The Federal Administrative Court No. 8 of the City of Buenos Aires has ruled in favor of a plaintiff, declaring the unconstitutionality of certain provisions within Law 27605 and Decree 42/2021.These provisions mandated the inclusion of contributions made to trusts, trusteeships and similar structures should be included..
In this particular case, the plaintiff had contributed assets to an irrevocable trust established under the laws of New Zealand. It is crucial to note that, due to the nature of this trust, the plaintiff lost both availability and ownership of the contributed funds, a fact acknowledged by the Federal Tax Authority itself in Official Opinions DI ASLE 1084/02 and DAT 9/13.
Upon careful examination of the trust’s characteristics, the judge concluded that it was an irrevocable trust, since the contributed assets ceased to be the property of the plaintiff, and the plaintiff had no authority to revoke the trust or retain decision-making powers over the direction of the assets. It is the “protector” of the trust who acts as a supervisor or controller of the fiduciary in the adoption of decisions, which cannot be made without his authorization. Since the trust was established abroad, it is governed by the regulations of the place where it was established.
Finally, the Court’s decision was grounded in the understanding that the transfer of property rights occurs from the settlor to the trustee, who is a third-party owner. In the trust, two properties coexist on the same asset, that of the trustee as the legal owner and that of the beneficiaries. Therefore, the settlor, who has transferred the ownership of his assets to a trust, and no longer has control over them, cannot be subject to the specified contribution, as the assets are no longer part of the settlor’s estate..
In this manner, it was established that the assets contributed to an irrevocable trust cannot be subjected to taxation under the taxpayer’s name, as they have ceased to be part of their estate and lack contributory capacity.
