EUROPEAN INVESTMENT FUNDS

The Provincial Council of Bizkaia establishes how certain European investment funds for promoting smart, inclusive, sustainable development of the territory (a goal included in the Bizkaia Goazen 2030 Plan) are treated for tax purposes.

To that end it uses financial instruments established by European institutions to encourage economic activity, generate wealth and create quality jobs.

It also uses tax incentives (deductions) to encourage citizens to take part in the financing of technological innovation and business capitalisation projects for the development of economic activity.

ELTIF

European long-term investment funds recognised by the Provincial Council of Bizkaia

detailed information

Information

  • What types of funds can I find?

    In 2018 Bizkaia has incorporated into its tax regulations the rules for taxation of certain European funds intended to foster innovation, the financing of economic activities and the capitalisation of production. Incentives have also been implemented to encourage the private sector to become involved in attaining the goals pursued in this area within the framework of the Europe 2020 Strategy.

    The following types of funds have been introduced, based on the European regulations that cover them:

    • European venture capital funds (EVCF)
    • European social entrepreneurship funds (ESEF):
    • European long-term investment funds (ELTIF):

      There are three specific categories within the ELTIF with tax incentives for investors:

      • European funds for fostering innovation
      • European funds for fostering the funding of economic activities
      • European funds for fostering productive capitalisation

  • What are the tax incentives?

    For funds themselves:

    For the purposes of Corporation Tax, European venture capital funds (EVCF) and European social entrepreneurship funds (ESEF) will follow the tax regime for venture capital funds, which consists of exemptions on dividends and capital gains on investments, regardless of the percentage of ownership or age of the investment. In the case of capital gains, this will be provided that not more than 15 years have passed since the acquisition of the holding.

    Income derived from securities considered to be eligible investments in accordance with the provisions of their respective regulations may be entitled to this benefit.

    European long-term investment funds (ELTIF) that meet the requirements established will be taxed at a corporate tax rate of 1%.

    For stake holders in funds:

    Positive income arising from the transfer or redemption of investments representing European venture capital funds (EVCF) and European social entrepreneurship funds (ESEF):

    1. Will be exempt, regardless of the percentage of the stake held and the length of time the investments are held, when their recipient is a Corporation Tax payer or a Non-Resident Income Tax payer with a permanent establishment.
    2. Will not be deemed as being obtained in Spanish territory when the recipient is an individual or an entity paying Non-Resident Income Tax without a permanent establishment.

    With regard to European Long-Term Investment Funds (ELTIF), there is an exemption for Personal Income Tax for reinvestment in the event of a transfer of investments.

    More specifically, with regard to European funds for fostering innovation, the following is established:

    1. a deduction on tax liability for personal income tax of 15% is established, up to a limit of €750, for amounts paid during the tax period for the purchase of stakeholdings and amounts deposited at banks that fund the purchase of same, provided that those amounts are held there for five years.
    2. exemption from property tax on the stakeholdings acquired.

    And with regard to stakeholdings in European funds for fostering the funding of economic activities and European funds for fostering productive capitalisation, tax exemptions from Property Tax and Inheritance and Gift Tax have been established.

  • European long-term investment funds recognised by the Provincial Council of Bizkaia

    Name of the investment fund Tax identification number of the investment fund Managing entity Fund type Resolution date Resolution number Resolution of the Directorate General of Internal Revenue
    FONDO DE INNOVACIÓN FILPE V-95.920.310 Solventis SGIIC European fund for fostering innovation. 18/06/2018 14/2018 Resolution 14/2018 (223 KB)
    TALDE DEUDA ALTERNATIVA FILPE V-95.953.196 TALDE GESTIÓN SGEIC, S.A. European fund for fostering the funding of economic activities 24/07/2019 19/2019 Resolution 19/2019 (224 KB)

INVESTORS IN EUROPEAN LONG-TERM INVESTMENT FUNDS

Funds

Venture capital finances and assesses very small businesses at the start-up stages of their existence which have high potential for growth and expansion. Venture capital funds stimulate economic growth via their activities, help to create jobs and mobilise capital, foster the establishment and expansion of innovative businesses, increase investment by such businesses in research and development and encourage entrepreneurial spirit, innovation and competitiveness in line with the goals of the Europe 2020 Strategy.

European venture capital funds (EVCF) must comply with the requirements laid down in Regulation (EU) No. 345/2013 of the European Parliament and of the Council of 17 April 2013 on European venture capital funds (160 KB).

There are more and more investors who are not just looking for financial profitability but also have social goals. This has resulted in the emergence in the EU of a social investment market made up in part of investment funds that invest in social economy businesses. Such investment funds seek to provide funding for social economy businesses that work to bring about social change by offering innovative solutions to social problems and make a valuable contribution to efforts to attain the goals of the Europe 2020 Strategy.

European social entrepreneurship funds (ESEF) are aimed at Collective investment undertakings, which must comply with the requirements set out in Regulation (EU) No. 346/2013 of the European Parliament and the Council of 17 April 2013 on European social entrepreneurship funds (163 KB).

European long-term investment funds (ELTIF) provide long-duration financing for a range of infrastructure projects for non-listed companies and listed SMEs that issue debt or capital instruments for which there are no easily identifiable buyers. They thus help to finance the real economy of the EU and to implement its policies.

More information

Pursuant to the provisions of Subsection 1 of Article 7 of Provincial Regulation 2/2018 of 21 March (102 KB), the notification to be submitted to the tax authorities by European funds that meet the requirements set out in Articles 4, 5 and 6 that wish to apply the tax measures envisaged in Chapter IV of Title I of the said Provincial Regulation must be submitted as per the procedure set out in Article 45 of the Regulations on Corporation Tax approved by Provincial Decree 203/2013 of 23 December of the Provincial Council of Bizkaia.

The notification must contain the following data:

  1. Identification of the long-term investment fund by which it is submitted.
  2. The documentation submitted to the relevant authority for ELTIF as provided for in Subsection 1 of Article 5 of Regulation (EU) 2015/760 of the European Parliament and the Council of 29 April 2015 on European long-term investment funds.
  3. The notification of authorisation as an ELTIF by the competent authority as referred to in Article 6 of Regulation (EU) 2015/760 of the European Parliament and the Council of 29 April 2015 on European long-term investment funds.
  4. An affidavit signed by the manager of the ELTIF attesting to compliance with the requirements set out in Subsection 2 of Article 80 of Provincial Regulation 11/2013 of 5 December on Corporation Tax.
  5. The prospectus and, as relevant, the key information document referred to in Article 23 of Regulation (EU) 2015/760 of the European Parliament and the Council of 29 April 2015 on European long-term investment funds, plus documentation attesting to compliance with the requirements of Articles 4, 5 or 6 of Provincial Regulation 2/2018 of 21 March, as relevant.

The notification must be submitted to the Subdirectorate for Coordination and Technical Assistance.

Acknowledgement of their status as European funds for fostering innovation, European funds for fostering the financing of economic activities and European funds for fostering productive capitalisation will be published in the Official Gazette of Bizkaia.

The Revenue and Finance Department will also keep an up-to-date list on the website of the Provincial Council of Bizkaia of those European long-term investment funds which are acknowledged to be European funds for fostering innovation, European funds for fostering the financing of economic activities and European funds for fostering productive capitalisation.

More information (98 KB)