Peruvian Income Tax at a Glance

Peruvian Income Tax (IT) is based on the source of the income, the nature of the taxpayer and their residence for tax purposes. Resident taxpayers are subject to IT across their global-source income and non-resident taxpayers are subject to IT only across their Peruvian-source income. 

Resident individuals are taxed under a schedular system with progressive rates ranging from 8% up to 30% (on annual income of approximately USD62,300 upwards) applicable to labour income and foreign-source income, from which certain small expenses are deductible. A fixed tax rate of 5% applies to Peruvian-source dividends, interest, royalties, or local capital gains obtained by resident individuals or undivided successions (estates). Also, joint tax returns can be filed by spouses and/or undivided successions (estates). 

Non-resident individuals are subject to a 5% rate on dividends, a 4.99% rate on interest (under certain conditions), a 5% rate in case of capital gains from the disposal of securities within the Lima Stock Exchange (LSE), and a 5% rate in case of capital gains or lease income derived from real estate located in Peru. Other kinds of Peruvian-source income are generally subject to a 30% rate. If the payor of the income is a Peruvian resident, the IT will be paid through a withholding mechanism; otherwise, it will have to be paid directly by the non-resident. In addition, the cost basis for determining capital gains outside the LSE will have to be certified by the Peruvian tax administration prior to any payment being received, to allow its deduction.

Individuals are deemed to be residents for tax purposes if they are Peruvians and have domicile in the country. Foreign and Peruvian individuals will acquire tax residency if they stay in the country more than 183 days in any 12-month period, effective on 1 January of the following year after this condition is met. In the case of undivided successions, they are considered residents if the deceased was resident at the date of death. Finally, spouses that have decided to file a joint tax return will be considered residents if one of them is resident in Peru. 

Peruvian individuals could lose their tax residence status if they obtain a foreign domicile with the corresponding visa or a foreign working contract for a minimum of a year, effective once they leave the country. Also, Peruvian and/or foreign individuals will lose their tax residency status if they stay outside the country for more than 183 days in a 12-month period, effective on 1 January of the following year after this condition is met. 

Trust, Investment Funds and Foundations 

Local trusts and investment funds are considered transparent entities for tax purposes, liable to attribute their income to their beneficiaries on a yearly basis in the case of accrued business income, or when it is paid in the case of passive or foreign-source income. Income attributed to individuals’ beneficiaries is subject to IT withholding rates depending on its nature, except in the case of foreign source income which has to be declared directly by the beneficiary. 

Real estate trusts and funds (FIBRAs or FIRBIs) in Peru have a tax benefit in which investments made by individuals are treated as passive income, subject to the 5% IT rate, instead of the corporate IT rate of 29.5% that would otherwise be applicable to them. This benefit will expire on 31 December 2026.

Foreign trusts are treated as ordinary foreign entities (ie, non-resident companies); therefore, Controlled Foreign Company (CFC) rules may apply. For Peruvian CFC rules to apply, the Peruvian taxpayer must own or control an offshore entity that is deemed a CFC. 

With respect to foundations, associations and other non-profit organisations incorporated in Peru, these are generally not subject to or exempt from corporate IT. In this regard, they are not allowed to distribute their profits directly or indirectly to their founders and/or owners and have to apply their income to specific purposes within Peru. Other requirements are also applicable, depending on the kind of entity to be formed.   

CFC Rules

As of 1 January 2013, Peruvian IT legislation included CFC rules to avoid the deferral of foreign passive income, through the establishment of offshore entities (CFCs) which Peruvian residents (solely or with related parties) own and control, or in the benefits of which Peruvian residents participate.

If the participation in control, ownership or benefits is 50% or more and the CFC is taxed with an effective tax rate lower than 75% of the Peruvian corporate IT (29.5%), then the accrued passive income must be attributed to the Peruvian resident taxpayer at the end of the year. The applicable tax rate will be between 8% and 30% if the taxpayer is an individual, or 29.5% if it is an entity. 

Business income is excluded from the CFC regime but, if passive income obtained by the CFC is equal to or higher than 80% of its income, all the income will be deemed attributable according to the regime. 

Inheritance Tax, Gift Tax or Similar Transfer Taxes on Property

Peru does not have any wealth tax, inheritance tax, gift tax or similar transfer taxes on wealth. 

