quarter of 2005. The release is due to applying the reduced tax rate of 16.5% to certain unrealized gains rather than the regular tax rate of 34%, a situation that was recently confirmed, as well as to the fact that the exit tax is payable in four annual installments.
Source: Rodamco Europe