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Wills, probate and inheritance in Argentina

Taxation

Tax year and payment dates

1. When does the official tax year start and finish in your jurisdiction and what are the tax payment dates/deadlines?

For income tax purposes, the official tax year for individuals starts on 1 January and ends on 31 December.

Domicile and residence

2. What concepts determine tax liability in your jurisdiction (for example, domicile and residence)? In what context(s) are they relevant and how do they impact on a taxpayer?

Domicile

For individuals, the domicile is the individual’s principal place of residence and business (Argentine Civil Code). When the principal place of residence differs from the principal place of business, the tax regulations provided that the domicile for tax purposes will be the principal place of business. For tax purposes, the domicile is relevant for receiving notices from the tax authority but is not used to determine tax liability.

Residence

Residence determines the manner in which an individual is taxed in Argentina. Whenever an individual, under the relevant rules of each tax (in particular, income tax and tax on personal assets), is deemed to be a resident of Argentina, the tax is levied on a worldwide basis (either on worldwide sourced income or the assets owned worldwide by the taxpayer) rather than on an exclusively Argentine basis. Resident individuals must file tax returns with the Argentine Tax Authority. Non-resident individuals are solely taxed on their Argentine-sourced income (through withholding) and on their Argentine-based assets.

Under Argentine income tax law, the following are considered Argentine residents for tax purposes:

– Argentinean individuals, whether native or naturalised, except for those that no longer hold a “permanent resident” status either because:

i. they became permanent residents of another country under that company’s immigration rules; or

ii. due to a continued residence abroad for a continuous period of 12 months. Short trips to Argentina are deemed not to interrupt the 12-month continuous residence period if they do not cumulatively exceed 90 days in a 12-month period.
Foreign individuals that have a permanent resident visa or individuals who have remained in Argentina for 12 months while holding temporary visas. If absences from Argentina do not cumulatively exceed 90 days in the 12-month period, the permanent residence period is deemed to be uninterrupted. However, foreigners who must remain in Argentina by reason of their employment for a period not exceeding five years (as well as their relatives) will not be considered to be Argentinean residents.

Under certain circumstances, individuals re-entering Argentina with the intention of residing permanently in Argentina will be considered to be Argentinean residents. This will even apply if they had previously lost their residence status in Argentina or if they acquired status as a permanent resident elsewhere.

Taxation on exit

3. Does your jurisdiction impose any tax when a person leaves (for example, an exit tax)? Are there any other consequences of leaving (particularly with regard to individuals domiciled in your jurisdiction)?

There are no exit taxes in Argentina. There are no other consequences of leaving, except that it is necessary to file a special tax return for the irregular period closing the date in which the individual leaves the country. Once an individual is no longer an Argentine resident, he:

– No longer has to pay income tax on a worldwide source basis and is only taxed, through withholding, on his Argentine-sourced income.
– Is no longer subject to personal assets tax on his worldwide assets but solely on his Argentine-based assets.

Citizenship does not necessarily determine tax liability. For example, an individual that resigns Argentinean citizenship but remains a resident of Argentina is still subject to tax in Argentina on his worldwide assets and income.

Temporary residents

4. Does your jurisdiction have any particular tax rules affecting temporary residents?

Foreigners who must remain in Argentina by reason of their employment for a period not exceeding five years (as well as their relatives) will not be considered to be Argentinean residents (see Question 2, Residence). Certain treaties to avoid double taxation also address the issue of temporary residents (see Question 14).

Taxes on the gains and income of foreign nationals

5. How are gains on real estate or other assets owned by a foreign national taxed? What are the relevant tax rates?

There is no capital gains tax on individuals in Argentina. Therefore, in principle, tax is not charged on the sale of real estate or other assets when the seller is a foreign individual.

However, if the foreign individual is usually engaged in buying and selling assets, he will be deemed an individual “enterprise” (which is not expressly defined in the Income Tax Law) and income tax is withheld on the total amount received by the seller on the sale of real estate at an effective rate of 17.5%. Alternatively, the foreign seller can file a special tax return with the tax authority to evidence the actual profit derived from the sale, and apply income tax at the rate of 35% on the net proceeds (see Question 6).

When the sale of real estate is not subject to income tax (whether made by an Argentine individual or a foreign individual), the seller is subject to a special tax on the transfer of real estate at the rate of 1.5% of the amount of sale.

Certain stamp taxes apply on the instrument (that is, public deed (escritura)) evidencing the sale. The buyer and seller customarily pay one-half each of those stamp taxes, which can be up to 4% of the sale price.

6. How is income received by a foreign national taxed? Is there a withholding tax? What are the income tax rates?

Generally, any income or profit obtained by foreign beneficiaries (as non-Argentine resident individuals are referred to under income tax regulations), which is deemed to be Argentine-sourced, is subject to withholding tax. Withholding tax does not apply on dividends paid by Argentine companies or to profits obtained from permanent establishments in Argentina.

For resident individuals, the income tax charged on a sliding scale that starts at 9% for individuals making up to ARS10,000, and goes up to 35% for individuals making more than ARS120,000. For any other taxpayer (including foreign beneficiaries) the rate of the tax is 35%.