Nonetheless, donations and gifts granted to individuals could trigger unjustified capital increases subject to IT. Therefore, these transfers have to be supported by the following: 

i) a public deed, in the case of donations of goods and real estate that, according to civil law, require such a formality; 

(ii) a dated document (eg, a private agreement with signatures certified before a notary), which applies for donations of goods not included in (i); or 

(iii) a document that attests that the good was a wedding gift or similar, or a donation with a value of no more than 25% of a Tax Unit (approximately USD340), provided that (i) or (ii) is not applicable. 

The transfer of real estate property is subject to Alcabala Tax at a rate of 3% on the highest of either the self-assessment value or the sales value of the property. The higher of these values is then multiplied by the consumer price index (“IPM”) applicable to the month of the transaction and deducted in ten Tax Units (where one Tax Unit equals PEN5,150 at the time of writing, August 2024). The taxpayer will be the acquirer of the immovable property and inheritance transfers are not subject to this tax. 

In turn, the ownership of real estate is subject to Real Estate Property Tax, determined by applying the following rates to the self-assessment value of the property (which is determined by considering the municipal value of the land, buildings and fixed and permanent installations existing on the property), and is paid on a yearly basis: 

• up to 15 Tax Units – 0.2%;
• more than 15 Tax Units and less than 60 Tax Units – 0.6%; and
• more than 60 Tax Units – 1%.

Finally, a Financial Transaction Tax (FTT) of 0.005% is levied on each debit or credit transaction performed in Peruvian bank accounts. Peruvian law also states that payments in cash not using a bank account are not recognised for tax purposes as, for example, expenses, costs, fiscal credits, tax recovery and so on. 

The Peruvian tax regime does not have inheritance, gift or similar transfer taxes.

Capital Gains From Securities Transfer

With respect to tax benefits applicable to non-resident investors (entities or individuals), capital gains derived from the disposal of securities listed and traded within the LSE are subject to a preferential tax rate of 5%; instead of the general capital gains tax rate of 30%.

Other IT benefits apply to foreign-source capital gains obtained by resident individuals within the MILA (Mercado Integrado Latino Americano) stock market, which includes the stock exchanges of Peru, Chile, Colombia and Mexico. These capital gains are subject to a preferential and flat tax rate of 6.25% instead of the general foreign-source rates ranging from 8% up to 30%.   

It is important to point out that the cost basis of securities that were acquired prior to 1 January 2010 will be the highest of either the fair market value of the securities on 31 December 2009 or the cost paid. This step-up rule was established for securities transfers that, prior to 1 January 2010, were tax exempt (eg, individuals were only subject to taxes if they performed 20 purchases and 20 sales of securities in a year). 

In turn, as of 1 January 2013, the cost basis of securities received by individuals as inheritance or donations is the same as that which applied to the deceased or the donor prior to the transfer, provided that this can be duly verified with notarised or public documents and/or proof of usage of the Peruvian Financial System. No step-up rule was established for this situation. 

Capital Gains From Real Estate Transfers

Regarding capital gains derived from the disposal of immovable property, if they were acquired prior to 1 January 2004, they are not subject to IT. Also, the disposal of real estate that qualifies as a “principal residence” is not subject to capital gains tax. 

Other local real estate transfers performed by individuals are subject to a capital gains tax of 5%; however, from the third transfer in a calendar year onwards, income from these transfers is treated as “business income” subject to the corporate IT rate of 29.5% (or 30% in the case of non-residents). 

This qualification will remain for the following two calendar years. Nonetheless, the transfer of inherited immovable property and principal residences, the contribution in guarantee of real estate to local trusts, and transfers made through securitisation trusts or investment funds (without prejudice to the nature of the attributed income) should not be included in the calculation of “business income”.   

Other Tax Benefits for Individuals

Finally, the IT Law establishes permanent tax exemptions for interest paid by Public Bonds and other debt securities issued by the Peruvian government, gains obtained through Peruvian pension funds, and indemnities or gains obtained from the premiums paid by Peruvian life insurance companies. Also, any kind of fixed or variable interest and gains paid by the Peruvian Financial System to saving accounts or bank certificates are tax exempt for individual holders, although this is a temporary exemption until 31 December 2026.

From a Peruvian tax perspective, the ownership of real estate by a non-resident individual or non-citizen is only subject to Real Estate Property Tax (described in 1.1 Tax Regimes) and other non-relevant municipal charges. 

It should be noted that the acquisition of real estate is subject to Alcabala Tax (described in 1.1. Tax Regimes), unless it is the first sale of the constructor; however, in this case, it will be subject to VAT at a rate of 18%, applicable only to the value of the building. 

