New legislation in Spain that would restrict interest deductions for taxation purposes could reduce foreign investment in Spanish commercial real estate, according to a statement from the European Public Real Estate Association (EPRA).

“Three years ago, Spain missed the opportunity to introduce a ‘best-in-class’ REIT regime for its listed property companies in line with other major European economies such as France and the United Kingdom,” says Gareth Lewis, EPRA finance director. “REITs are effective at attracting long-term capital into commercial and residential real estate and provide a steady and reliable source of revenue for governments from withholding taxes on dividends, as well as significant once-off tax windfalls from conversion charges levied when firms adopt the REIT structure.”

When the Spanish government introduced a new regime for property investment in 2009 — SOCIMI — EP