Argentina: Stamp Tax: Statute Of Limitations – Calculation Of Term

The Contentious Administrative Court of Appeals of La Plata made an important contribution to rule of law by confirming that, regarding the statute of limitations on local taxes, the Civil Code is applicable to tax periods prior to August 2015, when the new Civil and Commercial Code came into force.

The Contentious Administrative Court of Appeals of La Plata has confirmed that, regarding the statute of limitations, the Civil Code is applicable to tax periods prior to August 2015, when the new Civil and Commercial Code came into force. It has also reaffirmed its ruling according to which it is unnecessary to initiate a refund claim to obtain reimbursement of the sum paid to be granted access to judicial review. In this case we are commenting a judgment of great importance as it contributes to rule of law on an uncertain topic.

1. The Case

On August 2, 2016, the Contentious Administrative Court of Appeals of La Plata, Province of Buenos Aires, issued a judgment in "ALUSUD ARGNETINA S.A.I. y F. c/ FISCO DE LA PROVINCIA DE BUENOS AIRES s/ PRETENSIÓN ANULATORIA – OTROS JUICIOS" (Case File No. 12,890), which upheld the ruling previously issued by the First Instance Contentious Administrative Court No. 2 of La Plata which had revoked the tax assessment made by the local Tax Authority ("ARBA") with respect to Stamp Tax.

In December 2007 the local Tax Authority (at the time, "Dirección Provincial de Rentas") assessed Stamp Tax on a technology transfer agreement executed on April 20, 1993. Even though 14 years had passed since the execution date, the local Tax Authority claimed that the term of the statute of limitations must be calculated from the date when the Tax Authority became aware of the agreement, on November 23, 2005.

The local Tax Authority claimed that Law No. 13,529, Section 5 was applicable to cases such as this one, involving a transfer technology agreement, which set forth a 5-year period for the statute of limitation. Therefore, the local Tax Authority held that the term for the statute of limitations had initiated on January 1, 2006 and that at the time of the tax assessment, in December 2007, it had not run out.

The tax assessment was challenged before the Appellate Tax Court. On October 27, 2011, more than 18 years after the execution date of the technology transfer agreement, Room II of such Court decided to uphold the tax assessment, revoking the fines imposed on the Company. The Appellate Tax Court rejected the application of the Civil Code with respect to the statute of limitations and concluded –in a majority opinion- that Law No. 13.529 was in effect applicable to the case. In accordance with its legal provisions, the period for the statute of limitations had initiated on January 1, 2006, therefore, it had not run out at the time of the tax assessment made in December 2007.

The discussion later carried on before the judicial courts, after the payment of the sums claimed by the local Tax Authority, and on December 3, 2014 the First Instance Contentious Administrative Court No. 2 of La Plata ruled in favor of the Company and revoked the tax assessment. The Court also ordered the reimbursement of the sums paid by the Company to be granted access to judicial review.

The Court held that the Civil Code was applicable with respect to the statute of limitations in accordance with the Argentine Supreme Court of Justice current doctrine. Pursuant to Section 4023 of the Civil Code, the period for the statute of limitations is one of 10 years, which must be calculated from the date of the obligation, meaning from the date the creditor is able to claim payment: in this case since April 20, 1993. Therefore, the Court stated that the period for the statute of limitations had run out.

The Court completed the analysis by pointing out that the period for the statute of limitations would also have run out in accordance with the provisions of Law No. 13,529. It was held that the technology transfer agreement was revealed when it was registered before the National Institute of Industrial Technology ("INPI") on November 25, 1993. Consequently, the period for the statute of limitations set forth in such law had run out at the time the local Tax Authority claimed the agreement was made public –on November 23, 2005.

The local Tax Authority appealed the Court's decision and on August 2, 2016, the Court of Appeals issued a judgment affirming that ruling.

2. The Court of Appeals' Judgment

Between the First Instance Court's judgment, in December 2014, and the date of the judgment issued by the Court of Appeals, in August 2016, the Civil Code ceased to be in force. In August 2015 the new Civil and Commercial Code entered into effect and as a result of Sections 2532 and 2560 of such Code the controversy regarding the provincial and municipal powers to legislate with respect to the statute of limitations was rekindled.

Even though in accordance with Section 2537 of the Civil and Commercial Code the application of local legal provisions with respect to the statute of limitations could only be admitted in connection with tax periods after August 2015, some administrative and judicial courts of the Province of Buenos Aires and the City of Buenos Aires challenged such conclusion with questionable arguments.

In this context the judgment of the Court of Appeals was issued on August 2, 2016.

In so far as is relevant here, the Court of Appeals examined 2 topics: (i) if the provisions of the Civil Code with respect to the statute of limitations are applicable and the effects of the enactment and entering into force of the Civil and Commercial Code; and (ii) if the initiation of a refund claim was necessary to obtain reimbursement of the sums paid in order to be granted access to judicial review.

Firstly, the Court of Appeals held that the provisions of the Civil Code were applicable. The Civil Code was in force and effect at the time of the execution of the technology transfer agreement and the exception set forth in Section 2537 of the Civil and Commercial Code that would allow the application of the periods for the statute of limitations established in this Code did not apply.

Secondly, the Court of Appeals held that the 10-year period for the statute of limitations set forth in Section 4023 of the Civil Code was applicable and that such term must be calculated in accordance with Section 3956: from the date of the obligation.

As a result, the Court of Appeals stated that the 10-year period for the statute of limitations was initiated on April 20, 1993, on the date of the execution of the technology transfer agreement and that it had run out at the time the tax was assessed on December 19, 2007.

The Court of Appeals also rejected the application of the exemption set forth in Section 3980 of the Civil Code because the local Tax Authority had sufficient powers to audit the taxpayer and there had not been any situations of difficulty or impossibility to pay.

Finally, the Court of Appeals reaffirmed its opinion according to which it is not necessary to initiate a refund claim to obtain reimbursement of the sums paid in order to be granted access to judicial review. It held that such criterion was justified on the grounds of celerity and procedural economy and that the reimbursement should be granted even if the plaintiff had omitted such claim at the time the lawsuit was filed. The Court of Appeals also stated that the position held by the local Tax Authority which required a refund claim, entailed an unreasonable delay which infringed the taxpayers' property rights.

3. Final Comments

We celebrate the judgment issued by the Court of Appeals as it contributes to stability and rule of law in a context of questionable precedents on which it was held that the Civil and Commercial Code should be retroactively applied with respect to the statute of limitations on local taxes. The Court of Appeals' defense of the principles of celerity and procedural economy by holding that the request of reimbursement of sums paid to be granted access to judicial review should be considered implicit in any claim of nullity of administrative acts.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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