The disposal of real estate by a non-resident individual is subject to capital gains tax with an effective tax rate of 5%. To determine the taxable capital gains, the non-resident will have to certify its cost basis before the Peruvian tax authority prior to receiving any payment, otherwise the cost basis will not be deductible. The regulations described in 1.3 Income Tax Planning for real estate transfers apply. 

Regarding the transfer of real estate holding companies, this is subject to the regular capital gains tax (see “Capital Gains From Securities Transfer”, under 1.3 Income Tax Planning). 

Tax incentives have been approved to promote the development of investment funds (FIRBIs) and securitisation trusts (FIBRAs) that make investments in real estate for renting (such as REITs in the United States or FIBRAs in Mexico), provided that certain requirements are met. The incentives allow the investors to defer the recognition of capital gains tax derived from their contribution of real estate to such funds or trusts, until the point at which the fund or trust transfers its securities or transfers the real estate property to a third party. In the case of funds, the incentives also allow the acquirer of the real estate to defer payment of the Alcabala Tax until either of the aforementioned events occur (ie, the investors transfer their securities, or the fund transfers the real estate property to a third party). 

Likewise, individuals that invest in such specific funds or trusts will be subject to a reduced withholding tax of 5%, instead of the regular corporate tax rate of 30% (this rate applies since it is deemed that renting generates business income). This tax rate is calculated on the income attributed to the FIBRA or FIRBI. 

As previously stated, there are no wealth, gift, inheritance or similar taxes in Peru. However, in previous years, Congress received three different bills to establish wealth taxation due to the COVID-19 situation in Peru. The discussion regarding the enactment of such a tax has currently been suspended. 

Regarding relevant tax changes, Congress recently approved a bill to enact an income tax amnesty, for undeclared net income obtained up to 31 December 2022. At the time of writing (August 2024), the law is still pending publication in the official gazette. 

Tax amnesty establishes tax rates of 10% (if income is just reported) and 7% (when income is reported, repatriated and invested in Peru) on the unreported income, provided that some legal requirements are met. This programme will expire on 29 December 2024. 

General Anti-Avoidance Rule (GAAR) Within the Tax Code

The Peruvian Tax Code has had a General Anti-Avoidance Rule (GAAR) granting the Peruvian tax authority (“SUNAT”) power to challenge tax avoidance since 19 July 2012. However, this power was suspended until 2019, when the regulations for its implementation were finally approved by the government. Prior to this, SUNAT was only able to challenge sham transactions.   

On the other hand, the amendments to the Tax Code introduced a new case of joint liability, which applies in the case of acts that constitute “tax avoidance”. In such cases, the responsibility will be attributed to the legal representatives if they have collaborated with the design, approval or execution of acts, situations or economic relations described in the GAAR. 

Moreover, the amendments established that the board of directors is liable for defining the tax strategy of the company and deciding on whether to approve acts, situations or economic relations to be carried out within the framework of fiscal planning. It has been expressly stated that this faculty is non-delegable.

UBO

Entities incorporated in Peru and legal agreements established therein (ie, trusts, investment funds and consortiums, among other associative agreements) are required to file an affidavit before the Peruvian tax authority identifying their ultimate beneficiary (“UBO”). 

This obligation also applies to non-resident legal persons that have incorporated a branch, agency or other permanent establishment (PE) in Peru, as well as to legal entities established abroad whose manager and/or administrator is domiciled in Peru, and to consortiums constituted abroad that nonetheless have a Peruvian-resident party. 

Failure to submit such an affidavit may result in the imposition of a fine equivalent to 0.6% of the fiscal year’s net income (which will be no less than five Tax Units and no more than 50 Tax Units), as well as in the joint liability of legal representatives for any tax debt and in the inability to access certain notarial services. In addition, any modification of the UBO must also be communicated to SUNAT. 

Common Reporting Standard and FATCA

Peru is involved in the US Foreign Account Tax Compliance Act (FATCA) and is a signatory of the Common Reporting Standard (CRS), both of which require Peruvian financial institutions to report non-Peruvian residents’ financial information. 

One of the primary factors affecting succession planning in Peru has been the lack of a culture of creating sophisticated wills and planning a structured succession, even in families with high net worth. Until recently, making wills was not part of the Peruvian mindset. Many patriarchs or matriarchs of significant wealth passed away intestate, and if they did create wills, the wills were simple and did not contribute much to the organisation of the succession. However, this mentality has changed significantly in recent years, especially among families with very high, high, and medium net worth, as they have started making wills guided by specialised lawyers in the field. 

