Division of Marital Property Under the New Argentinian Civil and Commercial Code

NEW CIVIL AND COMMERCIAL CODE OF ARGENTINA

Division of property under the new Code

As a result of all questions and doubts that have arisen from the enactment of the “new Code” (Civil and Commercial Code of Argentina, CCCN in Spanish), which came into force on August 1 this year, we will explain the effects of “Termination of the Community Property System”, mainly what we need to know when a couple decides to divorce, when one of the spouses dies, or when they decide to opt for a different property system and need to divide assets after the dissolution of marriage.

Nowadays the law allows us to choose the way in which we want to “administer” our matrimonial property so that couples can select what property system will govern their marriages by executing a marriage settlement.

Section 446 of the new Code expressly contemplates “Marriage Settlements” and provides that “before the celebration of marriage, prospective spouses may enter into settlements only for the following purposes: a) to designate and valuate the assets that each spouse brings into the marriage; b) to list debts; c) to list donations made to each other; d) to opt for any of the property systems provided under this Code.”

Although the Code provides that prospective spouses may sign marriage settlements, it also limits the scope of said settlements. As opposed to what most people imagine, the law stipulates a strict framework of what terms the parties may agree on. Outside this legal framework, spouses cannot dispose of property in any way. If they do so, the law states that such disposition will have no effect.

The principal amendment relates to the fact that now spouses can opt for a system of division of property, under which they keep the right to freely administer or dispose of their premarital property.

At this stage we may conclude that the most significant change not only relates to the possibility of choosing one system or another, but also to the right to agree to change it, whether choosing between the division of property system or the community property system. For this to be possible, two requirements must be met. First, spouses must have kept the adopted system for a period of at least one year. Second, the settlement must be made by a notarially recorded instrument. However, if the parties are silent, that is, in case spouses do not make any marriage settlement or do not agree on any property system in the settlement, the community property system will apply by operation of law, as the situation was before the new Code.

“In my view, the Commission correctly chose not to do what Italy implemented after the Code of 1942, when it changed the system in force at that time thus generating a strong opposition from the society, who was not accustomed. Here we thought that the same thing could happen. That’s why the community property system was chosen as a legal and suppletory system “, explained attorney Pedro Di Tella during a seminar held at University of Buenos Aires Law School (UBA).

Another relevant issue to point out is that spouses who got married before the new Code came into force have the right to change systems, as long as they meet the statutory requirements: time in the system (one year) and written settlement made by a notarially recorded instrument. Such change of system does not require any leave or acknowledgement from a court.

So far this is what the parties may “choose”. Nonetheless it is important to highlight, as we have mentioned before, that the freedom of choice is restricted by what is called Régimen Primario (Primary System) based on mandatory and unalterable rules which apply whatever system the parties may have adopted, and on the principle of joint and several liability, family responsibility, and protection of family and other persons. Consequently, any agreement to the contrary will be of no effect.

What we need to know is that despite the amendments made by the new Code and the property system adopted, in every marriage spouses must comply with the following:
– neither spouse may dispose of the matrimonial home, nor of moveable property and property used for work without the other spouse’s consent.
– they must contribute to support themselves, the home and their children in common, in proportion to their resources. If one of them fails to do so, he or she could be sued in court.
– they are jointly and severally liable for the obligations assumed by each of them to meet family common necessities and children’s maintenance and education.
Apart from these cases and except as otherwise provided by the marriage system law, none of the spouses is liable for the other’s obligations. Not only prospective spouses may choose a property system, but they may also specify in the settlements what assets they bring into the marriage, which debts are still due, and what donations they have made to each other.

To sum up, it is important to realize that all these amendments have not been made in a capricious way, just because a substantive reform of the code was needed. The reform of the Code represents and consolidates the solutions provided by case law and legal authors to the social and cultural changes of the last decades as a result of the absence of express rules.

