Corporate restructurings performed in Argentina (e.g., mergers, spin-offs, transfers of on-going concerns within the same economic group) may enjoy tax-free treatment.
If structured as a tax-free reorganization, gains or losses realized from the transaction are not recognized as taxable income or deductible losses for Argentine CIT purposes. In addition, certain tax attributes are carried over to the surviving company.
Tax neutrality is achieved as long as the reorganization meets certain requirements: (i) continuity of business enterprise; (ii) continuity of ownership interest by substantially the same shareholders (80%) for at least two years after the reorganization; and (iii) notice of reorganization to the Argentine tax authorities. In addition, for the reorganized company’s net-operating losses to be carried over, ownership of an 80% interest for at least two years prior to the reorganization is also required.
Should the reorganizing companies not satisfy any of those requirements, the reorganization would be deemed a taxable transaction for Argentine tax purposes. As a result, each of the companies involved in the reorganization would have to assess and pay its tax liabilities arising from the transaction.