Likewise, another related factor has been the limited culture of creating family protocols. Currently, families with very high and high net worth are seeking ways to implement family protocols and other elements that contribute to organising their wealth within the family. 

A third factor has been the fact that trusts have not been widely promoted or used for estate planning and succession purposes. The culture of trusts has not been widely spread in Peru. However, as with the above cases, in recent years the culture of estate planning has been increasing in Peru, leading to greater dissemination and use of living trusts that help in organising the estate after the trustor’s death. Likewise, families with very high net worth are also establishing Anglo-Saxon trusts or private interest foundations abroad, especially for certain assets not located in Peru (eg, shares in companies incorporated overseas). 

Peruvian tax planning is mostly focused on compliance with GAAR and CFC rules, in order to prevent challenges by the tax administration regarding implemented structures.

The Peruvian Civil Code establishes that the following persons are forced heirs:

(a) children and other descendants; 

(b) parents and other ascendants; and 

(c) the spouse (or formally recognised co-habitant).

These forced heirs have the right to receive what is called the “legítima” or legitime (a percentage of the inheritance reserved for them).

In cases where there are forced heirs, testators can freely dispose of: 

• up to one third of their assets in favour of whomever they wish, in cases (a) and (c); and 
• up to half of their assets in favour of whomever they wish, in case (b). 

The portions not available in each case constitute thelegitime of the forced heirs. 

There are two property regimes that a couple can choose when getting married: (a) the so-called “sociedad de gananciales” (community of marital property); and (b) the “separation of assets” regime. 

In the first case, all the assets acquired by the spouses are considered as the property of the community of assets formed by both. Thus, once an asset becomes part of the sociedad de gananciales (whether acquired by both spouses or by just one of them), neither spouse can dispose of the asset without the involvement of the other. There are exceptions regarding certain assets that are considered as separate property even after the marriage. Examples include inheritances and other assets acquired gratuitously. 

In the second case, the marriage does not create a common property community, so the assets acquired by each spouse are considered as the separate property of the spouse who acquired them. Additionally, spouses can be co-owners if they both acquire an asset (each will be the owner of their percentage of participation in said asset). 

Although the regime must be chosen at the time of marriage, the Civil Code allows spouses to change their regime later through a public deed made before a notary, which is then registered in the public records.

For IT purposes, the cost basis of acquired securities or immovable property (which are the only property that triggers capital gains IT for individuals) will be determined by the amount paid for the acquisition. However, if the acquisition was made free of charge, the cost basis will either be zero or the cost basis the transferor had at the date of transfer, provided that such a cost can be substantiated with appropriate public documentation.

An inheritance advance made in favour of heirs apparent (forced heirs) is not subject to IT (either for the transferor or for the beneficiary) or the Alcabala Tax, in the case of immovable property.

Nonetheless, the effect of this non-onerous transfer on the cost basis of the securities or real estate might not produce attractive results for the determination of further capital gains subject to IT. 

For example, acquirors of immovable property will have the cost basis of the transferors without a step-up rule that could increase such costs, which in a further disposal of such goods could trigger a higher level of taxable capital gains than that which might have been triggered for the original owner.

In addition, if the real estate was originally acquired prior to 1 January 2004, its disposal will not be subject to IT, which will not be the case when the acquiror transfers ownership to their own forced heirs and they transfer the property in a further transaction.

In this sense, depending on the financial or economic objective to be achieved, it could be advisable for the parents to first realise the assets and then perform an inheritance advance to their forced heirs in cash with the funds obtained.

Peruvian inheritance laws do not explicitly address digital assets, such as emails and cryptocurrencies, so they are not treated differently from the rest of the deceased person’s assets.

These digital assets are considered intangible (incorporeal) property and follow the same fate as the rest of the deceased person’s assets, without distinguishing between tangible or intangible assets. All assets will pass to the ownership of the heirs according to the applicable succession rules established in the Peruvian Civil Code. 

Regarding estate planning, there are legally two types of trusts: (a) testamentary trusts (established in the will and, consequently, only effective after the testator's death); and (b) living trusts (created during a person’s lifetime through a contract and effective from the moment of creation). 

However, testamentary trusts are rarely used in Peru because, being trusts established through a will, their creation takes effect only after the testator’s death (once the succession is open). Accordingly, this type of trust is directly subject to all the limitations established in Peru’s succession rules (eg, the rights of forced heirs). 

