Argentina: foreign trusts under Argentine law. Walter Keiniger

Transcription

1 Argentina: foreign trusts under Argentine law Walter Keiniger

2 Income Tax - Argentine residents: taxable on worldwide income - Rate for resident individuals: 9% to 35% - Rate for resident companies: 35% (includes capital gains) - Credit mechanism for foreign taxes - Non-Argentine residents: pay tax on Argentine-source income through withholding (rate: varies)

3 Provisions regarding foreign trusts Argentine resident individuals must recognize as taxable income profits obtained as beneficiary of fideicomisos (usually translated as trusts ) or equivalent legal structures Any distribution made by a foreign trust or equivalent legal structure is presumed to be a profit unless the taxpayer proves that the trust or equivalent legal structure: Did not obtain any profit in the relevant year, and Does not have accumulated profits from precedent years

4 Example of trust created abroad SETTLOR TRUSTEE BENEFICIARY Argentina U.S. Argentina Cash Cash + earnings

5 Some questions What is a fideicomiso for purposes of the law? Does it refer to the definition of Argentine civil law? Main features of a fideicomiso : Settlor creates it through a contract Title of assets is transferred to the trustee Trustee has the control and management of the assets Trustee is entitled to transfer the assets Assets are kept separated from trustee s assets

6 Some questions What is an equivalent legal structure? Is it judged under Argentine or foreign standards? Might be relevant: section 1205 of Argentine Civil code, under which validity, nature and obligations of contracts executed outside Argentina are governed by the law of the place of their execution What if under a foreign law the structure is called trust but property is not transferred to the trustee but just assigned with very narrow powers?

7 Do CFC rules apply? Some questions Goal of Argentine CFC rules: to tax regardless of an actual distribution by a foreign vehicle The driver for CFC rules to apply seems to be the control of a foreign vehicle If settlor / beneficiary have no control over the assets, CFC rules would not apply CFC rules are very detailed where they apply, and foreign trusts are not addressed

8 The Eurnekian case Settlor (Argentine resident) transferred funds to a foreign trustee for the benefit of his heirs (Argentine residents) Trust was revocable? Settlor had authority to appoint and remove a committee in charge of advising the trustee as to management of the assets Criminal case: won the taxpayer Tax case: undergoing

9 Foreign trusts: recent requirements Apply to Argentine-residents who act as settlors, trustees or beneficiaries of foreign trusts Obligation to provide in July of each year detailed information about the trusts as of December 31 of precedent year: name and residence of all the parties, assets transferred, distributions made, etc. Years 2009 and 2010: also included (deadline: July 2012) As to new trusts, a registry of trusts was created and the same information requirements apply (term: 10 days of any relevant event, such as a transfer, distribution, etc.)

10 THANK YOU!