Introduction
Being South Amercia's second largest and the world's 23rd
economy1, Argentina
certainly attracts foreign investors, including investors in the
real estate sector.
The state of Argentina is a federal republic. In December 2007,
Cristina Fernández de Kirchner became the president and is expected
to maintain the broad policy stance of her husband and predecessor,
Néstor Kirchner.2
Argentinean legal system is one of the few in the world that
combines civil and common law.
In general, no restriction has been posed on foreigners. Land
and immovable properties can be owned by one person as well as more
than one person jointly. A full range of property rights are
available in Argentina, include freehold, leasehold, easements
rights, usufruct and so on.
The court system in Argentina can be slow, inefficient,
secretive, and even corrupt.3 Therefore, when
necessary, foreign investors may resort disputes via international
arbitration.
In terms of the fiscal system of Argentina, investors need to be
aware that Argentina has high tax rates. Both the top income tax
rate and the top corporate tax rate are 35%. Other taxes include a
value added tax (VAT) and assets tax.
Legal Guide
LAW
While the Argentina legal system is based upon the French civil
code, its Constitution is modelled after the U.S.
Constitution.4 In
short, the legal system of Argentina is one of the few in the world
that combines civil and common law.5 National Congress and Chamber
of Deputies are the legislative branches and the country's judicial
system is comprised of both federal and provincial courts.
The federal courts deals only with cases of a national character or
those to which different provinces or inhabitants of different
provinces are parties; the provincial courts deal with the cases
occur within the province in question.
In respect of the real estate sector, following are some of the
relevant laws:
- Constitution
- Civil Code
- Law 13,512 (Propiedad Horizontal)
- Law 24,441 (governing trust)
- Law 25,509 (Superficie Forestal)
- Act No. 19,724 (regulates registration of condominium
properties)
OWNERSHIP & RIGHTS
In general, there are no restrictions on foreign investments.
Foreign ownership of immovable properties is not restricted except
in certain areas, such as frontier zones, for national security
reasons, foreign investor must obtain consent of a Federal Agency
for the purpose of acquiring immovable properties. Normally such
consent will be granted.
The rights of immovable property are mainly defined in the
Argentinean Civil Code. Immovable property may be owned by
one person or more than one person jointly. Rights of
immovable property may also be purely contractual, such as
leases. Other rights include easements, which favours a
person rights over another person's land; and usufructs, which give
a person the temporary rights to use and profit from another
person's property.6
BUYING PROCEDURE
In general, all lands not under the public domain and related
real estate rights and its encumbrances must be registered with the
real estate registry of the area where the lands are situated, i.e.
Provincial Cadastral Organization. Rights of unregistered
lands are not effective against third party. Having said that,
certain contractual rights over property, for example, land leases
do not require to be registered.
The buying procedure is in general as follows:
Reserve the property
Once you have chosen
your ideal property, a reservation agreement is to be signed with
the seller and a reservation deposit needs to be paid (will form
part of the purchase price).
Due Diligence
Before signing the
preliminary purchase contract (off-plan property) or property sale
and purchase contract, it is important that to carry out a due
diligence check on the seller as well as the subject property. The
due diligence checklist may include:
- the company registration certificate (if the seller is an
entity) or proof of seller's identity (if the seller is a private
individual)
- proof of a personal who is duly authorised to sign all legal
documents (if the seller is an entity or an attorney of the
seller)
- the title certificate for the land
- the planning permission/consent (off-plan property)
- the building licence (off-plan property)
- all other relevant permissions for the commencement of the
project (off-plan property)
- any lien, debt, development finance, or encumbrances against
the land and/or the project
- at least one of bank guarantee, insurance and/or assurance
ensure the completion of the project or an escrow system to provide
security for the buyer's property payments (off-plan property)
- an independent quantity surveying (QS) system during the
construction period (off-plan property)
The above due diligence check is more appropriate to be done
through a local law firm or conveyancing lawyer.
Exchange Contract
Before singing
preliminary purchase contract (off-plan property) or property sale
and purchase contract, buyers are suggested to consult a local law
firm or conveyancing lawyer on analyse the risk, any unfavourable
terms of the contract. Upon signing of the contract, first
instalment/payment is often required.
Title Deed Transfer
Once the property is
completed, following steps shall be followed in order for the
seller to be able to transfer the title deed under buyer's
name:
- Seller to obtain a domain certificate and a personal annotation
certificate from the Real Property Registry
- A surveyor measures and values the property
- Obtain a certificate issued by a surveyor describing measures,
boundaries, and tax appraisal of the land and building
- The public deed is executed by the parties with the
intervention of a notary public
- After the execution of the public deed, the notary public files
the property transfer for registration with the Real Property
Register7
Taxation (for non-residents individuals)8
TAXATION WHEN acquiring/purchasing PROPERTY
| category |
tax/fee rate |
scope/remark |
| Valued Added Tax |
10.5% for residential building
21% for other buildings |
charged on new build or refurbished buildings |
| Stamp Duty |
a local tax and vary between provinces between 0.5%
and 2.5% |
jointed share between the seller and buyer |
TAXATION WHEN OWNING/HOLDING PROPERTY
| category |
tax/fee rate |
scope/remark |
| Income Tax |
levied from 9% to 35% |
|
| Personal Assets Tax |
1.25% |
calculated based on the assets value on 31st
December each year |
| VAT |
21% if rental value over $1,500 a month |
collected from tenant |
| gross revenue tax |
NIL if property owner is private individual |
|
TAXATION WHEN SELLING/DISPOSING PROPERTY
| category |
tax/fee rate |
scope/remark |
| Transfer of Immovable Property Tax (Impuesto a la
transferencia de inmuebles “TT”) |
1.5% |
this is a federal tax and subject to individual who are
transferring property |
| Capital Gains Tax (CGT) – called Income tax in Argentina |
17.5% of the 50% of the gain/profit |
effectively is 35% of the total
gain/profit |
| Stamp Duty |
a local tax and vary between provinces |
shared between the seller and buyer |
Argentina has signed double taxation agreement with a number of
countries. For more information on UK and Belize double taxation
agreement, please refer to HM Revenue & Customs' webpage:
http://www.hmrc.gov.uk/manuals/dtmanual/dt2500+.htm
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