Introduced in January 2003, the SIIC regime has boosted interest in the real-estate segment of the stock market. The "SIIC France" index will comprise all listed real-estate investment companies having elected for SIIC treatment, making it possible to closely monitor their performance. It will also help investors, fund managers and issuers to measure performance and make comparisons with other companies in the real-estate industry.
Designed by IEIF, the "SIIC France" index is consistent with Euronext's index methodology. Euronext will be responsible for calculating and disseminating the index through its dedicated subsidiary, Euronext Indices BV. Meanwhile IEIF's Scientific Committee3 will manage the index on a daily basis, ensuring that the component stocks continue to represent the specific nature of the real-estate sector in a reliable manner. Two versions of the index will be calculated, a price version and a total return version (net and gross).
The "SIIC France" index joins Euronext's existing range of European and global real-estate indices, developed in conjunction with the European Public Real Estate Association (EPRA) and the National Association of Real Estate Investment Trustsâ (NAREIT).
Commenting on the new index, Mark Adema, director of Euronext Indices BV, said: "This important step is one of several initiatives taken by Euronext to support listed real-estate companies. Market participants now have a tool to monitor, analyse, manage and take advantage of opportunities provided by the SIIC regime".
Ms Maryse Aulagnon, a director of the French Federation of Real-Estate Companies (FSIF) and a member of IEIF's Scientific Committee added: "This tool will underscore the interest generated by the SIIC regime, particularly among investors outside France. It is the first step towards a system for comparing the performance of listed tax-advantage real-estate vehicles throughout Europe".
- Institut de l'Épargne Immobilière et Foncière (Institute for Real-Estate and Land Investment, IEIF) is an independent economic-intelligence unit that has worked since 1988 to produce information and indices for the real-estate segment of the stock market.
- The SIIC regime Article 11 of the 2003 Finance Act (2002-1575, 30 December 2002) established an elective tax exemption regime for listed real-estate investment companies, known as SIICs.
- Eligibility for the new regime depends on three conditions:
- the company must be listed on a regulated market in France
- it must have minimum share capital of fifteen million euro
- its main corporate purpose must be either to acquire or construct rental buildings or to take direct or indirect ownership interests in entities with an identical corporate purpose that are taxed as look-through partnerships (sociétés de personnes) or corporations.
- Election for the regime is irrevocable. It entails the full consequences of discontinuance of business, with partial tax relief and a special rate of taxation for capital gains on buildings and on shares in partnerships having the same corporate purpose as that of the partner(s) that elected for the regime. Unrealised capital gains are taxed at 16.5% and payment is spread over four years in equal instalments.
- Under the new regime, income is eligible for exemption if three distribution conditions are satisfied:
- at least 85% of rental income must be distributed before the end of the fiscal year following the year in which it is earned;
- at least 50% of the capital gains realised on the disposal of buildings, equity interests in companies referred to in Article 8 that have the same corporate purpose as an SIIC, or shares in subsidiaries liable for corporation tax that have elected must be distributed before the end of the second fiscal year following the year in which those gains were realised;
- dividends received from subsidiaries that have decided to elect must be redistributed in full in the year after they were received.
- Distributions of tax-exempt income fall outside the scope of the parent-company tax regime and the dividend tax credit system (avoir fiscal). Shares issued by SIICs are eligible for inclusion in personal equity plans in France.
- Members of the IEIF Scientific Committee:
Michel Pariat (Chair), Philippe Le Trung and Philippe Tannenbaum (investment analysts), Pierre Dinon and Laurent Gauville (portfolio managers), Jean-François Boulier and Pierre Schoeffler (eminent scientists), Maryse Aulagnon (representative of FSIF, Chair of Affine), Guy Marty and Hervé Metais (IEIF).