Best Argentina Divorce Lawyer|Buenos Aires Top Divorce Lawyer|Expert Argentinian Family Law

Argentina Divorce Lawyer|Buenos Aires Divorce Lawyer|Argentinian Family Law Firm

Doing Business Buenos Aires, Argentina – Guide – Foreign Investments – Lawyer – Law Firm

Doing Business Buenos Aires, Argentina

Factors to be considered in order to set up a foreign company in Argentina

Foreign companies can operate in Argentina by registering with the Public Registry of Commerce (Registro Público de Comercio), as a branch or a subsidiary.

Subsidiaries are created by setting up a business company. The commonest types are the Corporation (known as Sociedad Anónima or S.A.) and the Limited Liability Company (known as Sociedad de Responsabilidad Limitada or SRL).

Both, branches and subsidiaries, are subject to the same tax regime.

The following are the main characteristics and dissimilarities between the different possibilities:

Doing Business in Buenos Aires, Argentina: A. Branch

In Argentina, the Argentine Companies’ Law (LSC, Ley de Sociedades Comerciales), considers that a branch (the “Branch”) is a decentralization of the company’s headquarters (the “Headquarters” or the “Company”). The Branch is governed by the laws of the country of origin of the Headquarters, and thus, it is authorized to perform all the acts that are permitted to the Headquarters. As a result of the relationship established between the Headquarters and the Branch, the former is indirectly responsible for the transactions carried out by the Branch.

Even though the Branch has no limitations to have its own assets, it is not obliged to have a specific capital stock. However, it must keep separate accounts from the Headquarters and submit its Financial Statements every year before the Public Registry of Commerce (the PRC) of the City of Buenos Aires.

The transactions of the Branch do not generate much administrative control, as long as there are no meetings of the partners, shareholders or board of directors and it is not necessary to keep a record of the minutes, either. However, the Branch must take the necessary administrative measures, such as the registration with the PRC and with the social security entities and tax authorities. Likewise, every year when the Branch submits the Financial Statements, it must inform the PRC about any change that might occur pursuant to what is set forth in item 4.(v) described as follows.

In order to register a Branch in the Argentine Republic, the headquarters must fulfill the following requirements before the PRC:

  • 1. Certificate of good standing issued by the Secretary of State or the relevant public office certifying that the company is duly authorized or incorporated and in good standing pursuant to the laws of its country of origin. This certificate must also state that such company is under no liquidation or any other kind of legal proceedings that result in restrictions imposed on its assets and/or activities.
  • 2. Copy of the company’s bylaws or articles of incorporation, including any amendments thereto.
  • 3. Copy of the resolution by the headquarters’ competent body, through which the following decisions are stated:
    • (a) to set up a branch in Argentina;
    • (b) to appoint a legal representative in Argentina (the legal representative may or may not have a domicile in Argentina);
    • (c) to establish a legal domicile in Argentina.

4. Statement subscribed by the legal representative in Argentina, through which he:

  • (a) accepts his appointment as the legal representative;
  • (b) states his personal data;
  • (c) establishes a legal domicile in Argentina.

5. Statement subscribed by a headquarters’ representative with sufficient power, providing evidence:

  • (a) that the development of the Company’s activities or its main activity or activities is not prohibited or legally restricted in its place of origin.
  • (b) that the company complies with any of the following conditions outside the Argentine Republic: (i) of the existence of one or more branches or permanent agencies in good standing; (ii) the ownership of fixed non current assets or exploitation rights on third parties’ assets of the same kind; (iii) interest ownership in any other company in the form of non current assets, in accordance with the definitions set forth in the Generally Accepted Accounting Principles (GAAP).
  • (c) of the company’s shareholders / partners, indicating: (i) name and surname or business name of the shareholder; (ii) domicile or registered office; (iii) corresponding number of passport or ID, or else, the data of registration, authorization or incorporation; (iv) amount of shares, votes and ownership percentage of each shareholder.

Please note that all the documents to be submitted before the PRC must be duly certified and legalized by a consulate or the Apostille (Convention de La Haye 1961).

