To support its position, the then AFIP said that the activities of the Belgian company in our country had begun in 1997 with an extension contract of the Bahía Blanca plant, which had culminated in 1999, and also by application of the sub -section b) of section 3 of article 5 of the CDI, the services provided by Solvay at the Bahía Blanca plant constitute a permanent establishment in the country.
The Judgment of the Fiscal Court of the Nation
The Fiscal Court of the Nation revokes the determinative resolution of the Treasury, wielding that the fiscal claim regarding the tax on technical services and advice provided by the Belgian firm cannot be related, in terms of the existence or not of a permanent establishment, with the activity of expansion of the Bahía Blanca plant, which was developed in fiscal periods prior to those referred to in cars (PF 2001 to 2007).
Likewise, when considering the technical services independently of the civil work, it indicates that the budgets established in article 5.3.b) of the CDI with Belgium are not met, in which the Treasury framed its claim, given that the temporary threshold for the existence of the permanent establishment for the establishment of[i]. Depending on this, the TFN revokes the determinative resolution issued by AFIP.
What was resolved by the National Chamber of Appeals in Federal Administrative Litigation
As a consequence of the unfavorable result in administrative headquarters, the AFIP resorts to federal justice to insist with its position with two arguments: (i) the provision of services that Solvay developed as a result of the contracts signed with INDUPA, framed in the inc. b) of section 3 of article 5 of the CDI under examination, and; (ii) The development of such business activities at the Bahía Blanca plant also meets the requirements of section 1 of article 5 of the CDI, but without providing major details.
The Chamber confirms the pronouncement of the TFN, for which it states that it is the same inspectors of the Treasury who highlighted that in the period between 2000 and 2007 Solvay personnel had remained in our country on average 57 days per year. For this reason, it considers that the minimum period provided for in article 5.3.b) is not met.
It also understands that “The exposed considerations are also applicable to the argument offered by the AFIP-DGI in the sense that the Belgian company also met the requirements established in section 1 of art. 5 of the agreement to avoid the double imposition signed with the kingdom of to be considered as a permanent establishment, because, as it was seen, the AFIP did not prove that it existed by the firm Solvay Sa A fixed business place in which that company will totally or partially develop its activity ”.
The extraordinary resource deduced by the Treasury was denied, which generated the respective complaint resource, reiterating the treasury its argument: Solvay constituted a permanent establishment in Argentina, since the essential conditions provided for in article 5, section 1), of the CDI were verified in this regard.
The opinion of the Attorney General’s Office
In the April 2025 opinion, the Procuration formally declares the extraordinary appeal, understanding that the interpretation of federal norms is discussed, but does so to confirm the sentence of the Chamber and limiting the analysis to determine if Solvay constituted, or not, a permanent establishment in accordance with the provisions of art. 5th, section 3, points a) yb), of the CDI.
The procurement precisely analyzes the applicable regulations in relation to two points:
- “Design and supervision” activities of the works of expansion of the productive capacity of the INDUPA facilities: argues that the treasury feeds that the construction of the work was extended for two years, but does not claim or demonstrates that the “design and supervision” activities have been developed by Solvay within the national territory, during the controlled periods, by a period that exceeds the six months, which seals the adverse fate of AFIP.
- The configuration of a permanent establishment for the advice and consulting tasks provided by Solvay A INDUPA during the fiscal periods under study, in the terms of art. 5th, section 3. b), of the CDI with Belgium: notes that the position sustained by the empty collection entity of content to the norm and deprives of its scope, since it annuls the minimum threshold of stay in the country that demands the CDI, a requirement that is erected in an insurmountable obstacle for the existence of a permanent establishment.
However, the reasoning and conclusions reached by the Procuration in relation to the impossibility of applying paragraph 1 of article 5 of the CDI to determine that Solvay performed the advice and consulting tasks discussed by a permanent establishment require a more comprehensive analysis that contemplate comments to the OECD CDI model.
The criteria of the procurement of understanding that “the provision of services by a company, including consulting services, through its employees or personnel hired by the company for that purpose” has been typified- specific way- in art. 5th, section 3, b) and that such a typification reveals the will of the legislator to condition the existence of a permanent establishment for the execution of these actions at the fulfillment of the special elements required there is not integral and homogeneous with the rest of the CDI and the OECD model.
Indeed, section 3. b) of article 5 of the CDI with Belgium incorporates an independent clause of section 1 and extends its scope, providing the configuration of an EP for the provision of services even in the absence of a fixed place Business This does not imply that if the services are provided in a given place (and not in more than one) for a considerable period of time, that activity will constitute a permanent establishment in the terms of paragraph 1.
For this reason, the reasoning of the procurement that “the lack of verification of these specific requirements inhibits the existence of a permanent establishment is arguing, without it being appropriate, in its absence, to the generic definition of section 1”.
Finally, it is true that the AFIP recently incorporates the argument of the framing of Solvay’s technical services in article 5, section 1, of the CDI, in the brief of expression of grievances before the elevation, a situation that can lead to understand that it is an attempt of the Treasury to extend the cause and motivation of the contested acts. However, as the procurement indicates in point III of its opinion, “… in the task of establishing the correct sense of the norms of federal nature, the Court is not limited by the positions of the parties or of the Court appealed, but also incumbent“ a declaration on the point ”(Art. 16 of Law 48), according to the intelligence that she brightens them (arg. among others). “
Consequently, a correct interpretation of the regulations of the CDI analyzed, applicable to the facts described and verified in the case, must lead to the conclusion that the advice and consulting tasks carried out by Solvay in the Indupa plant in Bahía Blanca constitute a permanent establishment in terms of paragraph 1 of article 5 of the CDI with Belgium.
Regardless of the fact that it cannot be ignored that from the dictation of the determinative resolution to the proposals and allegations in administrative and judicial headquarters, the treasury has been inaccurate when carrying out the legal framework of the fiscal claim (and little effective when using all the probative material), interrelating the rules of sections 1 and 3 of article 5 of an agreement to avoid the double imposition based on the UN model To which the opinion of the prosecution arrives, it would imply limiting the power of the Argentine Treasury in similar cases.
[i] In fact, the aforementioned article 5 provides in its section 3.b) that the expression ‘permanent establishment’ also includes “the provision of services by a company, including consulting services, through its employees or personnel hired by the company for that purpose, but only in the case that such activities continue (in relation to that same project or related project) in the country, during a period or periods that in total exceed six months within any period of twelve months“
Lawyer and Public Accountant
Source: Ambito
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