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Tuesday, 28 June 2011 03:34

FIIs or “Fundos de Investimento Imobiliário” were introduced by Law 8668 in 1993 and through the instructions in paragraphs 205 and 206 in 1994, but are now regulated via the 2008 legislation in Instruction 472/08 from the CVM / Comissao de Valores Mobiliários ie the Brazilian equivalent of the SEC. They are similar to equity funds & fixed income funds, managed by financial institutions & supervised by CVM to invest in the development of real estate or real estate assets.

·         Incomes for individuals are exempt from income tax

·         Are divided into equity shares, which are variable-income securities

·         Are compulsorily administered by financial institutions

·         Need to apply at least 75% of its assets in real estate and rights

·         Funds are closed and there is no redemption of shares so to settle the whole or part of an investment, the shareholder must sell its shares to 3rd parties

·         Fund must distribute at least every 6 months, 95% of their income to shareholders

·         Cannot invest in real estate developments that have a developer, builder or partner, stockholder who holds, alone or together with related person, over 25% of shares of the fund

·         Individual shareholders are exempt from income tax on income earned

·         Corporate shareholders pay income tax of 20% on income earned

·         Capital gains (if any profit on the sale of shares) is taxes at the rate of 20% for all shareholders

·         Funds must have at least 50 shareholders and have their shares traded

·         Foreign shareholder are penalized by tax if they sell their investments in less than a year

Last Updated on Tuesday, 18 June 2013 09:00