Doing Business in Buenos Aires, Argentina: B. Subsidiary

A subsidiary is a separate entity, independent from the headquarters (the “Subsidiary”). It has its own duties and obligations, a capital stock and its own administrative and management body.

The subsidiary is liable to third parties with its own assets, and thus, the headquarters is not responsible for the operations carried out by the subsidiary. However, this protection has been recently questioned by some local courts.

In order to set up a subsidiary, a foreign company must be registered in Argentina pursuant to what is set forth in section 123 of the Argentine Companies’ Law (“LSC”), and this is only with the aim to participate as a shareholder or partner in a local company, regardless of whether it is a Corporation (“SA”) or a Limited Liability Company (“SRL”). The procedure to register a foreign company for these purposes is similar to the procedure applicable to a Branch, pursuant to what has been previously set forth in item A.4.

Requirements for the registration of foreign shareholders, in order to set up or participate in Business Companies in the Argentine Republic:

First, in order to set up a company, the foreign shareholder must register with the PRC pursuant to what is set forth in section 123 of the Argentine Companies’ Law (“LSC”) in order to participate as a shareholder of the local company. In that sense, the shareholder must submit the following documents before such registry:

  • 1. Certificate of good standing of the company in its place of origin, giving due evidence of the existence of the company in this place;
  • 2. The company’s contract or articles of incorporation and any amendments thereto;
  • 3. Copy of the resolution adopted by the company in order to
    • (i) register the company in the Argentine Republic in order to participate as a shareholder of a local company;
    • (ii) appoint the company’s legal representative in the Argentine Republic;
    • (iii) establish a legal domicile in the Argentine Republic

Written statement subscribed by the company’s representative (i) accepting the position for which he was appointed; (ii) stating his personal data; and (iii) establishing a special domicile in the Argentine Republic;

4. Documentation subscribed a company’s officer indicating that the company has the following outside the Argentine Republic (i) one or more agencies, branches or representations in good standing; or (ii) fixed non current assets or exploitation rights on third parties’ assets of the same kind; or (iii) interests in other companies that are not subject to public offer; or (iv) investment operations in stock exchanges or markets. (Said information may also be proven by submitting the financial statements approved by the company, corresponding to the last closed fiscal year);

5. Statement subscribed by one of the company’s officer individualizing its composition and the ownership of its capital stock.

The documentation must be sent with the due certification before a notary public and the authentication by the Argentine Consulate of the place that granted it, or by the Hague Apostille, as it may correspond.

Finally, if there is not enough time for the registration of the company’s shareholder, it is possible to register other provisional shareholders, who shall transfer their shares to the company 123 of the Argentine Companies’ Law (LSC, Ley de Sociedades Comerciales), shall transfer their shares to them.

How is a commercial partnership or corporation established?

Companies may be established by a written public or private instrument (section 4 of the Argentine Companies’ Law (LSC, Ley de Sociedades Comerciales). . The instrument of organization is an agreement. The instrument of organization is an agreement In case of a corporation it is called Bylaws.

If you are planning to set up a company or do businesses in Argentina, please click on how to invest, and you will find the main characteristics of the legal regime in force regarding the different aspects to be taken into the account at the moment of investing in this city.

Distribution of dividends and repatriation of capital from a local company to its headquarters

The following is a brief description of the general principles applicable to the distribution of dividends of local companies and the repatriation of capital from a branch to its headquarters, according to the Argentine legislation.

1. Distribution of dividends in a local company with foreign shareholders

1.1. Law 19,550 and its amendments – The Argentine Companies’ Law (LSC, Ley de Sociedades Comerciales)

The general principle for the distribution of dividends is reflected in section 68 of the Argentine Companies’ Law (“LSC”), which provides that the dividends can only be approved and distributed when, once the fiscal year is closed, there are realized and liquid profits resulting from the balance sheet that was made according to the law, the bylaws, and approved by the shareholders’ meeting; “realized and liquid profits” are understood as the net profits from the fiscal year, specified with objective data, and which have an implicit irrevocable nature. The profits distributed in breach of that principle are repeatable, pursuant to the provisions of the second paragraph of said section, except if they are received in good faith, as set forth in section 225 of the Argentine Companies’ Law (“LSC”).