To determine the tax liability of a foreign beneficiary, the Income Tax Law establishes a series of non-rebuttable presumptions of net income on the gross amounts paid, that varies depending on the kind of payment made by the local resident (who must act as withholding agent), including:

– 60% of the amounts paid for technical, engineering or consulting services that are not obtainable in Argentina and fulfil the requirements established by the Transfer of Technology Law (as the tax rate is 35% this amounts to an effective tax rate of 21% on the income).
– 80% of other amounts paid under the Transfer of Technology Law (effective rate: 28%).
– 35% of the royalties paid for the exploitation of copyright in Argentina (effective rate: 12.25%).

-100% in the case of interest. However, 43% (effective rate: 14%) is deemed to be the net income of Argentine source where the:

i. borrower is a financial institution;
ii. lender is a bank or financial institution located in a non-tax haven jurisdiction;
iii. interest relates to certain bonds that are registered in countries with which Argentina has concluded investment protection agreements.
– 40% of the amounts paid for renting movables goods in Argentina (effective rate: 14%).
– 60% of the amounts paid for renting real estate in Argentina (effective rate: 21%).

Finally, if the concept of the income is not expressly set out in the Income Tax Law, 90% is deemed net income of Argentine source (effective rate: 31.5%).

Argentina has entered into treaties to avoid double taxation with various countries (see Question 14).

Inheritance tax and lifetime gifts

7. What is the basis of the inheritance tax or gift tax regime (or alternative regime if relevant)?

There are no federal inheritance or gift taxes in Argentina. Only one jurisdiction (the province of Buenos Aires) has imposed an inheritance and gift tax on the amount received by the beneficiary. This tax is applicable as from January 2010, and is charged on assets:

– Located in the province (even if the owner is not domiciled there).
– Transferred to individuals or legal entities domiciled in the province.

The tax rate will depend on the amount received by the beneficiary and his relationship with the deceased.

8. What are the inheritance tax or gift tax rates (or alternative rates if relevant)?

Tax rates

Tax is payable on the amount received, at progressive rates from 4% to 21.92%.

Tax free allowance

There is a tax-free allowance of ARS50,000 on the aggregate of the lifetime gifts of an individual and the gifts at the time of death. This amount is increased to ARS200,000 when the receiving party is the spouse, child or parent of the transferor.

In addition, in relation to inheritance tax, the debts of the deceased existing at the time of his death, and funeral expenses, are deductible from the amount transferred to the beneficiary.

Exemptions

The following are exempt from inheritance or gift tax:

– Any transfers in favour of the national government, the provinces or the City of Buenos Aires or any municipality or any body of these institutions.
– Gifts to religious, public health, social assistance, cultural or public welfare institutions, provided those institutions comply with certain conditions.
– Transfer of art or other objects that have a historic, scientific or cultural value, as long as the deceased has transferred the property on the basis that the art or object is to be used for instruction or public exhibition purposes.
– Transfer of collections of books, newspapers, magazines or other periodic publications.

– Transfer on death of the household registered under the Family Household Protection Act (Law N° 14,934) when:

i. the transfer is made in favour of the spouse, descendants, ascendants or collateral relatives up to the third degree of relationship with the deceased;
ii. they lived with the deceased;
iii. the registration of the property under the Family Household Protection Act is maintained for at least five years after the death.

– Transfer on death of urban real estate that is used as the household, when the:

i. transfer is made in favour of the spouse, ascendants or descendants (including adopted children);
ii. property does not exceed a certain valuation, established by the province on an annual basis.

– Transfer on death of an enterprise when the:

i. aggregate gross income of the fiscal year before the year of death exceeds a certain figure established annually;
ii. transfer is made in favour of the spouse, ascendants or descendants (including adopted children);
iii. acquiring parties maintain the enterprise in activity for five-year period following the deceased’s death.

Techniques to reduce liability

The simplest way to avoid inheritance or gift tax liability is to avoid being domiciled in the province of Buenos Aires, and to own assets through a company domiciled outside of the province of Buenos Aires.

Other

Not applicable.

9. Does the inheritance tax or gift tax regime apply to foreign owners of real estate and other assets?

If the assets are located in the province of Buenos Aires, the tax applies even if the owner does not reside in Argentina.

10. Are there any other taxes on death or on lifetime gifts?

There are no other taxes on death or on lifetime gifts.

Taxes on buying real estate and other assets

11. Are there any other taxes that a foreign national must consider when buying real estate and other assets in your jurisdiction?

Purchase and gift taxes

The provinces impose stamp tax on the public deed required to transfer real property (see Question 5). The rate varies depending on the province, and ranges from 2% to 4% of the price paid for the property being transferred.

In addition, there is a special tax on the transfer of real estate that applies when the sale is not subject to income tax (that is, when the sale is made by an individual rather than an enterprise). The rate of the tax is 1.5% applicable of the price paid.

Wealth taxes

The Personal Assets Tax applies to foreign individuals holding property (whether real estate, movable property or intangible property) in Argentina. The rate of the tax is 1.25% and it is levied on an annual basis. When the owner of the real estate is a foreigner, there are certain methods of substitution that impose the obligation to pay the tax on the local resident that has the administration of the asset.

Other

Each of the provinces and the city of Buenos Aires (which has an autonomous status, as if it were a province) levy a tax on real estate. The tax is imposed on the fiscal valuation of the real estate and the rate varies depending on the valuation of the property.

12. What tax-advantageous real estate holding structures are available in your jurisdiction for non-resident individuals?

The simplest holding structure is to have a special purpose foreign company to own the real estate in Argentina. This company must be set up in a country that does not tax capital gains (or at least does not tax the capital gains stemming from the sale of equity instruments). There are no local rules that deem the sale of this special purpose company a sale of real estate in Argentina.

