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  • Residence and basis for taxation

    In Argentina coexist three levels of taxation which are Federal, Provincial (state) and Municipal level.

    An entity is deemed as resident for tax purposes when it is incorporated in Argentina under the laws of Argentina. An Argentine individual is considered a tax resident unless he or she loses his tax residence status by choice, obtains legal residence in other country, or by fact, when the individual is outside the country for at least a twelve months period, with certain exemptions.

    Domestic 

    Local entities and resident individuals are subject to income tax on domestic and foreign source income.

    Foreign 

    Non resident entities or individuals are taxed on income of Argentine source. The tax applicable is the income tax that comprises corporate earnings and capital gains. In general, a local resident paying to a foreign entity or individual is obliged to withhold income tax. The withholding rate varies in connection with the type of the payment.

    Permanent establishments are taxed as local entities on income attributable to the permanent establishment.

    Income tax on indirect transfer

    Income tax on an indirect transfer may apply if a non resident entity is transferred provided that at least 30 percent of value of the entity is represented by assets located in Argentina and provided that the transferor owns at least 10 percent of the capital of such entity.

  • Taxable income

    Domestic

    In general the taxable income in the income tax for resident entities and resident individuals is equal to gross earnings minus deductions. In general, all expenses incurred to obtain, maintain and preserve taxable income are deductible unless expressly forbidden.

    Foreign 

    Non resident entities and individuals are taxed in the income tax on the incomes of Argentine source. The local resident paying to a foreign entity or individual is obliged to withhold the income tax at a 35 percent tax rate applied on a presumption of taxable income that varies in connection with the concept by which the payment is made. The presumption of taxable income can be from 35 percent up to 90 percent of the amounts paid.

    For incomes connected to the transfer of shares, bonds or titles, or incomes connected with the rental of real estate or the transfer of assets located in Argentina owned by a non resident, the non resident individual or entity is entitled to choose to apply the presumption of income or to present evidence of all the expenses incurred and deduct those expenses from the gross amount to be paid.

  • Tax rates

    Domestic

    Local entities are subject to an income tax rate of 30% for fiscal year 2019 and 25% as of fiscal year 2020.

    In general, local individuals are taxed at a progressive tax rate that goes from 5% to 35%, except for earnings with a fixed tax rate. Those are the following:

    • For local individuals the transfer of sovereign bonds, or any title is taxed at a 5% income tax rate if the title is issued in Argentine pesos, or 15% income tax rate if a share of a corporation is transferred, or if the title or sovereign bond is issued in Argentine pesos with adjustment clause or in foreign currency
    • The transfer of real estate by a local individual is taxed at a 15% of income tax rate
    • Interests of financial investments such as bank deposits, sovereign bonds, negotiable obligations, financial trusts and similar, issued in Argentine pesos without adjustment clause, are taxed at an income tax rate of 5%. The applicable tax rate is 15% when issued in Argentine pesos with adjustment clause or when issued in foreign currency
    • Dividends paid to a local individual are taxed at a 7% tax rate for fiscal year 2019 and 13% as of fiscal year 2020

    Foreign

    In general non resident entities and individuals are taxed at an income tax rate of 35% applied on the presumption of taxable income with effective tax rates of 12.5% up to 31.5% (see Taxable Incomes). Some concepts are not taxed at the general 35% tax rate and are taxed to an specific tax rate.

    • Transfer of sovereign bonds or any title (public or private) is taxed at a 5% income tax rate if the title is issued in Argentine pesos, or 15% income tax rate if the title is issued in Argentine pesos with adjustment clause, or in foreign currency. The transfer of shares of a local corporation is taxed at a 15% income tax rate. This assumes that the foreign beneficiary is in a jurisdiction considered as cooperative for tax purposes
    • Interests of financial investments such as bank deposits, sovereign bonds, negotiable obligations, financial trusts and similar, issued in Argentine pesos without adjustment clause are taxed at an income tax rate of 5%. The applicable tax rate is 15% when issued in Argentine pesos with adjustment clause or when issued in foreign currency. This provided that the foreign beneficiary is in a jurisdiction considered as cooperative for tax purposes
    • Dividends paid to a non resident individual or entity are taxed at a 7% tax rate for fiscal year 2019 and 13% as of fiscal year 2020

    The applicable tax rates can be lower if a double taxation treaty is applicable.

  • Tax compliance

    Local entities and individuals are obliged to fill tax returns at federal, state and municipal level depending on their activities. Tax returns mas be filled on monthly or yearly bases depending on the tax.

    Information regimes are applicable to certain activities.

    Advance payment regimes are applicable for some taxes.

  • Alternative minimum tax

    Not applicable for this jurisdiction.

  • Tax holidays, rulings and incentives

    Tax holidays

    Not applicable for this jurisdiction.

    Tax rulings 

    In some cases, taxpayers are entitled to present to the tax authorities a request for a ruling on a specific case. The ruling is binding for the consultant. 

    Tax incentives

    There are tax incentives at the federal, state and municipal level which target specific activities such as renewables and software services and development.

  • Consolidation

    Not applicable for this jurisdiction.

  • Participation exemption

    Argentina tax legislation does not provide for a participation exemption.

    Dividends paid by a local entity to another local entity are exempt from income tax. Dividends are only taxed when distributed to a local individual or to a foreign entity or individual.

  • Capital gain

    Capital gains are taxed by the income tax.

    Domestic and foreign, see Taxable income and Tax rates.

    Income tax or indirect transfer

    Income tax on indirect transfer may apply if a non resident entity is transferred provided that at least 30% of value of the entity is represented by assets located in Argentina and provided that the transferor owns at least 10% of the capital of such entity. When the transfer is carried on intragroup the income tax on indirect transfer is not applicable.