On the other hand, section 71 of the Argentine Companies’ Law (“LSC”) adds that the profits cannot be distributed until the losses of previous fiscal years are covered, and according to what is set forth in the second paragraph of the abovementioned section, this principle is not applicable in the case in which the managers, directors or syndics are paid with a percentage of the profits, and the shareholders’ meeting stipulates the payment of their remunerations even when the losses of the previous fiscal years are not covered. According to section 261 of the Argentine Companies’ Law (“LSC”), the maximum amount that can be received by the board members or the Supervisory Committee (including salaries and other remunerations for their performance in their permanent technical and administrative roles) shall not exceed twenty five percent (25%) of the profits. This maximum amount shall be limited to five per cent (5%) when dividends are not distributed to shareholders, and it shall be proportionally increased according to the distribution, up to the limit of twenty-five percent (25%) when all the profits are distributed.

The abovementioned general principle of section 68 of the Argentine Companies’ Law (“LSC”) is incorporated by section 224 of the Argentine Companies’ Law (“LSC”), corresponding to Corporations (“S.A.”). This section also contemplates the prohibition to distribute anticipated dividends, except for those companies that are included in section 299 of the Argentine Companies’ Law (“LSC”), i.e., those companies that make a public offering of their shares, have a capital that exceeds $10 million, have a mixed economy, carry out capitalization or savings transactions, exploit public concessions or services, and control or are controlled by the above-mentioned companies. In this case, said companies have the possibility of distributing anticipated dividends affecting partial profits obtained by the company during a period that does not coincide with that of the annuity of the fiscal year.

Anyway, according to the legal principles and caselaw, we understand that the anticipated distribution of dividends is subject the effective closure of the fiscal year, with liquid and realized profits, so that the permit the anticipated payment of distributed dividends.

1.2. General Resolution 7/2005 (“GR 7/2005”) of the Inspección General de Justicia (“IGJ”, Companies’ Control Authority)

Besides, section 78 of General Resolution 7/2005 provides that the term for the payment of dividends, which shall appear in the bylaws, shall not exceed the duration of the fiscal year in which they were approved. If the bylaws do not refer to this, the shareholders’ meeting shall be able to establish a special term for the payment of dividends, which shall not exceed 30 days. If the shareholders’ meeting does not establish this special term, the dividends shall be at the partners’ disposal as of the day following the shareholders’ meeting in which their distribution was approved. The payment can be made in periodical installments.

Besides, section 143 of the abovementioned GR 7/2005 provides that if the distribution of anticipated dividends is approved, this decision shall be communicated to the Inspección General de Justicia (“IGJ”, Companies’ Control Authority) within a period 10 business following the adoption of this decision, including the supporting documentation.

1.3. Exchange regulations

According to the exchange regulations in force, if the distribution of dividends is approved according to the provisions of the Argentine Companies’ Law (LSC, Ley de Sociedades Comerciales), there are no restrictions to the foreign exchange outflow under such concept. In that sense, the dividends approved by the Shareholders’ Meeting can enter the foreign exchange market and be drawn to foreign investors.

For further information, please see the exchange regulations in force which were issued by the Banco Central de la República Argentina(“BCRA”, Central Bank of the Argentine Republic).

2. Repatriation of profits and/or capital from a branch to the headquarters abroad

Communication A 3859 issued by the Central Bank of the Argentine Republic (BCRA, Banco Central de la República Argentina) and its amendments establishes that “…the entities that are authorized to carry out exchange transactions can make transfers abroad for the payment of profits and dividends corresponding to past financial statements certified by external auditors”.