Taxes on overseas real estate and other assets

13. How are residents in your jurisdiction with real estate or other assets overseas taxed?

Local residents are taxed on their worldwide income; however, capital gains are not subject to tax, except when the individual usually trades in selling and buying real estate or assets (see Question 5).

International tax treaties

14. Is your jurisdiction a party to many double tax treaties with other jurisdictions?

Argentina has entered into double taxation treaties, although some have been recently cancelled or repealed (such as the ones entered into with Spain and Austria). Current treaties include treaties with: Australia, Belgium, Bolivia, Brazil, Canada, Denmark, Finland, France, Germany, Italy, The Netherlands, Norway, United Kingdom, Sweden and Switzerland.

Wills and estate administration

Governing law and formalities

15. Is it essential for an owner of assets in your jurisdiction to make a will in your jurisdiction? Does the will have to be governed by the laws of your jurisdiction?

It is not essential for an owner of assets in Argentina to make a will in Argentina. Where no will is present, forced heirship and intestacy rules apply (see Questions 24 to 29). In Argentina, it is not usual to have wills or testaments, except for certain wealthy individuals. There is no requirement for the will to be governed by the laws of Argentina, although the provisions of a foreign law are only applied where they do not violate Argentine public policy (for example, forced heirship rules).

16. What are the formalities for making a will in your jurisdiction? Do they vary depending on the nationality, residence and/or domicile of the testator?

The formalities for making a will in Argentina are the same, regardless of the nationality, residence and/or domicile of the testator.

There are three different ways in which wills can be made (Argentine Civil Code):

1. Handwritten testament (testamento ológrafo). This must be completely handwritten, signed and dated by the testator.
2. Public deed testament (testamento por acto public). This must be notarised by a public notary, with three witnesses that insert their signature in the public deed.
3. Closed testament (testamento cerrado). This does not have to be completely handwritten by the testator, although it must bear the testator’s signature. In addition:it must be given in a closed
i. envelope to a public notary in the presence of five witnesses;
ii. the testator must say aloud that the closed envelope contains his will.

Redirecting entitlements

17. What rules apply if beneficiaries redirect their entitlements?

Beneficiaries are not entitled to redirect their entitlements.

Validity of foreign wills and foreign grants of probate

18. To what extent are wills made in another jurisdiction recognised as valid/enforced in your jurisdiction? Does your jurisdiction recognise a foreign grant of probate (or its equivalent) or are further formalities required?

Validity of foreign wills

Wills made in a foreign jurisdiction are recognised as valid, as long as they comply with the law of the place in which the wills were made. Substantive provisions, however, must comply with Argentine law (in particular, forced heirship) to be enforceable in Argentina. The law will also enforce wills made by foreigners outside of Argentina if the will complies with the formalities of the place of residence of the testator, his country of nationality, or those of Argentina.

Validity of foreign grants of probate

As with foreign wills, foreign grants of probate will be recognised in Argentina if they comply either with Argentinean laws or the relevant foreign law (see above, Validity of foreign wills). No further formalities are required.

Death of foreign nationals

19. Are there any relevant practical estate administration issues if foreign nationals die in your jurisdiction?

The issues depend on whether the foreign national’s last domicile was in Argentina or not and whether he had any assets in Argentina. If he was domiciled in Argentina, Argentine rules apply and a court-based procedure (sucesión) must be followed. This also applies if he has assets in Argentina.

Administering the estate

20. Who is responsible for administering the estate and in whom does it initially vest?

Responsibility for administering

The court appoints an administrator of the estate (usually, the surviving spouse or an heir or a group of heirs) that has limited authority to carry on acts that are:

  • Necessary to preserve the estate.
  • Ordinary, considering the nature of the goods and assets that are being administered.

The administrator, in principle, has no authority to sell, mortgage, pledge or otherwise dispose of or encumber the goods and assets.

Vesting

A court procedure must be followed to finally declare the legitimate heirs of the deceased. When the court makes that declaration, the estate is deemed to have vested directly and immediately from the deceased to each of its heirs.

21. What is the procedure on death in your jurisdiction for tax and other purposes in relation to:
  • Establishing title and gathering in assets (including any particular considerations for non-resident executors)?
  • Paying taxes?
  • Distributing?

Establishing title and gathering in assets

Any and all heirs are entitled to establish title and gather in assets. However, everything must be done through the court procedure and with the control of the judge. There are no particular considerations for non-resident executors in this aspect, since court participation is mandatory. If a non-resident executor has been appointed, the court will probably require from him a local address for service of process.

Procedure for paying taxes

Until the court procedure is ended, the administrator is responsible for filing tax returns and paying taxes on behalf of the estate. Failure to do so could make the administrator jointly and severally liable for any unpaid taxes.

Distributing the estate

The court distributes the estate in the court procedure (see above, Establishing title and gathering in assets). The court decides how the distribution is to be made or grants authority to distribute the estate to the testator or the executor.

22. Are there any time limits/restrictions/valuation issues that are particularly relevant to an estate with an element in another jurisdiction?

In principle, there are no time limits, restrictions or valuation issues that are particularly relevant to an estate with an element in another jurisdiction.

