The Supreme Court of Justice confirmed that the assignment of rights is out of the scope of the value added tax

According to the relevant facts arising from the decision under analysis, the City of Resistencia, Province of Chaco, had granted San Buenaventura S.R.L., the concession of a cemetery and the company commercialized the use of the land and rendered complementary services related to the maintenance of the land.

The National Tax Authority (“Administración Federal de Ingresos Públicos”) argued that even though the commercialization of the land was exempted, it had to be considered subject to the value added tax because it was closely related to the complementary services, which were subject to VAT.

In the first instance, the National Tax Court (“Tribunal Fiscal de la Nación”) decided in favor of the tax authority and the taxpayer appealed. In the second instance, the Federal Court of Appeals in Contentious and Administrative Matters confirmed and the taxpayer appealed to the Supreme Court of Justice.

The Supreme Court revoked, concluding that the value added tax was not applicable. It focused its analysis on the nature of the transaction. In this sense, it highlighted that (a) during the whole process the transaction was characterized as a “concession”, when it should have been characterized as an “assignment of rights”; and (b) the transaction should have not been characterized as anything but an “assignment of rights”. Having said this, it concluded that the transaction was not exempted, but out of the scope of the tax.

The Supreme Court highlighted that a reasonable interpretation of the law could not lead to match an assignment of rights to a sale of movable property, a lease, a rendering of services or any other taxable event contained in the value added tax law.