On the other hand, the trust created during a person’s lifetime (commonly known as a management or estate planning trust) is not established posthumously. Instead, it is created through a trust agreement when the person is alive, transferring ownership of the assets to the trustee. The trustee then holds the fiduciary title and carries out the tasks specified in the trust agreement. These tasks can be executed after the trustor’s death, serving as a tool to manage the estate after their passing. Therefore, there are legal grounds to support the position that the testamentary limitations explained above (forced heirs and legitime) do not apply to this kind of trust once the trustor dies since it is a fiduciary transfer made during the trustor’s lifetime and, consequently, the assets no longer form part of their estate (inheritance mass) at the time of death. However, there is as yet no legal precedent in Peru on this matter, so this scheme must be carefully managed for each client.

Regarding foundations, note that private interest foundations do not exist and are not permitted in Peru, unlike in other jurisdictions. According to the Civil Code, Peruvian foundations are necessarily non-profit organisations established by dedicating one or more assets to achieving religious, charitable, cultural or other social goals — not for the founder’s own benefit or that of their family.

Trusts are recognised and regulated under Peruvian law (more specifically, in the General Law of the Financial System). Moreover, within the limits established by the law, trusts are subject to the private autonomy of the parties who enter into them. This means that the trustors have the freedom to create a trust tailored to their needs, as long as it does not violate any rules of public policy. 

It is worth mentioning that, unlike in other jurisdictions, in Peru, only companies authorised by the Superintendence of Banking and Insurance (Superintendencia de Banca, Seguros y AFP) can act as trustees.

Aside from general trusts, there are securitisation trusts, which are regulated by the Securities Market Law and whose trustees must be companies authorised by the Superintendence of the Securities Market (Superintendencia del Mercado de Valores). However, unlike general or common trusts, these have a different purpose and are not related to estate planning.

From a tax perspective, being the beneficiary of a foreign vehicle (trust, foundation, etc) could mean that CFC rules are applicable and thus, could trigger taxation in Peru. 

In Peru, there has been no need for recent normative changes since, based on existing regulations, it has always been possible to create irrevocable trusts that allow the trustor to retain certain powers over the trust to make changes or authorise specific decisions (eg, modifying the beneficiaries of the trust). Such matters are not prohibited nor considered to be in violation of the rules that govern trusts and foundations, thus operating under the fundamental principle of Peruvian private law: what is not prohibited is legally permitted. Making changes to a trust is therefore simply a matter of appropriately regulating these matters in the trust’s constitutional agreement. 

On the other hand, as noted in 3.1 Types of Trusts, Foundations or Similar Entities, private interest foundations are not permitted in Peru. 

The most popular methods of asset protection are:

• specific corporate vehicles;
• trusts;
• family patrimony (patrimonio familiar); and
• application of investment treaties, if applicable. 

Regarding specific corporate vehicles, this involves setting up companies that serve to diversify the portfolio of assets or investments of a family estate. However, this is accompanied by a tax analysis to determine the costs and benefits of transferring assets to a company.

As for trusts, they are being increasingly used and present fewer difficulties than transferring assets to a company. One benefit is that the taxation of assets, where applicable, will not change simply because they are part of a trust estate. However, as trusts are regulated, and only companies authorised by the financial system can act as trustees, maintaining a trust may entail costs (eg, administration and maintenance fees charged by the trustees). 

Regarding the family patrimony (patrimonio familiar), this only applies to a real estate property owned by the constituent. It is a legal regime created by the owner of the property (which is usually the family home) to protect that property (typically used as the family residence or for sustenance) in favour of the beneficiaries (family members). The property affected by this regime is then protected from being seized by the owner’s creditors.

The most popular succession planning strategies currently involve creating a comprehensive will and establishing a living trust. The best alternative is to use both instruments together, acting in tandem with each other. 

For the will, it is essential to draft a sophisticated document that adequately covers the institution of heirs and legatees (if any), potential disinheritances, the appointment of executors, an inventory of assets, and a detailed list distributing these assets (indicating what goes to each heir). It should also anticipate possible conflicts among the successors, or between them and the executor (allowing for the establishment of testamentary arbitration). 

Regarding a living trust, this involves entering into a trust agreement, during the person’s lifetime, with a trustee who will manage and protect the assets and eventually distribute them to the beneficiaries (at the end of the trust or subject to the fulfilment of specific conditions established in the trust). These estate planning trusts are often accompanied by a manual of specific administrative rules, which is a private document that outlines the rules applicable to the specific family trust (eg, the creation of a management committee or assembly of trustee-beneficiaries). Note that it is common practice among Peruvian families to have more than one trust. For instance, assets located in Peru (real estate, shares, accounts, etc) can be placed in a local trust, while assets located abroad (such as investment properties or residences in a foreign country, or bank accounts, among others) can be placed in a foreign trust, either in that country or in a jurisdiction specialising in trusts.