When the estate involves elements in different jurisdictions, certain “offset” provisions of the Argentine Civil Code might be relevant, depending on the facts. Heirs of the deceased that reside in Argentina would be entitled to a larger portion of the assets that are located in Argentina if, due to the application of foreign law, they were deprived of assets located abroad (or a portion of those assets) that should have, under Argentine Law, been allocated to them under the forced heirship regime (see Question 24). Therefore, if a foreign resident dies leaving assets in both Argentina and in his home country, and through a will deprives an heir who resides in Argentina of his statutory reserved portion under Argentine Law, that heir is entitled to the additional portion of the Argentine assets, equal to the value ascribed to the deprived portion (see Question 24).

23. Is it possible for a beneficiary to challenge a will/the executors/the administrators?

A beneficiary is entitled to challenge the:

i. Will, when it affects the portion that Argentine Law mandatorily reserves for forced heirs.
ii. Executors, when their acts affect the portion that Argentine Law mandatorily reserves for forced heirs or when they depart from the instructions contained in the will.
iii. Administrators, when they perform their duties in excess of their authority or without fulfilling the “good businessman” standard.

Succession regimes

24. What is the succession regime in your jurisdiction (for example, is there a forced heirship regime)?

Argentina has a forced heirship regime that is deemed part of public policy. Any provisions of the parties (either by the deceased or the heirs) against it are invalid and of no force and effect. There are precedents in Argentine courts in which forced heirship claims have been admitted against trust assets.

Forced heirs (ascendants, descendants, spouses and others) cannot be deprived of a certain portion of the deceased’s estate (except where one of the few statutory causes for disinheritance are present and invoked by the decedent in the will). These portions are:

  • i. Children and their issue: four-fifths of the total assets of the deceased.
  • ii. Ascendants (where there are no children): two-thirds of the assets of the deceased.
  • iii. Spouse (where there are no ascendants or descendants): one-half of the assets of the deceased.

In relation to the intestacy rules, see Question 28.

Forced heirship regimes

25. What are the main characteristics of the forced heirship regime, if any, in your jurisdiction?

Avoiding the regime

There are no ways to avoid the regime and judges are reluctant to admit structures that defeat the forced heirship rules.

Assets received by beneficiaries in other jurisdictions

Assets received by beneficiaries in other jurisdictions are taken into account (see Question 22).

Mandatory or variable

Any agreement entered into between future beneficiaries during the deceased’s life is null and void. Argentine law forbids any agreement regarding the future estate.

Real estate or other assets owned by foreign nationals

26. Are real estate or other assets owned by a foreign national subject to your succession laws or the laws of the foreign national’s original country?

Title to real property located in Argentina may only be passed in accordance with Argentine law. It is unclear, however, if this applies solely to transfers between living persons or if it should also apply in the case of transfer by death. However, most Argentinean court decisions have held that it applies to both.

 

27. Do your courts apply the doctrine of renvoi in relation to succession to immovable property?

The Argentine courts may, where the case concerns immovable property located in Argentina, accept a reference back to their jurisdiction; however, this is a complex area of law.

Intestacy

28. What different succession rules, if any, apply to the intestate?

The intestacy succession rules depend on the surviving relatives.

i. There are surviving descendants but there is no surviving spouse. The children are entitled to the entire estate. If any of the children have predeceased but have surviving issue, the share that would have been allocated to that child goes to his or her issue per stirpes (in equal proportions).
ii. There is a surviving spouse and surviving descendants. One-half of the deceased’s “marital” property is distributed to the surviving spouse and the other half is transferred entirely to the children (in relation to marital property, see Question 37). The deceased’s “own” property is distributed in equal portions among all of the children and the surviving spouse.
iii. There are surviving ascendants but no surviving descendants or a surviving spouse. The whole estate passes to the surviving ascendants. In this case, the closer generations exclude the inheritance rights of the further generations (for example, the grandfather is excluded if the father survived).
iv. There is a surviving spouse and surviving ascendants but no descendants. The surviving spouse is entitled to one-half of the marital and one-half of the own property of the deceased. The other half goes to the ascendants.
v. There is a surviving spouse but no surviving ascendants or descendants. The surviving spouse is entitled to the whole estate.
 vi. There are no surviving ascendants or descendants, and there is not a surviving spouse. The collaterals (until the fourth degree of relationship) are entitled to the estate.

29. Is it possible for beneficiaries to challenge the adequacy of their provision under the intestacy rules?

It is not possible for beneficiaries to challenge the adequacy of their provision under the intestacy rules.

Trusts

30. Are trusts (or an alternative structure) recognised in your jurisdiction?

Type of trust and taxation

Law No. 24,441 (Trust Act), enacted in December 1994, established the regulation for trusts in Argentina. Trusts under the Trust Act depend on the concept of revocable property (dominio revocable) and have certain differences with the common law concept of trust.

Generally, the Trust Act considers two types of trusts, a financial trust and an ordinary trust. The difference between the two depends on the person acting as trustee. If it is a financial trust, the trustee must be a financial entity or a corporation specifically authorised by the Argentine Securities Commission to act as financial trustee.

Residence of trusts

In general terms, if the trust is set up under Argentine law, it is deemed a resident of Argentina for tax purposes.

 

31. Does your jurisdiction recognise trusts that are governed by another jurisdiction’s laws and are created for foreign persons?

Argentina recognises trusts that are governed by another jurisdiction’s laws and are created for foreign persons.

32. What are the tax consequences of trustees (for example, of an English trust) becoming resident in/leaving your jurisdiction?

