FIBRAS

2005 2006

USE OR ENJOYMENT SALE

SALE

• BUSINESS TRUST GOOD OPTION SALE REAL PROPERTY DEVELOPMENTS

TRUST

• GRANTOR: THIS IS THE PERSON WHO CONTRIBUTES ASSETS OR RIGHTS TRUSTEE: THIS PERSON IS RESPONSIBLE FOR COMPLIANCE WITH PURPOSES OF THE TRUST

• BENEFICIARY OF THE TRUST: • THIS PERSON RECEIVES THE BENEFIT OF

THE TRUST - IT CAN BE THE TRUSTOR HIMSELF

TRUST

• ARTICLE 318 GENERAL LAW ON NEGOTIABLE INSTRUMENTS AND CREDIT TRANSACTIONS– BY VIRTUE OF THE TRUST, THE TRUSTOR

TRANSFERS THE OWNERSHIP OR TITLEHOLDER OF ONE OR MORE ASSETS OR RIGHTS TO A TRUST COMPANY, AS THE CASE MAY BE, TO BE DESIGNATED FOR LAWFUL, DETERMINED PURPOSES. THE TRUST COMPANY IS GIVEN THE RESPONSIBILITY OF CARRYING OUT THOSE PURPOSES.

TRUST

• ARTICLE 382 LGTOC (INITIALS IN SPANISH)• PERSONS HAVING THE NECESSARY CAPACITY TO

RECEIVE THE BENEFIT IMPLIED BY THE TRUST CAN BE BENEFICIARIES OF TRUSTS

• ARTICLE 384 LGTOC (INITIALS IN SPANISH)• ONLY PERSONS HAVING CAPACITY TO TRANSFER

THE OWNERSHIP OR LEGAL TITLE OF THE ASSETS OR RIGHTS, SUBJECT MATTER OF THE TRUST, CAN BE TRUSTORS, AS THE CASE MAY BE, AS WELL AS THE JUDICIAL OR ADMINISTRATIVE AUTHORITIES WITH COMPETENT JURISDICTION THEREFOR

TRUST

• ARTICLE 386 LGTOC (INITIALS IN SPANISH)• ACCORDINGLY, ONLY THE RIGHTS AND ACTIONS

RELATING TO THAT PURPOSE MAY BE EXERCISED, EXCEPT FOR:

– THOSE EXPRESSLY RESERVED BY THE GRANTOR– THOSE DERIVED FROM THE TRUST FOR THE

GRANTOR OR– THOSE ACQUIRED LEGALLY WITH RESPECT TO

SUCH ASSETS, PRIOR TO THE CREATION OF THE TRUST BY THE BENEFICIARY OF THE TRUST OR BY THIRD PARTIES

TRUST

• ACTIVITIES CARRIED OUT THROUGH TRUSTS HAVE TAX EFFECTS:

1.- CONTRIBUTION OF ASSETS TO THE TRUST BY THE GRANTOR

2.- BENEFIT (YIELDS, EARNINGS) GENERATED BY THE TRUST AND RELIES ON THE PURPOSES OF THE TRUST

3.- THE PERSON RECEIVING THE BENEFIT WHO IS THE BENEFICIARY OF THE TRUST

TRUST• FORMS OF CREATING REAL PROPERTY TRUSTS:

– WHEN THE GRANTOR ALREADY HAS REAL PROPERTY AND WISHES TO CONTRIBUTE SUCH PROPERTY

– WHEN REAL PROPERTY FOR LEASE OR SALE IS ACQUIRED IN THE TRUST

• A COMBINATION OF BOTH• END: LEASE OR SALE• BENEFICIARIES OF TRUSTS WHEN THEY RECEIVE

THE YIELDS, WHO CAN BE THE SAME GRANTOR OR BENEFICIARIES OF TRUSTS

• A COMBINATION OF BOTH

TRUST (ART. 14 C.F.F.)

I. CONTRIBUTION OF REAL PROPERTY TO THE TRUST– ALL TRANSFERS OF OWNERSHIP ARE SALES– THAT CARRIED OUT THROUGH A TRUST, UNLESS:

• THE GRANTOR DESIGNATES OR BINDS HIMSELF TO DESIGNATING A BENEFICIARY OF THE TRUST OTHER THAN HIMSELF, PROVIDED THAT HE HAS NO RIGHT TO REACQUIRE THE ASSETS FROM THE TRUSTEE

• THE TRUSTOR LOSES THE RIGHT TO REACQUIRE THE ASSETS FROM THE TRUSTEE IF THAT RIGHT HAD BEEN RESERVED

TRUST

II. INCOME OR RETURNS GENERATED BY THE TRUST HAVE TAX CONSEQUENCES

- A TRUST IS NOT A FINAL TAXPAYER OF INCOME TAX

- A TRUST HAS NO LEGAL PERSONALITY FOR TAX PURPOSES - IT ACTS FOR ACCOUNT OF TAXPAYERS

TRUST

• EFFECT IF THE TRUSTOR IS NOT THE BENEFICIARY OF THE TRUST AND DOES NOT RESERVE THE RIGHT TO REACQUIRE THE ASSETS FROM THE TRUSTEE

– TAX SALE - VAT (IF APPLICABLE), INCOME TAX, ASSET TAX

BUSINESS TRUST(ARTS. 2 AND 13 LISR)

• WHEN BUSINESS ACTIVITIES ARE CONDUCTED THROUGH A TRUST:– THE TRUSTEE DETERMINES TAXABLE INCOME

OR A TAX LOSS IN TERMS OF TITLE II– BENEFICIARIES OF THE TRUST ACCRUES OR

DEDUCTS TAXABLE INCOME OR THE TAX LOSS– THE TRUSTEE IS BOUND TO MAKING ESTIMATED

PAYMENTS– THIS RESULTS IN A PERMANENT

ESTABLISHMENT FOR NONRESIDENTS– INCOME FOR INDIVIDUALS FROM BUSINESS

ACTIVITIES

BUSINESS TRUST

• EARNINGS RATIO

– TRUST ACTIVITIES

– WHEN THERE IS NO EARNINGS RATIO OR IN THE FIRST YEAR OF OPERATIONS

• EARNINGS RATIO PROVIDED FOR IN ARTICLE 90 INCOME TAX LAW

BUSINESS TRUST

1. GRANTOR

FBENEFICIARY OF THE TRUST

2. GRANTOR

FBENEFICIARY OF THE TRUST

TRUST(B) (C)

A) NO INCOME TAX IS DUE (DEFERMENT)

B) NO ASSET TAX IS DUE (DEFERMENT)

C) DETERMINES INCOME AND/OR LOSS

ESTIMATED PAYMENTS

CONTRIBUTES LAND REVERSAL CLAUSE (A)

$

TRUST

INCOME $200

LESS: DEDEDUCTIONS

ACCRUED INCOME 100 CUMULATIVE INCOME I.

TRUSTOR 50 50

THE BENEFICIARY OF THE TRUST

II. TRUSTOR 50

BENEFICIARY OF THE TRUST

THE TRUSTOR MAKES ESTIMATED PAYMENTS

BUSINESS TRUST

• ESTIMATED PAYMENTS MADE BY THE TRUST ARE REPORTED TO TRUSTORS, BENEFICIARIES OF THE TRUST, WHO WILL APPLY THEM BASED ON THEIR PARTICIPATION

• TAX REGIME OF PREPAYMENTS