ARGENTINA Law and Practice Contributed by: Juan McEwan and Agustín Lacoste, McEWAN
bilities and claims of each spouse have been worked out, they are divided and distributed equally between the spouses (in the case of divorce) or between the heirs and the surviving spouse (in the case of death). 2.5 Transfer of Property The cost basis of any property being transferred (whether gifted or at death) must be maintained at the same cost assigned by the transferor in their income tax return – ie, the value in Argentine pesos at which they acquired that property. As mentioned in 1.3 Income Tax Planning , there are no special provisions in the ITL that provide a step-up in the value of assets to their fair market value. 2.6 Transfer of Assets: Vehicle and Planning Mechanisms The only way to transfer assets to younger generations tax-free is through lifetime gifts, to the extent that the gifted assets do not qualify as PBA situs assets and that the donee is not domiciled within PBA (in which case, ITGB would apply). Gifts involving real property in favour of forced heirs are now a viable instrument as per the amendments to the CCCN introduced by Law 27.587. 2.7 Transfer of Assets: Digital Assets There are no specific provisions regarding how digital assets (such as email accounts and cryptocurrency) should be treated for succession purposes. 3. Trusts, Foundations and Similar Entities 3.1 Types of Trusts, Foundations or Similar Entities Under Argentine law, the applicable law is the law of the place where the trust has been settled, provided that Argentine public order is not infringed (mainly, the forced heirship rules). Revocable and Irrevocable Trusts Before the enactment of Law 27.430, Section 140 (b) of the ITL was the only reference to foreign trusts in local legislation. Law 27.430 establishes the cases in which a foreign trust should be considered transpar - ent for tax purposes. In this sense, fiscal transpar -
ency applies to revocable trusts, so they are no longer useful for income tax planning purposes. However, as mentioned in 1.4 Taxation of Real Estate Owned by Non-Residents , it must be stressed that these struc - tures will still be useful for estate planning. With regard to irrevocable trusts, neither fiscal trans - parency nor anti-deferral rules will apply unless: • the settlor is also a beneficiary of the trust; or • the settlor has direct or indirect powers to decide how the assets comprising the trust fund should be invested. Therefore, if structured correctly, revenues derived from the assets held in trust will not be subject to tax in the jurisdiction of the trustee. The trustee becoming the legal owner of the assets will ensure that neither PAT nor income tax will be levied on the settlor for such assets and their revenues. However, it must be stressed that there has been an attempt to change this situation by taxing the “rights inherent in the capacity as beneficiary of a foreign trust” with the differential rate of PAT (Section 25, paragraph 3 of Law 27.541). Nevertheless, it seems that the way in which this provision has been included does not change the tax consequences for the ben - eficiary of an irrevocable discretionary trust for the following reasons: • the provision implies an excess in the exercise of taxing rights by Argentina; • the provision infringes the “ability to pay” principle ( principio de capacidad contributiva ) – until they receive actual distributions, beneficiaries of an irrevocable discretionary trust have no ability to pay PAT; and • in any case, the value of the beneficiary’s rights would be zero. However, this provision has not yet been regulated. Therefore, the use of an irrevocable trust – ignoring the fact that the transfer in trust that must be made by the settlor to a third party (trustee) generally generates resistance in individuals in countries such as Argen -
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