If any foreign entity (including a trust) becomes resident in Argentina, it is subject to tax in the same manner as an Argentine corporation.

33. If your jurisdiction has its own trust law:

– Does the law provide specifically for the creation of non-charitable purpose trusts?
– Does the law restrict the perpetuity period within which gifts in trusts must vest, or the period during which income may be accumulated?
– Can the trust document restrict the beneficiaries’ rights to information about the trust?

Purpose trusts

The Trust Act does not include specific provisions regarding non-charitable purpose trusts. However, Argentine law distinguishes between an act that is gratuitous from an act which is made for a consideration that has certain legal effects such as, for example, a fraud of creditors, which may be relevant in the context of transfers to trusts.

Perpetuities and accumulations

A trust has a maximum term of 30 years from the date on which it was created. The restriction does not apply where the beneficiary is not capable, in which case the trust can extend until the incapacity ceases or the person with the incapacity dies. There are no regulations regarding the period within which income must be accumulated.

Beneficiaries’ rights to information

The Trust Act does not include any information rights in favour of the beneficiary that cannot be contractually restricted. However, the statute does prohibit any provision that would release the trustee from liability incurred due to the non-performance of his duties.

 

34. Does the law in your jurisdiction recognise claims against trust assets by the spouse/civil partner of a settlor or beneficiary on the dissolution of the marriage/partnership?

In relation to marital property, the spouse would not be entitled to claim against trust assets in the case of dissolution of the union (that is, divorce or death of one of the spouses). However, the spouse could, depending on the circumstances, be entitled to make a claim directly against the other spouse at the time of dissolution. When the trust was settled with own property, and the settlor dies, the forced heirship rights apply (see Question 24).

35. To what extent does the law of your jurisdiction allow trusts to be used to shelter assets from the creditors of a settlor or beneficiary?

Where a trust is used to shelter assets from the creditors of a settlor or beneficiary, fraudulent conveyance rules can be used under the Trust Act to invalidate the transaction.

Ownership and familial relationships

Co-ownership

36. What are the laws regarding co-ownership and how do they impact on taxes, succession and estate administration?

The Argentine Civil Code establishes the co-ownership rules (condominio). Those rules do not have any relevant impact on taxes, succession and estate administration, except in connection with the co-ownership rules applicable to the “marital” property, in which one of the spouses is responsible for filing the tax returns on that property. Generally, any co-owner has the right to require the dissolution of the co-ownership (even if it requires the sale of the good). There are few cases in which the right to dissolve the co-ownership does not apply.

Familial relationships

37. What matrimonial regimes in trust or succession law exist in your jurisdiction? Are the rights of cohabitees/civil partners in real estate or other assets protected by law?

Generally, the matrimonial regime in Argentina (which applies to all couples that married in Argentina, as long as their initial domicile was in Argentina) provides that all property (whether tangible or intangible) that was acquired by any of the spouses during the marriage is “marital property” (bienes gananciales). However, property that was received as a gift remains the own property of the spouse that received it. The marital property relates to the marriage “partnership” and, on dissolution, is distributed between the partners (spouses) by halves.

There are no relevant protections for cohabitees or civil partners (except for the case of same-sex civil unions, which were formalised by statute in 2010) (see Question 38).

38. Is there a form of recognised relationship for same-sex couples and how are they treated for tax and succession purposes?

Same-sex unions were legalised by statute in 2010. As this is a recent development, no case law exists. However, regulations passed under the statute establish that the tax and succession treatment must be the same granted to a heterosexual marriage.

39. How are the following terms defined in law:
  • Married?
  • Divorced?
  • Adopted?
  • Legitimate?
  • Civil partnership?

Married

Marriage is defined as a person that is united to another of the opposite sex, as husband or wife, in a consensual and contractual relationship recognised by law, and in which the consent is usually expressed in the presence of a public officer. There are certain “marital duties” that the spouses must comply with (such as fidelity, maintenance payments, and residing in the same house).

Divorced

A divorce is the final termination of a marital union. It is declared by a judge in a formal procedure, and it cancels the marital duties and dissolves the marital “partnership”.

Adopted

An adopted child is one that was taken into a family that is different to the one of its parents after a legal process was followed under the Argentine Adoption Act. The adopted child’s legal rights and obligations towards his natural parents are terminated and similar rights arise with the adoptive parents. Adopted children have the same legal status as children which are not adopted.

Legitimate

Formerly, a distinction was made between “legitimate” children (born from a married couple) and “natural” children (born with no marital union). Although the difference can still be found in certain sections of the Civil Code, legitimate, natural and adopted children have the same rights and status.

Civil partnership

Civil partnership is a legal union or contract, similar to a marriage, between two people of the same sex.

Minority

40. What rules apply during the period when an heir is a minor? Can a minor own assets and who can deal with those assets on the minor’s behalf?

Minors are represented, in general terms, by the surviving parent. If no parent survives, the court designates a representative (curador) to handle all the assets on the minor’s behalf. Disposition of assets usually requires court approval.

Capacity and power of attorney

41. What procedures apply when a person loses capacity? Does your jurisdiction recognise powers of attorney (or their equivalent) made under the law of other jurisdictions?

A court procedure is required to declare that a person has lost his capacity. The court appoints a curator to represent the incompetent person.

Generally, Argentina recognises powers of attorney made under the law of other jurisdictions. However, once a person is declared to have lost his capacity, under Argentine law any and all powers of attorney are terminated.

