Escrow in Santa Fe levies the Stamp Tax on transfers between trustor and trustee.

By means of Resolution 29/2009 of the Provincial Tax Administration of the province of Santa Fe (published in the provincial BO on 7.22.09), the Provincial Treasury changed its interpretation on the fiscal effects of the transfer of fiduciary property between the settlor and the fiduciary. Until the sanction of this Resolution, the fiscal authority of this province interpreted “…that the transfer of the fiduciary property from the trustor to the trustee, included in the trust contracts constituted in accordance with the provisions established in National Law 24441, is outside the scope of the stamp tax only when said transmission does not entail any consideration or liberality from the trustee to the trustor.” (cf. general resolution (API) 16/2005 that is repealed with the aforementioned).

As of Resolution 29/2009, this tax criterion is completely modified considering that “… the transfer of the fiduciary property from the trustor to the trustee, included in the trust contracts constituted in accordance with the provisions established in National Law 24441, is subject to the provisions of article 167 of the Tax Code (t.o. 1997 and its amendments)”.

Consequently, this incidence of the development of the Trust, from now on, must pay the Stamp Tax.

The rationale put forward by the API in the recitals of the standard is summed up in the laconic expression that there has been a “…conceptual error, and therefore the situation must be recomposed”. In addition, he bases this change in tax criteria (which only operates towards the future) on the fact that, despite the fact that the transfer is carried out on a “trust basis”, it cannot therefore be avoided that what underlies the transfer is the onerous nature of said transmission since it can never be considered in isolation, but always in the light of economic reality.

This burden does not occur in all cases and, on the other hand, the interpretive guideline of the economic reality can also be used by the taxpayer himself.

We have always pondered, in relation to the transfer of assets to the trustee, that any interpretation on the application of the lien must attend to the characteristic that the transfer that the trustor makes to the trustee, this is by way of trust. The trustee does not pay any consideration for the trust property and does not undertake to do so. This absence of onerousness does not mean an act for free, because the trustee does not enrich himself with the transmitted assets, nor does he receive the value thereof for himself. The settlor does not intend to make a liberality in favor of the trustee, but simply transfers the assets so that the trustee fulfills an order with them.

In short, in the Escrow in Santa Fe, the trust now suffers an additional tax burden, ignoring the essence of this contract. It is only a guarantee and trust mechanism that protects the realization of one or more businesses other than the trust itself. Therefore, the trust is not an economically autonomous business. Nor does it mean an end in itself for the parties, since it only serves as a means to facilitate the realization of one or more other businesses to which the trust agrees, with a greater degree of certainty and legal certainty.