By combining a well-crafted will and a living trust, individuals can ensure a comprehensive and effective estate plan that provides clarity, flexibility, and protection for their assets and beneficiaries. 

Regarding taxes, see 2.6 Transfer of Assets: Vehicle and Planning Mechanisms.

According to Peruvian IT Law, all transfers must be determined at fair market value and any adjustment must be made for the transferor and the acquirer. Moreover, related parties or transactions made from or through tax havens, non-cooperative countries or preferential tax regimes will determine the transfer’s fair market value according to the Transfer Pricing rules. 

In this sense, the market value applicable to any transaction must be duly supported by a valuation made by an independent party or, if applicable, according to the Transfer Pricing rules, and taking into account the IT rules and methodology established for such purposes.

Currently, due to the increasing sophistication and complexity in estate planning and succession transfers in Peru, the trend in disputes on this matter is toward contesting wills, and in some cases, contesting trusts established during the person’s lifetime. Both types of dispute occur after the death of the deceased and the opening of the succession. 

These challenges are often made by forced heirs who consider they have not received the forced legal share the law grants them concerning the inheritance, which the testator cannot dispose of or impose conditions on. In these disputes, the heir usually claims that the distribution made in the will and/or the allocations made through the trust transgress their legitimate portion. Another cause could be the disinheritance of a forced heir, although in Peru the possibility of disinheritance is very limited. 

Will contests are typically adjudicated in judicial courts, as there is not much custom of establishing testamentary arbitration procedures, despite the law allowing the testator to do so. On the other hand, challenges to trusts are often discussed in contractual arbitration, as trust agreements usually include an arbitration clause.

To avoid potential disputes, it is advisable for the patriarch or matriarch (testator and trustor) to establish in advance a conflict resolution mechanism that encompasses all possible claims regarding estate planning in a single medium. This can be achieved through an identical arbitration clause, for instance, in both the trust agreement and the will. For the latter, see 4.2 Succession Planning.

From the succession perspective, if a claim is based on the impairment of the legitimate share of a forced heir, then the compensation will probably be equivalent to the value of that share (legitime). There are cases where a forced heir will demand to be directly allocated a certain specific property or a percentage of the inheritance property (specific performance) instead of being paid (compensated for) the value of their impaired share (damages). However, the trend in such cases is to compensate the heir for the value of what they have missed out on, rather than granting them an asset not adjudicated to them by the testator. 

Furthermore, and without prejudice to the above, any other damage that can be proven by the affected party may be claimed through the general regime of civil liability, if applicable. In this case, the claimant can claim actual damages, lost profits and any other damage covered under the rules of civil liability in the Peruvian Civil Code. 

In Peru, the trust is regulated under the General Law of the Financial System (Ley General del Sistema Financiero, or LGSF). The law lists entities authorised to act as trustees, such as banks, financial institutions, savings and credit unions, and fiduciary services companies, as well as insurance and reinsurance companies. All these entities are supervised by the Superintendence of Banking and Insurance (the “Superintendence”) mentioned in 3.2 Recognition of Trusts. 

The LGSF establishes the following list of obligations that all fiduciary companies must comply with: 

• to care for and manage the assets and rights that constitute the trust’s patrimony with the diligence and dedication of an orderly merchant and loyal administrator; 
• to defend the trust’s patrimony, preserving it from physical damage as well as from judicial or extrajudicial actions that could affect or reduce its integrity; 
• to protect the assets held in trust by obtaining insurance policies covering the risks, as agreed upon in the trust agreement;
• to fulfil the tasks that constitute the purpose of the trust, carrying out the acts, contracts, operations, investments or business activities required with the same diligence as the fiduciary company applies to its own affairs;
• to keep an inventory and accounting records for each trust in accordance with the law, and to comply with the tax obligations of the trust’s patrimony, both substantive and formal, as provided by the legislation;
• to prepare balance sheets and financial statements for each trust, at least once every six months, as well as an annual report or memorandum, and make such documents available to the trustors and beneficiaries, without prejudice to their submission to the Superintendence;
• to maintain confidentiality regarding the operations, acts, contracts, documents and information related to the trusts, with the same scope established by this law for banking secrecy;
• to notify the beneficiaries of the existence of assets and services available to them within ten days from the time the benefit is due;
• to return to the trustor or their successors, at the end of the trust, any remaining assets of the trust’s patrimony unless, considering the purpose of the trust transmission, delivery to the beneficiaries or other persons is appropriate;
• to transfer to the new fiduciary company, in cases of substitution, the resources, assets and rights of the trust; and
• to provide an account to the trustors and to the Superintendence at the end of the trust or their involvement in it.

