Personal Assets Tax - Companies Are Allowed to Fulfill the Payment Obligation Using Their Own Tax Credits

The Personal Assets Tax Law provides an obligation to pay tax for shares or other equity participations owned by the holders that are individuals, which must be calculated and paid by companies ruled by Law No. 19,550.

In this case the taxpayer tried to cancel that obligation with its Value Added Tax credit and asked for compensation.

The Tax Authority denied the request on the grounds that compensation only exists where the subject of the tax debt and the subject of the credit against the Tax Authority are both identified. Here, this is not the case as it is not the company but its shareholders that are the subject of the Personal Assets Tax payment obligation.

The Attorney General had understood in accordance with the previous decisions in the case that compensation existed because from the wording of the legal norm it is undeniable that only the company is liable before the Tax Authority for tax that would correspond to shareholders.

On July 12, 2011 the Federal Supreme Court decided, adhering to the Attorney General’s opinion, that companies ruled by Law No. 19,550 could pay their payment obligation of the Personal Assets Tax using their own tax credit.