On August 2022, the Federal Court of Corrientes – Secretariat 3, in files (1265/2021 and 1335/2021) upheld lawsuits filed by individuals affected by the Solidarity Contribution (the “Contribution”) set forth in Law 27.605, considering it a violation of the National Constitution. See our NL on this subject: https://canosa.com/another-tax-on-wealth-solidarity-and-extraordinary-contribution-to-help-mitigate-the-effects-of-the-pandemic/.
The judge in charge held that… “since the solidarity contribution is a public charge of an economic nature, it cannot be confiscatory and must respect the inviolability of private property“.
The Supreme Court of Justice has stated that in order for confiscation to occur, the State must absorb a substantial portion of the income or capital, the percentage above which it is important to absorb a substantial portion of the income was set at 33% as a ceiling, and must be calculated on the income produced by the assets, not on the capital.
In both cases, the Treasury intends to demand from individuals a percentage twice as high as the established ceiling of the 2020 income for the Solidarity Contribution, and in the words of the judge… “this would cause a clear absorption of the income already taxed by Personal Assets and Profits, resulting confiscatory in the light of the doctrine emanating from the Supreme Court of Justice of the Nation. The percentage of the taxed and exempt result that would be absorbed by the Extraordinary Solidarity Contribution, added to the tax on Personal Assets for the period 2020“.
For this reason, the judge held that the application of law 27.605 (Solidarity Contribution) “is manifestly unconstitutional because it constitutes a case of confiscation because there would be an absorption – by the state – of a substantial part of the plaintiff’s income“, and ordered AFIP (Federal Administration of Public Revenue) to refrain from applying the provisions of the law and its regulations in both cases.
Both rulings constitute an important and novel precedent against the “Wealth Tax” law promoted by Congress, which establishes a special tax on the wealth of individuals who have declared more than $200,000 million pesos in personal property tax.
