Alternative assets have become one of the business segments that investment companies promote the most. The evolution of the regulation of SICAVs, vehicles traditionally used by millionaires to channel their assets and optimize their tax bill, has led many investors to look for formulas that would give them the same effect.
But forming and managing an open-end investment company is not the same as structuring a venture capital company and the portfolio of underlying assets it has, due to the implications legal and tax issues that may arise from its common requirements. And in this sense, Creand is clear: Poorly structured alternative vehicles have been launched which, in a few years, will cause problems. Problems which will present themselves in the form of massive controls, both from the CNMV and the Tax Agency, warns Luis Bilbao, general manager of Creand Asset Management.
These alternative vehicles to which the Andorran bank refers are venture capital companies (SCR) belonging to a family group, which in many cases do not only know the cost necessary to maintain said company but also the most appropriate legal structure to assemble. all elements of commercial and family heritage.
“The disappearance of SICAVs has pushed families to create SCRs with tax credits in mind. But they spend 90% of the time talking to the team of tax advisors and only then to the investment team and this can cause problems in the future due to the illiquidity of these vehicles and the delays with which they operate,” explains Sergio Muñoz, head of alternative assets at Creand AM.
The expert emphasizes that Investors make the mistake of assimilating the format of a venture capital company to that of a traditional vehicle or a SICAV.and compare the cost in the same way, which can lead to errors when structuring the alternative vehicle in an attempt to reduce commissions. If in a SICAV the average cost was 0.30%, in an SCR this percentage can be at least doubled, depending on the complexity.
But it’s not just the cost. Depending on the shell adopted by said company or the underlying assets it has, the tax implications may be different, depending on whether the Treasury considers that the SCR complies with the regulations to be considered as such or if certain requirements are not met. in something as fundamental, for example, as the amount contributed to its constitution. And it will not be the same if the company has a single director or a board of directors, if it is self-managed or delegates management to third parties, if it has participations in direct investments or if it receives dividends from ‘a company registered in Luxembourg.
“It is necessary to have advice because what may be suitable for a client from a tax point of view may not be suitable from the point of view of investments and the cost of the vehicle structure,” insists Muñoz.
