In this post we’d like to develop some aspects of Law 27,743 passed by Congress on June 27, 2024. Pursuant to sections 35 through 38, real estate owned by third parties fall within the scope of law 27,743 enabling a new asset regularization regime. This opens an opportunity for different professionals to meet a recurring demand from their clients: the transfer of corporate real estate from companies to their partners with the benefit of lower taxes and rates. We recommend our clients to seek expert legal and accounting advice for a suitable planning,
Notarial considerations for Transfer of Corporate Real Estate
Transfer of corporate real estate from companies to their partners, whether by sale, assignment or tax amnesty, should be based on a specific cause or purpose, For example:
Sale to Partners: this case involves an onerous transaction whereby partners purchase the real estate paying the corresponding taxes and justifying the funds used.
Assignment due to Capital Reduction or Dissolution: this case also involves onerous transactions involving local taxes and profits plus the recovery of corporate shares by the partners.
Tax Amnesty: the Tax Amnesty Law passed in 2016 provided the transfer of real property from companies to their partners with a reduced tax, avoiding national and local taxes. However, this poses a risk regarding the possible insolvency of the transferring company in the future.
Risks and Legal Protection
Transfer of real estate through tax amnesty can lead the transferring company to insolvency, affecting its creditors in the future. This situation could arise legal claims by third-party buyers of the property. So, aiming to mitigate this risk, the legal protections stipulated by the General Corporations Law shall apply.
For example, in the case of capital reduction, companies must make publications pursuant to law to notify third-party creditors about the reduction of capital and assets. In this way, third parties are well acquainted with the course of business, having the option to object to the transaction if necessary.
It is essential to avoid losses likely to be considered fraudulent losses, because, in such case, creditors could be entitled to seek compensation from the estate of the acquiring partners. This, far from being a benefit, could result in damage to the partners.
Implications of the new Legislation
The new law for the regularization of assets brings similar opportunities for the transfer of corporate real estate from companies to their partners with tax benefits. However, it is essential to evaluate the legal and financial implications before closing any transaction.
Relevant Aspects of Law 27,743
Some key aspects of Law 27,743 should be considered by real estate owners and their professional teams upon evaluating the regularization of assets:
Regularization of Real Estate (Section 35): this section provides the requirements and proceedings for the regularization of real estate in Argentina owned by third parties. A special tax base is defined to calculate the Special Regularization Tax for a suitable assessment of the applicable taxes.
Special Tax Base (Section 36): a special tax base is established for the calculation of the Special Regularization Tax over the real estate market value, its purchase value or its minimum value, applying the most favorable criterion to the taxpayer.
Preservation of the Acquisition Cost (Section 37): taxpayers who regularize real estate will preserve the acquisition cost for tax purposes, with subsequent effects in the estimation of applicable taxes in future sales.
Transfer of Ownership (Section 38): a period of two (2) years is provided for the transfer of real estate declared in the name of third parties to its legitimate ownership, ensuring the effectiveness of the regularization and avoiding possible abuses or tax evasion.
Clients should have the counsel of an interdisciplinary team (legal, notarial and tax experts) upon carrying out this type of transactions.
Professional advice is required to ensure compliance with all legal regulations and optimize tax benefits. It is of the utmost importance to comply with the publications and notices required by law to ensure the validity and legal certainty of real estate transfers.
The new Law for the Regularization of Assets brings an excellent solution to those real estate owners seeking to reorganize their assets structure in an efficient and transparent manner. However, a broad comprehension of all relevant aspects is essential to ensure compliance with all legal provisions.
