Taxation of international executives
Tax returns and compliance
Termination of residency
Economic employer approach
Types of taxable compensation
Salary earned from working abroad
Taxation of investment income and capital gains
Additional capital gains tax (CGT) issues and exceptions
General deductions from income
Tax reimbursement methods
Calculation of estimates/prepayments/withholding
Relief for foreign taxes
General tax credits
Sample tax calculation
All income tax information is summarized by KPMG, the Argentine member firm of KPMG International, based on the Argentina Tax Act 24885.
When are tax returns due? That is, what is the tax return due date?
Income tax returns
The deadline for filing individual income tax returns and paying any annual tax due depends on the final digit of the taxpayer’s tax registration number and it usually operates by mid April.
If the person is a holder of shares of companies whose fiscal year end is 31 December, and the shares are not quoted in the stock exchange, the due date is mid May.
Despite the abovementioned, in relation to fiscal year 2016, an exceptional deadline has been set forth for all taxpayers in relation to tax return filing. Deadlines will operate from June 12 to June 16 2017, depending on tax ID.
Informative income tax returns
Employees who are not registered with the Tax Authorities and whose only source of income derives from their salary, which has been subject to withholding at source, have to file an informative annual income tax return when their annual gross income exceeds ARS300,000. The deadline for filing such tax return is 30 June.
What is the tax year-end?
What are the compliance requirements for tax returns in Argentina?
Employees do not have to file tax returns unless:
What are the current income tax rates for residents and non-residents in Argentina?
Both residents and non-residents located in Argentina on a permanent basis (hereinafter NRPP)1, are subject to the same regular income tax rates.
Income tax table for 2017
|Taxable income||Tax base||Rate on excess||On the excess of|
|From ARS||To ARS||ARS||Percent||ARS|
Expatriates working in Argentina on a regular basis for less than six months (Foreign Beneficiaries) are taxed at a rate of 35 percent of their imputed Argentine source income, which is calculated at 70 percent of the gross amount received, making an effective tax rate of 24.5 percent. This tax is implemented by means of withholding, as a sole and final tax. Individuals residing in the country for more than six months will use the scaled rate table system mentioned above.
For the purposes of taxation, how is an individual defined as a resident of Argentina?
An individual who obtains a permanent residence from an immigration viewpoint or stays in Argentina for more than 12 consecutive months is considered a resident of Argentina for tax purposes.
The acquisition of the capacity as resident shall be effective as from the first day of the second month immediately following that in which some of the requirements mentioned above had been met.
However, those individuals who hold a temporary visa and whose presence in Argentina is based on the grounds of employment which is duly accredited and which requires their permanency in Argentina for a period not exceeding five years are not considered Argentine residents, but non-residents located in Argentina on a permanent basis (NRPP). NRPPs are only subject to taxation on Argentine-source income, but for the purpose of tax calculation, they shall be governed by Income Tax Law provisions applicable to Argentine residents.
Argentine residence for tax purposes is tied to residence for immigration purposes. This is an important consideration as residents are taxed on a worldwide basis.
Is there, a de minimus number of days rule when it comes to residency start and end date? For example, a taxpayer can’t come back to the host country for more than 10 days after their assignment is over and they repatriate.
In the case of foreign natural persons, who stay in Argentina with temporary authorizations granted pursuant to migration regulations during a twelve-month period, it should be understood that temporary presences abroad that, in a continuous or intermittent manner, does not exceed 90 days during every twelve-month period, does not interrupt the continuous stay in Argentina.
What if the assignee enters the country before their assignment begins?
The individual would be subject to Argentine income tax when he/she enters the country after obtaining his/her temporary visa. As explained above, the way of being subject to income would vary depending on the time the individual spends in Argentina. Working without the proper visa is prohibited.
Are there any tax compliance requirements when leaving Argentina?
Tax liability ceases when the status of resident is lost and there is no longer any income received from Argentine sources. Generally, individuals who fall within the status of fiscal residents in Argentina (i.e.: subject to worldwide income) lose their residence status when they acquire permanent residence in a foreign state -from a migratory standpoint- or remain in another country for a period exceeding twelve months or more (the temporary presence within Argentina that, in a continuous or intermittent manner, does not exceed ninety days during every twelve-month period, does not interrupt the continuous stay abroad).The loss of the capacity as resident shall be effective as from the first day of the second month immediately following that in which some of the requirements mentioned above had been met.
If the individual is registered under income tax, he will have to file income tax returns as long as he is deemed as a fiscal resident. The person should also apply for deregistration after filing said returns.
Non-residents (Foreign Beneficiaries) do not file annual income tax returns. In the event they receive income of Argentine source, such income shall be subject to tax through a withholding at source.