According to this regulation, the local entities authorized to make foreign exchange transactions make transfers of profits from Argentine branches to their headquarters.

To perform such operation, Communication A 4177 of the Central Bank of the Argentine Republic (BCRA, Banco Central de la República Argentina) requires the presentation of all documentation that guarantees the genuineness of the operation regarding the concept and amount. For that purpose, the exchange regulations in force require the following:

  • I. Resolution by the headquarters ordering the branch to send the profits;
  • II. Resolution by the legal representative or representatives of the branch, approving the transfer of the profits arising from its balance sheet;
  • III. Accounting certificate evidencing the nature of the profits of the funds that are sent from the branch to the headquarters.

On the other hand, if the branch has allocated capital, it shall be able to repatriate the funds to the headquarters, making a total or partial reduction of such capital. In this case, section 6.3. of the General Resolution IGJ 11/06 establishes the procedure to be fulfilled by the branches “in case of an effective reduction as a consequence of remittances abroad” indicating the requirement, among others, of the publication contemplated in section 204 of the Argentine Companies’ Law (LSC, Ley de Sociedades Comerciales ) and the submission to the creditors’ opposition regime. For that purpose, the following shall be necessary, pursuant to the regulations in force:

  • I. resolution by the headquarters approving the total or partial reduction of the capital allocated to the branch;
  • II. publication of the notice in the Official Gazette and in a widely circulated local newspaper;
  • III. submission to a period of 15 days in which the creditors of the branch can oppose to such reduction of allocated capital.

Regarding the exchange regulations, Communications A 4662 of the BCRA and their amendments establish the concepts through which non residents can have access to the Single Free Exchange Market without requiring prior conformity from the Banco Central de la República Argentina(“BCRA”, Central Bank of the Argentine Republic). Among others, the following is established: “…1.13. Repatriations of direct investments in companies from the private non fiscal sector, that are not controlling companies of local fiscal entities, as long as the investor registers the permanence of that investment in the country for a period no shorter than 365 consecutive days, for the following concepts: … 1.13.3. Capital reduction decided by the local company.

It is worth mentioning that the authorization for non residents to make transfers under this concept corresponds to 05.11.07; before then, no transfer under the concept of capital reduction was permitted (neither for branches nor for subsidiaries).

Regardless of what has been stated, we would like to mention that:

  • (i) In all the cases the intervening exchange entity has the power to request the supporting documentation or information that it may deem necessary to verify the legal viability and genuineness of the corresponding transaction, in view of its joint responsibility under the Criminal Exchange Regime; and
  • (ii) In the case of choosing any of the abovementioned alternatives, it is recommendable to previously consult the intervening exchange entity in order to determine if there are no diverse opinions about the operational procedure to be used, which can be frequent on the market.

In order to buy a property in the Argentine Republic, foreign investors shall not only show their legal capacity but also their contribution of the necessary funds and their origin. For further information, please enter the guide to real estate market – “Other guides of interest”.

Doing Business in Buenos Aires, Argentina

The proven Buenos Aires – Argentina lawyer professionals at the Kier Joffe law firm have experience working with foreign clients involved in all kind of cases in Argentina. Buenos Aires Argentina attorney professionals are knowledgeable in almost all the practice areas of law, to service its international cases in Buenos Aires Argentina. International clients will have the confidence of knowing that the case is being handled by an experienced and knowledgeable Buenos Aires  lawyer in Argentina.

www.kierjoffe.com

 

Argentina Company Formation|Argentina Company Incorporation

Business and Company Formations in Buenos Aires, Argentina

Company law (US: Corporation law or Corporate law) is the law which deal with the creation and regulation of business entities. The most common forms of business entity are companies and partnerships.

A company (US: corporation) is a group of people which is treated as a legal person, with a separate identity from its shareholding members. It can own property, enter into contracts, sue others and be sued. This contrasts with partnership, which is not considered to be a legal person and it is not able to own property in tis own name.

