Licensing and Technical Agreements

SYNOPSIS

A. LICENSING AGREEMENTS

1. Between parties domiciled in Argentina 19.101
2. When the licensor or provider of technical
    assistance is not domiciled in Argentina 19.102

A. LICENSING AGREEMENTS

1. Between parties domiciled in Argentina

19.101 Licensing agreements or technical assistance contracts entered between parties that are domiciled in Argentina do not have a special legal regime and are subject to the general provisions of the Civil or Commercial Code. Consequently, there is absolute freedom as to the contractual provisions agreed by the parties with the same limitations as any unlegislated contract.

2. When the licensor or provider of technical
    assistance is not domiciled in Argentina

19.102 Licensing and technical assistance agreements with a valuable consideration that are entered between licensees that have their domicile in Argentina and licensors or technical assistance providers domiciled abroad covering transfer or licensing of technology or trade-marks must be registered for information purposes before the INTI. When the contract is entered between a foreign company and a local subsidiary it controls directly or indirectly or an affiliate of it, the agreement is to be considered, for all purposes, as entered between independent parties when their considerations and conditions comply with normal market practices between independent parties. Failure to register these contracts does not affect their validity but licensee can not deduct as an expense any consideration on licensor’s behalf for income tax purposes and the whole of the amount paid as a consequence of such acts is to be considered as net income of the licensor.

19.103 The requisites for registration are few; the submission of three copies of the agreement in Spanish or translated into Spanish, without need of certification or legalization of the signature of the party domiciled abroad and a form or affidavit with information regarding the licensee’s business and a five year sale projection that will be the basis for calculation of the registration fee. The person signing the forms for the licensee must justify his power of attorney.

19.104 The registration fee is of 1º/00 (one per thousand) of the estimated fee to be paid during the term of the contract.

19.105 Income tax withholding on royalty payments is considered in Chapter 13 - Tax Regulations.