What if the assignee comes back for a trip after residency has terminated?
The period of time for which the individual will be working along with his/her residence condition must be considered in order to determine the income tax treatment to be applied.
Do the immigration authorities in Argentina provide information to the local taxation authorities regarding when a person enters or leaves Argentina?
There is no formal procedure in place but its implementation could be possible.
Will an assignee have a filing requirement in the host country after they leave the country and repatriate?
If an individual who qualifies as a NRPP in Argentina is registered under income tax and leaves the country, he should file a final income tax return and apply for deregistration, if applicable.
If the individual qualifies as a resident for income tax purposes, he should file an annual income tax return until the residence condition is lost. Upon losing such condition, he must apply for deregistration.
Do the taxation authorities in Argentina adopt the economic employer approach2 to interpreting Article 15 of the OECD treaty? If no, are the taxation authorities in Argentina considering the adoption of this interpretation of economic employer in the future?
Argentina adopts the economic employer approach to interpreting OECD treaty. The analysis of domestic regulations also leads to a similar line of reasoning.
In light of the above, it could be understood that no tax will be paid to the extent that:
Are there a de minimus number of days3 before the local taxation authorities will apply the economic employer approach? If yes, what is the de minimus number of days?
We consider that each case should be evaluated individually.
What categories are subject to income tax in general situations?
As a rule, it can be stated that all types of compensation and benefits received by an employee for services rendered in Argentina constitute taxable income, regardless of where they are paid. Typical items of an expatriate compensation package, which are fully taxable, include:
Are there any areas of income that are exempt from taxation in Argentina? If so, please provide a general definition of these areas.
In general, most compensation items are taxable for Income Tax purposes.
No, except for the case in which the tax reimbursement relates to a prior assignment abroad and the individual is deemed non-resident in Argentina.
No. However, actual moving expenses reimbursed by vouchers are not considered as compensation. On the contrary, if the employee receives a lump sum, this amount should be taxable.
Only if the trip could be considered a business trip. This exception only applies to the assignee, not to the family members that could travel with him/her.
As long as they are necessary for the assignee's development in the Argentine company. Dependent's education is always taxable in Argentina.
No, except for the case in which the bonus relates to a prior assignment abroad and the individual is deemed non-resident in Argentina.
Are there any concessions made for expatriates in Argentina?
Expatriates who are living in Argentina for less than six months and are working on a regular basis are subject to a withholding tax of 24.5 percent.
If they come to the country for a period longer than 6 months and shorter than 5 years, with a temporary visa, expatriates are considered nonresidents with permanent presence (NRPP) and thus subject to income tax only on Argentine-sourced income.
Is salary earned from working abroad taxed in Argentina? If so, how?
Remunerations from overseas are taxable if received by an Argentinean resident. Nonresidents are only taxed on Argentine-sourced compensation (income derived from work performed in Argentina, irrespective of the place in which it is collected).
Are investment income and capital gains taxed in Argentina? If so, how?
Residents are taxable on their worldwide investment income.
Please note that Law 26,893 set forth a tax reform on capital gains and dividends, effective as from September 2013.
As a result of such reform, the net gain resulting from the sale, exchange, barter or disposition of shares, quotas, titles, bonds and other values is taxed at a 15% rate (there is an exemption for resident individuals that applies only to shares, titles, etc. that are traded through exchange markets authorized by the Argentine Securities and Exchange Commission).
Other capital gains are generally not taxable.
Notwithstanding the abovementioned, please note that non-tax residents are not subject to tax on foreign-source income.
Dividends distributed by foreign companies to residents, interests and rental income are taxable at regular income tax rates.
Notwithstanding the abovementioned, please note that non-tax residents are not subject to tax on foreign-source income.
Note that law 27.260 has repealed the 10% tax withholding on dividend distributions by domestic entities to both national and foreign shareholders.
Gains from stock option exercises are taxable at exercise based on the difference between the stock fair market value and the strike price set in the plan and paid.
|Residency status||Taxable at:|
* Based on the time of permanence in Argentina from grant to vesting.
Tax treatment of capital losses should be analyzed in each specific case.
The specific case should be evaluated.
Gifts are usually non taxable, but each specific case should be evaluated.
Are there additional capital gains tax (CGT) issues in Argentina? If so, please discuss?
No, there are not. Please refer to our previous comments on capital gains taxation.
Are there capital gains tax exceptions in Argentina? If so, please discuss?
Please refer to our previous comments on capital gains taxation.
What are the general deductions from income allowed in Argentina?