Because of the limited liability of the members of a company for its debts, as well as its separate personality and tax treatment, the company has become the post popular form of business entity in most countries in the world.

Companies have an inherent flexibility which can let them grow; there is no legal reason why a company initially formed by a sole proprietor cannot eventually grow to be a publicly listed company, but a partnership will generally have a limited number of partners.

A company has shareholders (those who invest money in it and get shares in return), a board of directors (people who manage the affairs of the company) and creditors (those to whom the company owes money). Company law deals with the relationships between companies and their shareholders, creditors, regulators and third parties.

The process of registering a company is know as company formation (also company registration in UK and incorporation in US). Companies can be created by individuals, specialised agents, attorneys or accountants. In the UK, a certificate of incorporation is issued once the company’s constitutional documents and statutory forms have been filed (generally no official certificate is issued in US).

The constitution of company consist of two documents. The memorandum of association (US: articles of incorporation or certificate of incorporation) states the principal object of the company. The second document, the articles of association (US: bylaws), regulates the company’s internal management and administrative affairs, including matters such as the rights and obligation of shareholders and directors, conduct of meetings and corporate contracts.

 

Property Prices at Lowest Price Since the 2001 Crisis

Property Prices at Lowest Price Since the 2001 Crisis

Those looking to purchase property abroad would be wise to consider purchasing in Argentina at this moment, with the guidance of bilingual (Spanish/English) Argentine lawyers. Currently, Argentines are hesitant to spend before this year’s presidential elections, resulting in some of the lowest property prices in years. But while locals are holding back, foreigners without ties to the local economy can invest now at extraordinary prices. Kier Joffe is the premiere real estate law firm for foreigners in Buenos Aires, and with our expertise and guidance, the buying process is simple, direct and stress-free. We are proud to call ourselves the only bilingual Argentine lawyers with such expertise in the real estate industry.

In January 2015, only 1723 property units were sold in Buenos Aires – 15 percent less than were sold a year ago, serving as the worst numbers for the month in 12 years. The average price was $907,306 Argentine pesos.

The sale and purchasing of property is in a historic low in the City of Buenos Aires. 2014 ended with some of the lowest indicators in 30 years, and 2015 has started with a similar forecast.

2014’s numbers are the lowest since the months immediately following the economic, political and social crisis of 2001 in Argentina. In fact, during the years after the 2001 crisis, it was reported that 67 percent more units were sold than were sold in 2014.

For example, in 2001, 54,493 contracts were signed, in 2001, 56,293, and in 2014, only 33,690. The information comes from the College of Notaries in the city of Buenos Aires, which measures changes in the market. Real estate lawyers in Argentina have noted the same phenomenon, noting that Argentines are buying less than they have in recent years.

CONTEXT

Property prices are much lower than they were three years ago. Since the implementation of tight monetary restrictions, the price of properties in dollars fell between 10 and 15 percent, and remain low now, according to reports by the specialized consulting firm, Reporte Inmobiliario.

Analysts consulted by newspaper La Nacion agree that causes for the low level of activity in the sector are due to more than just the restrictions on dollars. There is an existing tendency for sellers to delay activity as they wait for the administration to change this year.

There are also difficulties accessing mortgages, a wider gap between salaries and prices, the recessive nature of the economy and consumers’ perception of high prices. At this time, the square meter in an apartment with two or three rooms costs US$ 1700, on average, while two years ago that price was US$ 1900.

Mortgage lending has practically disappeared from the market, and those that are available are not easily accessible. For example, to qualify for a credit of AR$ 500,000 pesos (or US$ 57,736.00 using the official exchange rate), paying the loan off in ten years requires monthly payments of AR$50,000.00. This type of capital is only enough to purchase half of a two-room unit.