Proposals for reform

42. Are there any proposals to reform private client law in your jurisdiction?

Currently, a project to amend the Argentine Civil Code is being studied at the Congress. Although the project is complete, it is difficult to tell when (and if) it will be passed. However, although it does have effect on other areas of the civil law, it does not seem to affect significantly private client law.

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Real Estate: Summary and Critique of Argentina’s “Rural Land Law”

Argentina’s Rural Land Law

Last week, in an extraordinary session before summer recess, the Argentine Congress enacted a controversial law to restrict foreign ownership of rural lands. Law 26,737, introduced by the Executive Branch, passed with almost no floor debate. According to statements made by public officials, the law protects national sovereignty over natural resources by, among other things, limiting foreign ownership of rural lands to 1,000 hectares (approximately 2,500 acres) for each foreign person. Supporters of the law point to the massive holdings of Benetton and Ted Turner (Patagonia) and Douglas

Tompkins (northern Argentina wetlands) as examples of foreign wealth locking up sovereign resources. Read on for more about these restrictions and the disquieting uncertainties prompted by the law.

Summary of the Rural Land Law

The Rural Land Law restricts ownership and possession of rural land by natural and legal foreign persons. “Rural land” is broadly defined as “all land outside the urban area,” regardless of its location or use. While the Rural Land Law does not affect already acquired property and rights, it would affect future investments such as the acquisition of companies with rural land holdings.

Restrictions

The law imposes three restrictions on foreign ownership:

–      Foreign persons may not own more than 15% of all rural land in Argentina.

–      Of that 15%, no more than 30% may be owned by foreign persons of the same nationality.

–      Any one foreign person may not own more than 1,000 hectares (roughly 2,50 acres) in any “cluster” (zona núcleo) (a term that is not defined by the law). The Rural Land Law bans outright all foreign persons from owning coastal lands or other land adjacent to significant bodies of water. The law further prohibits foreign ownership of land within “border security zones,” absent consent from the Ministry of Internal Affairs, consistent with the exceptions and procedures established by law.

To implement its restrictions, the Rural Land Law calls for the creation of a “National Rural Land Registry,” a subdivision of the Ministry of Justice, and an Inter- Governmental Council of Rural Lands. The National Registry will be charged with

creating a database of rural lands owned by foreign persons. Current rural land owners subject to the “foreign person” definition are required to notify the National Registry within 180 days of the release of implementing regulations by the Executive Branch (which has not occurred yet). Any change in the ownership of a legal entity holding rural land must also be notified to the National Registry within 30 days of its occurrence.

Defining Foreign Persons

Foreign natural persons are not defined by the law but presumably the term excludes both natural-born and naturalized Argentine citizens. The law exempts three categories of foreign natural persons from its restrictions:

–      Those with 10 years or more of permanent and continuous residence in Argentina;

–      Those having Argentine children and at least five years of permanent and continuous residence in Argentina; and

–      Those married to an Argentine citizen for at least five years before acquiring the rural land (or interest in a legal person holding the land) and five years or more of permanent and continuous residence in Argentina.

As to legal persons domiciled in Argentina, the law defines them as “foreign” when:

–      Foreign natural or legal persons own more than 51% of its capital;

–      They are effectively controlled by any foreign legal person (which is presumed when foreign ownership exceeds 25%);

–      They have issued negotiable obligations or debentures, which allow a foreign holder to convert the instrument into equity representing more than 25% of the company’s capital stock; or

–      In the case of a trust holding rural land, when foreign beneficiaries have an interest in excess of 25%.

The law further declares rural land as a “non-renewable natural resource,” the acquisition of which will not be considered a protected investment under any Bilateral Investment Treaty to which Argentina is a party.

Commentary: Whose Interest is Being Protected?

The Rural Land Law is fraught with uncertainty, making it hard to assess its application. The law is patently contradictory in defining foreign legal persons (e.g., does a 51% or a 25% ownership threshold apply?). The law prompts obvious questions (e.g., would a foreign secured creditor be barred from foreclosing on a rural land mortgage? What is the

consequence of exceeding a nationality threshold? If a quota system, does a perspective buyer await an opening? How are natural persons with dual nationality to be considered?). Some or even all of these questions may be answered by the Executive Branch when it releases regulations. Nonetheless, it is unclear when this will be done.

The absence of meaningful debate only adds to the confusion prompted by the Rural Land Law. While a government may rightly assure that a country’s natural resources be available to its citizens, it would appear that the legislators have confused sovereignty with nationality. The owner’s nationality does not affect the State’s power to tax, to regulate, to condemn or even to expropriate in the public interest. It is hard to understand

the Rural Land Law as upholding any national interest, unless one accepts that the law will rightfully keep Argentine rural lands from being a world market commodity, thereby protecting the ability of Argentine citizens to acquire large landholdings without competing with foreign wealth. If so, it is hard to imagine the Argentine landed gentry as a class requiring the State’s protection.

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Foreigners own 6% of rural land in Argentina, equivalent to 15.8 million hectares

A total of 5.93% of rural land in Argentina is foreign-owned President Cristina Fernández announced which amounts to 15.8 million hectares. During a speech at Government House, Justice Secretary Julián Alvarez presented a survey that is a prelude to the full implementation of the Law 26,737 on Rural Lands (Ley de Tierras Rurales) passed in 2011 to place a 15% limit on foreign ownership of rural land in Argentina.

