A guide to structuring investment, business and private wealth between the United States and Latin America, and the tax and legal issues that come with it.

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The treaty gap

The United States has comprehensive income tax treaties with more than sixty countries. In Latin America, it has three: Mexico, Venezuela, and Chile. There is no US income tax treaty with Brazil, Argentina, Colombia or Peru, and none with most of Central America.

The Chile treaty is the newest and the most instructive. It was signed in 2010 but did not enter into force until December 2023, with withholding at source taking effect from February 2024. It arrived carrying two US Senate reservations, and unlike several other modern US treaties, it offers no withholding exemption for dividends between a parent and its subsidiary, or for interest or royalties.

Where no treaty applies, the default 30% US withholding rate on passive income from US sources stands.

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The estate tax gap

For private clients, the biggest single exposure in this corridor is often US estate tax.

A US citizen or domiciliary has a federal estate and gift tax exemption of $15 million for 2026. Someone who is neither US domiciled nor a US resident has an exemption of just $60,000 against US situs assets. That figure is not indexed for inflation and has not moved in decades. Above it, estate tax rises to 40%, and an executor has to file Form 706-NA within nine months of death.

What counts as US situs? US real estate and shares in US corporations fall inside the net. Cash in a US bank account and the proceeds of US life insurance generally do not. A Latin American client with a Miami apartment and a portfolio of US equities can carry serious exposure without ever having been a US taxpayer.

Estate tax treaties can soften this, but the United States has only around 15 of them, and none is with a Latin American country. In this corridor, the exemption stays at $60,000, and there is no treaty to work around it.

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Succession meets forced heirship

The second structural difference is succession law.

Most South American jurisdictions keep forced heirship, or legítima, inherited from Spanish and Portuguese law. Brazil's Civil Code reserves half of an estate for compulsory heirs, and that reservation overrides any will. Argentina, Chile, Colombia and Peru run comparable regimes, with different percentages and different classes of protected heir. Mexico and most of Central America moved away from forced heirship more than a century ago. This is why planning for a Mexican family and planning for a Brazilian family are not the same exercise.

As a result, common law planning tools do not always behave as expected. A trust set up offshore can be disregarded by a court at the settlor's last domicile if it defeats the legítima, and several civil law jurisdictions do not recognise trusts at all. Any arrangement meant to steer wealth away from compulsory heirs needs to plan for that challenge from the outset.

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What a good structure actually does

Tax efficiency is only the starting point. A well-designed arrangement should provide clear ownership, room for growth, a workable succession plan, and governance that lasts into the next generation. Depending on the goal, that might mean holding companies, trusts, special purpose vehicles or family investment entities, each with a distinct job to do, whether that is centralising ownership, protecting assets, simplifying investment management or preparing for a sale.

The checklist itself is familiar. Withholding rates, treaty availability, transfer pricing, permanent establishment risk, controlled foreign company rules, beneficial ownership, reporting obligations and substance. Three of these carry more weight in this corridor than elsewhere. Treaty availability matters because it is so often missing. Substance matters because an entity that has none is the first thing a tax authority challenges. And beneficial ownership matters because transparency registers now run across the region.

Planning for tax alone tends to produce arrangements that are more complex than the client needs and more fragile than the advisor wanted.

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Coordination is the hard part

Civil law and common law systems treat ownership, succession and taxation differently, and the rules across the region keep changing.

That makes collaboration a requirement. Lawyers, tax advisors, fiduciaries and corporate service providers each hold part of the picture.

Circumstances shift too. Business growth, a change of tax residence, an acquisition or a death in the family can each leave an arrangement that was right at the start no longer fit for purpose. The strongest structures tend to be lean. What marks them out is that they still do their job ten years later.

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About Affinity

We work alongside international tax advisors, private client professionals and family offices on cross-border structuring throughout the Americas and beyond. Our work runs from holding structures and trust planning to succession and private client advisory, delivering coordinated solutions for internationally mobile individuals, families and businesses.

If you would like to talk through US and Latin American structures, or wider cross-border planning, we would be glad to start the conversation. Contact our team at info@affinityco.com.

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