Among others, the following deductions are allowed (subject to strict limitations and conditions): social security contributions, voluntary medical care, certain gifts, life insurance premiums, burial expenses, interest related to mortgage loans, doctors, paramedical and health assistants’ fees, amounts paid for rents destined to the taxpayer’s home, etc.
Individuals living more than six months in Argentina can claim the following personal deductions:
* If the spouse or dependent child have been living in Argentina for more than 6 months in the year, and their income is not higher than the non taxable income.
A special deduction for compensation for services rendered is available. The amount that may be deducted is 51,967increased to 249,441.60, for employees.
Employees residing in certain specific provinces are able to compute higher deduction amounts.
What are the tax reimbursement methods generally used by employers in Argentina?
Current year gross up.
How are estimates/prepayments/withholding of tax handled in Argentina? For example, Pay-As-You-Earn (PAYE), Pay-As-You-Go (PAYG), and so on.
Withholdings are calculated and made by employer on a monthly basis.
Advance payments are made in five installments.
Individuals who receive income derived from sources other than remunerations must make advance payments.
The Tax Authorities requires payment of current year’s income tax liability during the year, before it is calculated through the annual return. These payments are made in five successive installments, equivalent to 20 percent, respectively, of the total income tax determined for the previous taxable year, less any amount withheld except those made as definitive payments.
The due dates for income tax prepayments are June, August, October, December corresponding to the fiscal year, and February of the following year.
Is there any Relief for Foreign Taxes in Argentina? For example, a foreign tax credit (FTC) system, double taxation treaties, and so on?
Foreign tax credits are available where Argentina taxes foreign-sourced income. When an expatriate is from a non-treaty country, Argentina will generally allow unilateral relief for foreign taxes payable, there being cap amounts applicable to such credits.
Additionally, Argentina has entered into several double taxation agreements that provide for the exclusion of the foreign sourced income from the taxable base or tax credits.
What are the general tax credits that may be claimed in your country? Please list below.
The calculation4 is based on the assumption that the assignee is a married taxpayer, carrying out his tasks only - in Argentina, with two children. It is also assumed that his three-year assignment begins on 1 January 2015 and ends on 31 December 2017. The taxpayer’s base salary is USD100,000 and the calculation covers three years.
|Moving expense reimbursement||20,000||0||20,000|
|Interest income from non-local sources||6,000||6,000||6,000|
Calculation of taxable income
Exchange rate for 2015: 1 USD = AR$ 9
Exchange rate for 2016: 1 USD = AR$ 13.43
Exchange rate for 2017: 1 USD = AR$ 15.86
|Days in Argentina per year||365||366||366|
|Income subject to income tax|
|Net housing allowance||108,000||161,160||190,320|
|Moving expense reimbursement||0.00||0.00||0.00|
|Total earned income||1,332,000||2,054,000||2,347,280|
|Deductions: Social Security and Medical Care||-97,336.46||-127,424.10||-141,430.56|
|Total taxable income||1,234,663.54||1,927,365,90||2,205,849.44|
Calculation of tax liability
|Taxable income as above||1,234,663.54
|Domestic tax rebates (dependent spouse rebate) - Married with 2 children, non-taxable income and special deduction||-124,761.60||-124,761.60||-398,719.60|
|Net taxable income||1,109,901.94
|Argentine tax thereon||374,965.68
|Total Argentine tax (including SST)||472,302.14||744,835.61
In connection with the company car, the amount of personal use has to be determined in order to tax such amount.
Foreign-source interest income is not taxable assuming that the individual qualifies as a NRPP.
Social Security for 2017 is estimated with current values, but the maximum taxable base is expected to change throughout the year.
As from fiscal year 2017, a 40% rent amount can be deducted for tax purposes, provided certain conditions are met. In order to avoid making this sample calculation more complex, we have assumed that the deduction requirements are not met.
1Please refer to the following section to check these definitions.
2Certain tax authorities adopt an economic employer approach to interpreting Article 15 of the OECD model treaty which deals with the Dependent Services Article. In summary, this means that if an employee is assigned to work for an entity in the host country for a period of less than 183 days in the fiscal year (or, a calendar year of a 12-month period), the employee remains employed by the home country employer but the employee's salary and costs are recharged to the host entity, then the host country tax authority will treat the host entity as being the "economic employer" and therefore the employer for the purposes of interpreting Article 15. In this case, Article 15 relief would be denied and the employee would be subject to tax in the host country.
3For example, an employee can be physically present in the country for up to 60 days before the tax authorities will apply the economic employer approach.
4Sample calculation generated by KPMG, the Argentine member firm of KPMG International based on tax regulations in force as of January 2017.
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