Catamarca, San Juan, Salta, Corrientes and Misiones were identified as the only provinces with 10% of their lands in foreign hands. Rural lands were reported to account for 95.8% of the total Argentine territory that is estimated at 277 million hectares. Neighbouring Uruguay is estimated to have 16 million hectares of rural land.

The top foreign owners were from the United States (3 million hectares), Spain (2.3 million) and Italy (2.1 million). A special mention was reserved for the British, who posses 1 million hectares, which Julian Alvarez attributed in part to firms, based in “tax havens”.

The survey was carried out through cooperation between Argentine municipal, provincial and national authorities, and the law will also be implemented at those levels.

That is, although no provinces were found to exceed the 15% limit, ten “subdivisions,” or departments, out of 569 were above the ceiling.

The Articles 8 and 9 of the law state that within each department, each foreign individual or entity will not be able to acquire more than 30% of land within the allowed 15% of the total land of the subdivision.

Alvarez, who said the aim of the law is to “protect our territorial sovereignty,” denied “legislative overacting” from the government and emphasized that the law is in “full force,” criticizing the opposition for having considered the law impossible to apply.

Cristina Fernandez who spoke after Alvarez pinpointed to the alleged contradiction of the opposition, which mostly abstained from voting the bill in 2011.

The law was passed with 153 votes for, 26 against, 1 abstention and 77 absentee members of Congress, with the president accusing the opposition of not having voted for the law because it was promoted by the Victory Front (FpV).

Cristina Fernandez said that “our land” is a “non-renewable resource,” and “this is why I wanted to use the instrument of the national broadcast, so all Argentines” can “be informed about the effort we have made to fulfil a law.”

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OWNERSHIP OF REAL ESTATE in Buenos Aires – Argentina

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1. Is perpetual fee simple ownership of real property permitted? If not, what are the principal forms of ownership, or other principal form of ownership, of real property?

Yes, perpetual fee simple ownership of real property is permitted.

2. What instruments are used to convey fee simple ownership, or other principal form of ownership, of real estate?

Although a private contract of sale of a property (“Boleto de Compraventa”) will contain valid and binding obligations as between the parties under Argentine law, it will not be accepted for registration in the relevant Land Registry (“Registro de la Propiedad Inmueble”), unless the terms of transfer have been included in a deed of conveyance “escritura pública” executed before a notary public.

3. How in this jurisdiction is the ownership of real property recorded or searched? Who generally performs the search?

In the City of Buenos Aires the deed of conveyance must be presented for registration at the Land Registry within a period of 45 days (40 days in the case of the province of Buenos Aires) after its execution before a notary. If it is presented later, it may be subject to any charges or encumbrances that have been presented in the meantime. In addition the notary is responsible for checking the title deeds to the property and ensuring that there are no charges or encumbrances over the property of which the purchaser is unaware. The customary time period of ownership that is searched in Argentina is 20 years.

4. What assurances of ownership are available to purchasers of real property (e.g., title insurance or title opinions)? What is the cost of obtaining such assurances?

There is no title insurance system in Argentina. The Land Registry registers ownership of real property, and such registration is effective vis a vis third parties.

5. What are the most common forms of investment vehicles? What are the most common entities employed to own investment real estate in a tax efficient manner?

An Argentine corporation (sociedad anónima), an Argentine limited liability company (sociedad de responsabilidad limitada), or an Argentine trust are the most common forms of entities used.

6. Has this jurisdiction adopted, or is it considering, legislation permitting the creation of real estate investment trusts or similar entities?

Although there are specific REIT regulations for publicly offered REITS, they have not been used in practice. However, several other Argentine entities may be used to form an entity similar to a REIT, such as an Argentine corporation (sociedad anónima), an Argentine limited liability company (sociedad de responsabilidad limitada), or an Argentine trust.

7. What state or local transfer, stamp or similar taxes are levied generally on sellers or buyers upon the direct transfer of real estate?

The provincial stamp tax (“Impuesto de sellos”) is a local tax levied on monetary acts, contracts or transactions which are evidenced in writing. While each provincial jurisdiction and the City of Buenos Aires has its own particular legislation, their provisions are very similar.

In principle, the tax is imposed on contracts executed in the relevant provincial jurisdiction. In the case of real estate, if the contract is executed in a different jurisdiction from the location of the real estate, in principle tax will be due both in the jurisdiction where the real estate is located as well as the jurisdiction of execution of the contract, unless there is provision for the avoidance of double taxation in the relevant provincial jurisdiction. Care must therefore be taken when dealing with real property to ensure that any contractual documentation is executed generally only in the jurisdiction where the property is located. In practice, provincial stamp tax is normally borne in equal parts by the parties, however in as far as the tax authorities are concerned they may claim the full amount of the tax from any of the parties to the transaction. The transfer of real property is subject to stamp tax on the higher of the values resulting from the value of the property in the deed of acquisition and the fiscal value as established in the provincial (in the City of Buenos Aires the municipal) cadastral records. The applicable rate in most provincial jurisdictions is 4% and 2,5% in the City of Buenos Aires (usually 1% is paid at the time the preliminary sale contract (“Boleto de Compraventa”) is executed and the remaining balance is payable upon the execution of the notarial deed of conveyance).

8. What state or local transfer, stamp or similar taxes are levied generally on sellers or buyers upon the transfer of interests in entities which own real estate?

