Sign up for tax alert emails    GTNU homepage    Tax newsroom    Email document    Print document    Download document

March 1, 2021
2021-5241

Peru establishes gains from indirect transfer of Peruvian shares will be taxed only in Chile under Peru-Chile DTT

The ruling clarifies where capital gains derived from the indirect transfer of Peruvian shares through a transfer of Chilean shares by a Chilean resident will be taxed. The ruling is good news for Chilean residents that own Peruvian shares, as their capital gains will be taxed only in Chile if they indirectly transfer the Peruvian shares.

In guidance (Ruling No. 001-2021-SUNAT/7T0000), the Peruvian tax authorities established that capital gains obtained by a Chilean resident from the indirect transfer of Peruvian shares through the transfer of Chilean shares will be taxed only in Chile under the Peru-Chile double tax treaty (DTT).

Background

Peruvian income tax law sources the indirect transfer of Peruvian shares to Peru. The income tax law defines an indirect transfer as the transfer of shares of a foreign company that owns, directly or indirectly, shares issued by an entity incorporated within Peru, provided certain conditions are met.

Ruling

The Peruvian tax authorities concluded that capital gains obtained by a Chilean resident from an indirect transfer of Peruvian shares through a transfer of Chilean shares are taxed only in Chile.

According to Article 13(4) of the Peru-Chile DTT, capital gains obtained by a resident of a member country from the transfer of shares issued in the other member country could be taxed in the other member country (source country). Article 13(5) establishes that capital gains from the transfer of other goods will be taxed only in the transferor's country of residence.

In the indirect transfer of Peruvian shares, the shares transferred are shares issued in Chile, not in Peru. Therefore, the Peruvian tax authorities determined Article 13(4) does not apply. Article 13(5) applies to this situation, so capital gains will be taxed only in Chile.

_________________________________________

For additional information with respect to this Alert, please contact the following:

Ernst & Young Asesores S.C.R.L, Lima

Ernst & Young LLP (United States), Latin American Business Center, New York

Ernst & Young Abogados, Latin America Business Center, Madrid

Ernst & Young LLP (United Kingdom), Latin American Business Center, London

Ernst & Young Tax Co., Latin American Business Center, Japan & Asia Pacific

 
 

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

 

Copyright © 2024, Ernst & Young LLP.

 

All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.

 

Any U.S. tax advice contained herein was not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.

 

"EY" refers to the global organisation, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

 

Privacy  |  Cookies  |  BCR  |  Legal  |  Global Code of Conduct Opt out of all email from EY Global Limited.

 


Cookie Settings

This site uses cookies to provide you with a personalized browsing experience and allows us to understand more about you. More information on the cookies we use can be found here. By clicking 'Yes, I accept' you agree and consent to our use of cookies. More information on what these cookies are and how we use them, including how you can manage them, is outlined in our Privacy Notice. Please note that your decision to decline the use of cookies is limited to this site only, and not in relation to other EY sites or ey.com. Please refer to the privacy notice/policy on these sites for more information.


Yes, I accept         Find out more