In Peru, there is no explicit provision for “piercing the veil” of a trust estate. The LGSF states that the trust estate is not liable for the obligations of the trustee or the trustor or their successors. 

Notwithstanding the above, there is recent jurisprudence (court rulings) that has allowed the seizure of assets within the trust estate as a consequence of unpaid labour claims. However, this is not a settled judicial precedent, but rather an isolated ruling at this time. 

There are no specific laws that encourage trustees to invest assets. However, as mentioned in 6.1 Prevalence of Corporate Fiduciaries, the current regulations establish a series of legal duties for trustees, stating that they must fulfil the tasks that constitute the purpose of the trust, making the necessary investments or transactions for that purpose, as agreed with the settlor (trustor) in the trustee constitution agreement.

As in the previous case, there are no specific laws on fiduciary investment in this context. However, as mentioned in 6.1 Prevalence of Corporate Fiduciaries, the current regulations establish a series of legal duties and standards of conduct for trustees. 

Notwithstanding the above, the parties involved in a trust agreement will typically determine the risks and limitations involved in the investment of assets. 

Peruvian Tax Residence

Regarding tax residence, refer to 1.1 Tax Regimes. 

Peruvian Migratory Residence

There are several migratory visas that allow foreigners to request a residence visa for Peru from the National Superintendence of Migrations, which authorises them to live and work in Peru for more than 183 days in one year. Examples of such visas include work visas, family visas and investor visas. 

In all cases, foreigners must submit their certificate of criminal, police and judicial records (issued no more than one year ago) from their country of origin or the country where they have lived for the last five years, duly apostilled according to the Hague Convention and translated into Spanish by an official translator authorised by the Peruvian Ministry of Foreign Affairs. Additionally, the foreigner must obtain their international police record from Interpol in Peru.

As a rule, the Immigration Authority grants a residence permit for one year, which is renewable on an annual basis. Moreover, the foreigner may not stay for more than 183 consecutive days out of a total of 365 days after obtaining their residence visa. If the foreigner maintains a Peruvian residence for at least three years, they can apply for indefinite residence, which grants them permanent residence in Peru.

Note on business travel

Foreign citizens travelling occasionally to Peru to supervise a company’s operations can obtain a business visa which allows foreigners with no intention of being residents in Peru to carry out activities related to corporate, legal, contractual and technical support matters (or similar activities). Therefore, a foreigner with a business visa can perform the following tasks, among others: attend meetings, supervise or control an investment in Peru, collect information regarding their company’s activities or business strategies, interview employee candidates, execute agreements (as a representative, if they have the necessary power of attorney to do so) and provide technical assistance.

The business visa will be valid for 183 days from a foreigner’s first entrance into Peru. In addition, a foreigner may not be in Peru with the migratory status of a business visa for more than 183 days within a period of 365 days since their first entrance. Hence, a foreigner cannot apply for two business visas per year due to this limitation. 

Peruvian Citizenship

Finally, Peruvian citizens by birth are those born within the territory of the Republic. Also considered Peruvian citizens by birth are those born outside the country to Peruvian fathers or mothers, who are registered accordingly during their minority. Furthermore, individuals who acquire nationality through naturalisation or choice, if they have residency in Peru, are also considered Peruvian citizens.

The following are specific cases in which a person can apply for Peruvian nationality:

• foreign citizens married to a Peruvian and residing in the country for at least two years after getting married can apply to the National Superintendence of Migrations for Peruvian nationality through marriage; and
• Spanish citizens who are 18 years or older and have a minimum of two consecutive years of legal residence in the country can apply to the National Superintendence of Migrations for Peruvian nationality through dual nationality.

In Peru, there is no specific regulation for estate planning mechanisms for minors or adults with disabilities. The general system of estate planning explained earlier (see 3. Trusts, Foundations and Similar Entities and 4. Family Business Planning) involving wills and trusts, would be applicable. However, it is important to note that where there is a minor or a person who is legally considered incapacitated, decisions and acts regarding the disposal of their assets and rights will be subject to the authorisation and oversight of family judges in most cases. 