As stated above, the provincial stamp tax (“Impuesto de sellos”) is a local tax levied on monetary acts, contracts or transactions which are evidenced in writing. While each provincial jurisdiction and the City of Buenos Aires has its own particular legislation, their provisions are very similar in many respects. However, no stamp tax applies to transfers of interests in entities which own real estate in the City of Buenos Aires.

9. How significant is local regulation and taxation of real estate? How significant is the variation of real estate law among political subdivisions of this jurisdiction?

The provincial stamp tax may be applicable. See prior answers for additional information.

10. Must ultimate beneficial owners of entities which own real estate be disclosed as a matter of public record?

No.

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Buenos Aires Lawyer Argentina: Offers Advise Gay Marriage to Foreigners

BUENOS AIRES, May 18 2012 (IPS) – Foreign non-residents, gay or straight, can now get married in the Argentine capital, thanks to a resolution that removed bureaucratic obstacles and streamlined the procedure.

Since same-sex marriage was approved in Argentina in July 2010, many homosexual couples from abroad have sought information about travelling to the city – not to settle here, but to legalise their bond and later push for official recognition of their new marriage certificate in their countries of origin.

But the process was bogged down in red tape, and civil registry regulations had to be modified to make it possible to meet the new level of demand. That was first done in the eastern province of Santa Fe, which in March authorised the marriage of foreigners who had spent a minimum of just 96 hours in the country.

A gay Paraguayan couple, Simón Cazal and Sergio López Centurión, immediately travelled to Rosario, the main city in that province, to get married. To indicate her support for the measure, socialist Mayor Mónica Fein was one of the witnesses to the wedding.

Cazal and López Centurión are gay activists who are trying to get their marriage legally recognised in their country.

Next to follow suit was Tierra del Fuego, Argentina’s southernmost province, which also eliminated the requisite that a couple must be permanent residents in the country. The eastern province of Buenos Aires then did the same.

Alex Greenwich of Australia and Victor Hoeld of Germany are gay rights activists who live in Sydney, Australia and wanted to get married in Buenos Aires. However, the authorities required an identity document for foreigners, which takes at least three months to obtain.

After running up against that hurdle, they applied for a marriage licence in La Plata, the capital of the province of Buenos Aires, where a resolution was adopted allowing foreign couples to marry without an Argentine identity card.

Their wedding was attended by some 40 family members and friends from Australia, Germany and the United States, and received broad coverage from the local press and from the media in Australia, where it has fuelled a lively debate.

In response to these precedents and to pressure from local activists, the city of Buenos Aires agreed to adopt the same changes. Now foreign non-residents can marry simply by presenting their passports and the address where they are staying in the country.

The new regulations also instruct civil servants to schedule the marriage ceremonies of foreign couples quickly, so that they do not have to wait more than five days after applying for the licence, in order not to “undermine the spirit” of the same-sex marriage law.

“Before this, we were already receiving inquiries from foreigners every week. But now with this Buenos Aires resolution, requests are going to rain down on us,” activist Alejandro Nasif, with the Argentine Federation of Lesbians, Gays, Bisexuals and Transsexuals (LGBT), told IPS.

The Federation has worked hard to expand these rights in Argentina, and to foreign couples as well, seeing the law as an instrument that can be used to force changes in the national legislation of other countries.

A report presented this week in Geneva by the International Lesbian, Gay, Bisexual, Trans and Intersex Association (ILGA) indicates that same-sex marriage is legal in only 10 countries around the world: Argentina, Belgium, Canada, Iceland, Netherlands, Norway, Portugal, South Africa, Spain and Sweden.

The report was presented on the occasion of International Day Against Homophobia and Transphobia, which is celebrated on May 17 because homosexuality was removed from the International Classification of Diseases of the World Health Organization (WHO) on that date in 1990.

The report also reveals that same-sex couples are allowed to adopt children in just 12 countries in the world – including Argentina. By contrast, 78 countries still have legislation criminalising same-sex consensual sexual acts between adults. In five countries – Iran, Mauritania, Saudi Arabia, Sudan and Yemen – such acts are punishable by death.

Since the law on same-sex marriage was passed in 2010, more than 4,000 same-sex couples have married in Argentina.

Bills on same-sex civil unions or marriage are being debated in other countries in the region, while progress towards equality is advancing along other lines in yet others.

In Brazil, the Supreme Court ruled in favour of recognising the same rights for same-sex civil unions as for marriages. Nasif explained that a constitutional amendment would be needed to legalise same-sex marriage in Brazil.

“In Uruguay (where same-sex civil unions are legal), Bolivia, Paraguay and Chile there are bills on same-sex marriage that have varied levels of support. And in Colombia, some progress has been made in the courts. That’s why we receive constant inquiries from couples who want to come and get married in Argentina,” he said.

But in the few countries in the world where same-sex marriage is legal, foreigners must be permanent residents in order to qualify. The new regulations in several provinces make Argentina the first country in the world to eliminate that requisite.

“It’s very likely that because Buenos Aires is such an accessible, attractive city, this resolution will draw many couples to come and get married here; not only homosexuals but heterosexuals as well,” Nasif said.

In the Argentine capital, the authorities had refused to allow that possibility, arguing that it would foment gay marriage tours to the city. But they finally understood that they had to stop resisting, the activist said.

“What’s the problem if a tourist market opens up for foreign couples who want to come and get married in Buenos Aires, Rosario or Tierra del Fuego? A tourist niche will emerge, but we don’t see that as a bad thing,” he said.

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