Amendment to the Civil Marriage Regime – Tax Treatment of Income and Assets

Law No. 26,618 introduced a significant amendment to the Civil Code allowing same sex marriage. As a result, some laws had to be revised, among them, the Income Tax Law and the Tax on Personal Assets Law.

It should be noted that both the Income Tax Law and the Tax on Personal Assets Law attribute to the husband the marital assets and the income those marital assets produced. These rules do not apply, however, when those assets were acquired with the product of the woman’s personal activities, there is a judicial separation of the assets, or the administration of the marital assets belongs to the woman due to a judicial decision.

When Law No. 26,618 was passed the terms “husband” and “woman” and any other term that referred to the gender of the spouses were modified creating uncertainty on the attributions that the referred tax laws made to the “husband” and “woman”.

In this context, on April 28, 2011 the Argentina Tax Authority issued Note No. 8/2011 to clarify the tax treatment that the marital assets and its income should be given, as follows:

In the Income Tax the attribution of income to each spouse should be as follows:

1. Personal activities (professional, employment, trade, commerce, industry).
2. Personal assets.
3. Marital assets acquired with the product of the profession, trade, employment, commerce or industry of one of the spouses.
4. Marital assets acquired with the benefits of any of the scenarios described in (ii) and (iii) above, in the proportion in which each spouse contributed for its acquisition.

In the Tax on Personal Assets the following should be attributed to each spouse:

1. All its personal assets.
2. Marital assets acquired with the product of the profession, trade, employment, commerce or industry of one of the spouses.
3. Marital assets acquired with the benefits of any of the scenarios described above, in the proportion in which each spouse contributed for its acquisition.

Due to this amendment each spouse must report its income and marital assets in the proportion in which each of them has contributed to its acquisition.