In this sense, foreign entities, such as trusts and private foundations established abroad, can be utilised to preserve and manage assets located abroad, for minor children or adults with disabilities. These assets can be transferred once specific conditions are met.

The different types of guardianship are regulated in the Civil Code and the Code of Children and Adolescents of Peru. 

For adults, the legal guardian protects the incapable person, provides for their possible recovery, and, if necessary, places them in an appropriate establishment. The guardian also represents or assists the incapable person, depending on the degree of incapacity, in their legal matters. In Peru, a legal guardian cannot be appointed for an incapable person without a prior judicial declaration of interdiction, except for those who suffer a criminal penalty that carries with it civil interdiction. 

It is essential to consider that, in Peru, people can make advance appointments of whom they want to be their guardian if this becomes necessary. Any adult with full capacity to exercise their civil rights can appoint their guardian or substitute guardian by public deed before a notary public, in anticipation of being declared judicially incapacitated in the future. This act is then registered in the public records. The judge in charge of the interdiction process verifies the existence of the appointment by obtaining certification from the public records. The designation made by the individual binds the judge. 

The appointment of a legal guardian for minors, children and adolescents who are abandoned or at risk, or whose parents have been suspended or have lost parental authority, is mandatory. The order of preference for the appointment goes from the nearest relative to the most remote, and if they are equally related, the most suitable among them is chosen. Interested relatives can request the guardianship through a request for family care presented to the family court judge.

The Law of the Elderly in Peru aims to establish a normative framework that guarantees the exercise of the rights of the elderly to improve their quality of life and promote their full integration into the social, economic, political and cultural development of the nation. An elderly person is understood to be anyone who is 60 years old or older. The law sets forth a series of duties for family members regarding the elderly under their responsibility, such as:

• safeguarding their physical, mental and emotional integrity;
• satisfying their basic needs for health, housing, food, recreation and security;
• visiting them regularly; and
• providing the care they require according to their needs.

Furthermore, the Ministry of Women and Vulnerable Populations is responsible for exercising leadership in promoting and protecting the rights of the elderly, and is in charge of regulating, promoting, directing, supervising, sanctioning and evaluating policies, plans, programmes and services for the benefit of the elderly, in co-ordination with other competent government entities. 

On the other hand, considering the demographic trends that point to a greater ageing population and increased life expectancy, there is growing concern about the low levels of retirement savings and the lack of action on the part of individuals to prepare themselves to face expenses during old age. For this reason, the government approved the National Policy of Financial Inclusion with the aim of developing versatile services that may be attractive to those who are not yet preparing for old age, and even services that allow those who have already started their preparation to diversify and complement their strategies.

There is no legal distinction between natural and adopted children, or between those born inside and outside of marriage, in terms of estate planning and succession, as they have the same rights and obligations. This also applies to children born after the death of their parents. 

Regarding surrogacy, there are currently no regulations governing this matter in Peru, which creates a problematic situation in most cases due to the existing legal void. However, a few months ago, the Constitutional Court of Peru issued a decision recognising the registration of minors (twins) by the father only, without declaring who the biological mother of said minors is. The children were conceived through surrogacy at the father’s request, via surrogacy services in the USA, where the children were born. Subsequently, they were registered in Peru, indicating only the father as the sole parent.

In Peru, there are no laws recognising same-sex marriage. As planning mechanisms, shared bank accounts can be utilised. 

However, it is the case that same-sex couples marry in countries where same-sex marriage is regulated, and then come to Peru to request the recognition of their acquired rights from the judiciary. Currently, the jurisprudence (case law) has not been favourable to such requests, but it is expected that more cases will arise, and a final decision may eventually support the registration of same-sex marriages celebrated abroad.

Generally, donations from Peruvian entities are considered as non-deductible expenses for corporate IT purposes. However, if donations are made to non-profit organisations registered before SUNAT under the Donations Recipients Registry, they could be tax deductible up to a threshold of 10% of the taxable income that the donor obtained during the fiscal year, after the offset of carry-forward losses. Any excess will not be deductible. Moreover, the donation of well-preserved human food could also be deducted, but it cannot exceed 1.5% of the net sales obtained by the taxpayer for the sale of food, on a yearly basis. 

Resident individuals are also able to deduct donations given, up to the 10% threshold of their taxable labour and foreign-source income, provided that the beneficiary entity is registered in the charitable Donations Recipients Registry before SUNAT. 

The most common charitable structure used in Peru is donating in favour of recipients registered before SUNAT (see 10.1 Charitable Giving).