While Argentines are experiencing difficulty obtaining the capital needed to buy a property, the climate is ideal for foreign investors looking for a beautiful property at an accessible price. But it is important to seek the assistance of an expert real estate law firm in Buenos Aires first. If you are interested in learning more about how to buy property in Argentina as a foreigner, contact us. Celebrating 75 years in the business, we are real estate attorneys that specialize in assuring that foreigners in Buenos Aires do not experience any of the headaches that come with working through a new and different legal system.

With an international reputation worthy of mention in The New York Times, Kier Joffe is your one-stop shop for information and legal services related to buying a property in Argentina as a foreigner. The first firm to specialize in providing services to international clients buying property in Argentina, we have assembled a top team of lawyers, accountants and notaries dedicated to making your buying experience as smooth as possible.

For more information, just fill out the Quick Contact Form on the right or give us a call today, and we will get back to you.

USA: +(1) 212.300.6377

ARG: +(54) 115.218.3100

Mendoza Argentina Lawyers|Mendoza Real Estate Attorneys|Mendoza Real Estate Law Firm

Skilled Real Estate Lawyers in Mendoza Argentina

Argentina has thrived in the international wine market for fifteen years. While the country was able to become the fifth-largest global producer of wines and world’s tenth-largest exporter, inflation and high production costs, a weak peso and restricted access to credit are affecting the winemakers sustaining the industry. La Nacion’s December 31 article, “Wine: The Crisis Obligates Us to Revise the Numbers,” explores the transformation that the Argentine wine industry is facing in the midst of economic turbulence at home. The Argentine wine industry is controlled and consumed by a small number of actors. Argentine winemakers depend on just a handful of companies that import supplies like bottles, boxes and cork, and 80 percent of exports are delivered to just five countries: The United States, the United Kingdom, Canada, Brazil and the Netherlands. Argentine wineries have paid the price of so little competition between providers:  the high price of supplies means production is expensive, which gives the advantage to bigger wineries that can find ways to make a profit through economies of scale. Meanwhile, smaller wineries that can’t compete have been gradually bought up by bigger players.

Mendoza Argentina: Experienced Real Estate Attorneys

In the United States, wines in the ten-dollar range are the big sellers, says Susan Balbo, President of Wines of Argentina, the organization that represents and supports local wine exporters and promotes Argentine wine abroad. And only bigger wineries can manage to export these less expensive bottles profitably. The result of this phenomenon is that only a small group of wineries have come to dominate the wine export market. Argentina became a big player in the international wine market in the 90s, when hundreds of millions of dollars were invested in transforming the quality of Argentine wine, which had traditionally been mostly generic and low-quality, with a focus on promoting Malbec in foreign markets. When the 2001 economic crisis occurred in Argentina, the country became extremely cheap for foreigners, and international investors poured in. With three unique wine varieties, Malbec, Bonarda and Torrontés, the Argentine wine market was booming.

Top-Notch Law Firm in Mendoza Argentina

But with the current state of affairs, the future of Argentine wine is changing. In 2013, profits from Argentine wine exports fell for the first time in a decade, and lately, countries like Chile, Australia, Italy and Spain have taken larger slices of market share that Malbec from Mendoza once enjoyed. Spain has high subsidies on wine exports to help winemakers make profits while charging low prices, and countries like Chile have free trade agreements with countries like the United States and China. These factors make it even more difficult for Argentine wine to compete internationally. It’s become expensive to produce that ten-dollar wine, as the cost of producing a box of wine often exceeds what can be made off of the bottles. Smaller wineries face two choices: A) convert themselves into large-scale productions focusing on lower-priced bottles or B) produce less, but charge more. It may be inevitable that the Argentine wine industry heads towards becoming a market dominated by a small group of big conglomerates in the next few years. This would not be a first, as in Chile, only four groups dominate wine production. Who will survive the transition, or the shape that smaller wineries will take, is yet to be determined. Kier Joffe has worked with international clients in Argentina for over 70 years, and our team members have become experts on the topic of buying and selling wineries in Mendoza, Argentina. Foreigners seeking advice or legal guidance on any matter related to Argentine wineries are encouraged to contact us for more information about our services.