Gross Income Tax: Country Clubs are not subject to the tax

By Christian Cossio and Federico Cantisano – Managers of the Tax Litigation Department at Lisicki Litvin & Abelovich

Since they carry out non-profit activities, they are not liable for tax. It is appropriate to reject tax claims and file court rulings declaring that they are not subject to the tax.

ARBA is unlawfully demanding that Country Clubs pay the Gross Income Tax , even though they do not engage in profit-making activities. It is important that taxpayers not only reject these tax claims in the administrative proceedings initiated, but also pursue legal action to obtain a ruling declaring that they are not subject to the tax.

Based on Article 182 of the Provincial Tax Code, which establishes the application of the Gross Income Tax for the regular and paid exercise within the province of Buenos Aires of any activity—profit or non-profit—the Provincial Treasury is making adjustments and demanding payment of the tax from Country Clubs.

In most cases, the so-called "Country Clubs" are intended to manage and maintain all the common areas of the neighborhoods, on a non-profit basis . These expenses are covered by the fees paid by the owners and, eventually, by the contributions they make for the use of common services and facilities.

The provisions of the provincial regulations conflict with the Federal Co-participation Law, which establishes that the Gross Income Tax can only be levied on activities carried out by those entities that pursue a profit motive. This law supersedes the provisions of the Provincial Tax Code and establishes the basic guidelines according to which the tax can be applied. Accordingly, there are court rulings declaring the provincial regulations unconstitutional insofar as they tax non-profit activities.

This is how the La Plata Administrative Litigation Appeals Chamber ruled in the case of “Puers del Lago Neighborhood Association SA vs. Tax Appeals Court s/ annulment claim” on 10/17/23 and the La Plata Administrative Litigation Court No. 2 in the case of “Los Pinguinos Country Club SA vs. Tax Collection Agency of the Province of Buenos Aires (ARBA) s/ claim for declaration of certainty” on 4/04/25, concluding that as long as no lucrative activity is carried out, the tax is not payable.

This criterion coincides with the conclusion reached by the Supreme Court of Justice of the Nation in the case: "Cooperativa Farmacéutica de Provisión y Consumo Alberdi Ltda. v. Province of Chaco s/ amparo", dated 03/19/24, in which it held that the Gross Income Tax may only tax activities carried out for profit.

From the above it follows that to the extent that the entities that manage the Country Clubs fulfill their purpose , in the sense of managing the common spaces and facilities of said clubs without profit motive, they are not subject to the Gross Income Tax.

It is important that these taxpayers go to court to obtain a court ruling that the provisions of the Federal Co-participation Law prevail over the provincial Tax Code and, therefore, they are not liable to pay the tax.