Trust distributions to residents in civil law countries


(Mbarajas) #1

Gifts from parents and spouse and inheritance income are tax exempted in Mexico, but offshore trust distributions may be taxed to beneficiaries other than settlor if not falling within one of those definitions. What are that tax consequences in other LATAM countries?


(Nmalumian) #2

Excelent question! In the case of Argentine individuals that receive payments from a foreign trusts, the benefits will be subject to tax unless it can be proved that the were funded with the original contribution of the settlor of the trust. Therefore, a good accounting of the trust that allows to prove t he origine of the funds distributed is key!


(Alvaro Aguilar-Alfu) #3

Panama abolished the gift tax in the 80s which would have been applicable to these distributions when the settlor is not a close relative.
However, gifts received by beneficiaries must still be listed as income for income tax purposes when earned from local activities, but not when earned from foreign activities.
DTAs may provide relief for beneficiaries of some countries.