Corio - Why people buy

Tax status

Corio performs its activities in five countries: France, Italy, the Netherlands, Spain and Turkey. The company strives to minimise its tax burden in order to achieve the highest possible return on its investments activities. In this respect Corio explores, on a continuing basis, possibilities to optimise its tax structure, as these are provided for within the boundaries of the law.

As such Corio utilises specific tax regimes in the Netherlands (FBI regime) and France (SIIC regime), that cater for an effective tax rate of 0% on the investment profit realised on virtually the entire local portfolio. Activities in Italy, Spain and Turkey are taxed at the normal statutory tax rate, be it that the effective tax rate may be lower as a result of the combined effect of interest charges, depreciation and other operating expenses. With respect to these latter jurisdictions Corio also investigates the possible application of tax-exempt regimes in these countries. If applying such a regime is deemed appropriate within the local investment structure, necessary actions will be taken. We note that the tax-friendly regimes in the Netherlands and France are subject to certain conditions.

In the Netherlands, the main conditions entail that the entire taxable profit must be distributed within 8 months after the end of the relevant fiscal year and that borrowing of external funds is subject to limitations. Currently, externally borrowed funds cannot exceed the maximum amount corresponding to the sum of 60% of the tax book value of directly owned real estate assets and 20% of the tax book value of its other assets. Based on a new law that came into force on 1 January 2009, the latter percentage was increased to 60% of the tax book value of other assets. In addition the new law determined that borrowings that are subsequently lent to parties outside the Dutch fiscal unity are ignored for the purpose of calculating the limitation on borrowing. As a result, the maximum ceiling for the limitation on external borrowings will increase substantially as from 2009. Furthermore, the FBI regime stipulates certain restrictions with respect to the maximum percentage of shares that a shareholder may own in an FBI and the nature of the activities in which the FBI may engage. Following an amendment to the FBI regime in the summer of 2007 the scope of the activities that an FBI may perform was broadened. This amendment mainly regarded activities in the area of property development and redevelopment. These activities are permitted under the new regime, provided that these activities are performed by the company for the benefit of its own portfolio and through a separate entity that is subject to the normal statutory tax rate. To this end, Corio set up Corio Vastgoed Ontwikkeling in January 2008 as a wholly-owned subsidiary of its Dutch operating company.

Similar conditions governing the distribution of the annual profit apply in France, but in this case the distribution may be spread over some years. On 1 January 2007 SIIC 4 has come into force which stipulates that if a shareholder with an interest in Corio of, ultimately, more than 10% is not liable for tax, the SIIC must pay 20% tax on both its income and any capital gains that it has realised. Corio is contesting this new law on the grounds that it is in violation of relevant EU legislation.

Source: Annual Report 2008, Chapter Overview & Strategy, page 25 (PDF, 476 kB)

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