  • Distributions

    Distributions are taxed as dividends. Regardless of the tax residence of the recipient, dividends are taxed at a 7% tax rate for fiscal year 2019 and 13% as of fiscal year 2020.

    Domestic and foreign, see Taxable income and Tax rates.

  • Loss utilization

    Losses can be carried forward and can be offset with future profits for a five-year period.

    Losses considered to be of Argentine source can be offset only with profits considered to be of Argentine source. Losses considered to be of foreign source can only be offset of foreign source profits.

  • Tax-free reorganizations

    In Argentina it is possible to carry on an intragroup reorganization with no tax effects. Mergers, spinoffs or partial spinoffs are exempted from income tax, VAT and turnover tax if certain requirements are met.

    Income tax on indirect transfers can also be carried on with no tax costs if it is an intragroup transfer.

  • Anti-deferral rules

    According to CFC rules, the profits of a foreign entity directly or indirectly owned by a local entity or individual should be declared and taxed in the fiscal year of accrual in the following cases.

    • Trusts: When the trust is revocable, when the settlor is also the beneficiary, or when the resident individual or entity has full control of the trust
    • When the foreign entity is not considered a tax resident of the jurisdiction where it is incorporated
    • When:
      • The local individual or entity directly or indirectly owns at least 50% of the capital of the foreign entity
      • The foreign entity does not have sufficient structure to carry on its business or when at least 50% of the profits of the foreign entity are passive income
      • The taxes paid by the foreign entity in the country where it is incorporated are less than the 25% of the income tax that would be payable in Argentina (this requirement is deemed as occurred if the entity is incorporated in a non-cooperative jurisdiction)
  • Foreign tax credits

    Subject to conditions and limitations, foreign tax credits are available for foreign income taxes paid.

  • Special rules applicable to real property

    Domestic and foreign

    When a local entity or a non resident individual or entity sells or transfers real estate property located in Argentina, income tax is triggered.

    For resident individuals, if the real estate property that is being transferred has been acquired by the seller before January 1, 2018, no income tax is applicable, and the local individual must pay a special tax on transfer of real estate property. 

    There is the possibility of a tax deferral on the income tax applicable to the sale of a real estate property using a sale and replacement mechanism.

  • Transfer pricing

    Argentine transfer pricing rules apply to transactions between an Argentine party and a foreign related entity or any entity domiciled in a tax haven jurisdiction, a jurisdiction considered as non-cooperative, or that is subject to a privileged tax regime.

    Argentine transfer pricing rules follow arm's-length rule and follow the OECD guidelines with some divergences.

  • Withholding tax

    (see Taxable income and Tax rates.)

    Domestic

    Payments made by banks and financial institutions made to local entities or individuals in the case of interests on bank deposits or financial investments are subject to income tax withholding.

    Dividends paid by a local entity to a local individual are subject to income tax withholding. The tax rate applicable is 15%.

    Foreign

    Non resident entities or individuals are taxed on their income considered to be of Argentine source.

    The local payer is obliged to withhold the income tax at the time of the payment. Tax rates and presumptions of taxable income vary in connection with the type of payment made.

    Tax treaties may reduce or eliminate withholding of income tax.

  • Capital duty, stamp duty and transfer tax

    Capital gains are taxed by the income tax (see Taxable income and Tax rates.).

    Stamp duty or Stamp Tax is a provincial tax triggered by the entering of written agreements signed by both parties. The tax rate applicable varies in connection with the province and in connection with the agreement. Tax rates are of 0.2% up to 5% of the total amount of the agreement.

    There are legal mechanisms to avoid the payment of Stamp Tax by entering into an agreement as an offering letter.

    Transfers of shares, assets and real estate property are taxed under the income tax (see Taxable income and Tax rates.).

  • Employment taxes

    Employers must withhold income tax and social security contributions. Employers also must pay their share of social security contributions. These taxes are deductible by an employer for Argentine income tax purposes.

  • Other tax considerations

    Provincial taxes - Turnover tax

    Turnover tax or gross income tax is a tax collected by the provinces. The taxable event is the performance of commercial or industrial activity in the territory of the provinces. Tax rates can be 0.5% up to 6% in connection with the activity applied on the gross income. Some activities are charged with higher tax rates, such as online gambling which is taxed at a 15% tax rate in the Province of Buenos Aires.

    Every province has its own turnover tax. However, the turnover tax collected by each province are similar, although different tax treatments may result applicable for certain activities.

    Tax benefits

    For some activities there are special tax benefits at the federal level and provincial level.

    There are tax benefits for an investment in renewable energy, software production and services, investments in capital assets, biodiesel fuel and mining.

    The benefits may include partial or full exemptions, accelerated depreciation and drawback.

    VAT on the import of digital services

    Federal Government collects VAT on the importation of digital services. The taxpayer is the local resident unless the service provider has a fixed place in the Argentina. The tax rate is 21%.

    Double taxation treaties

    Argentina has signed tax treaties with Germany, Australia, Belgium, Bolivia, Brazil, Canada, Chile, Denmark, United Arab Emirates, Spain, Finland, France, Italy, Mexico, Norway, Netherlands, United Kingdom, Russia, Sweden and Switzerland (all in force), and Turkey, China, and Qatar (signed but not yet in force).

  • Key contacts
    Augusto Nicolás Mancinelli
    Augusto Nicolás Mancinelli
    Of Counsel DLA Piper (Argentina) [email protected] T +5411 41145500 View bio
    Raúl Sanguinetti
    Raúl Sanguinetti
    Tax Partner Baker Tilly Argentina [email protected] T +54 (11) 5352 2400 View bio

Capital gain

Argentina

Capital gains are taxed by the income tax.

Domestic and foreign, see Taxable income and Tax rates.

Income tax or indirect transfer

Income tax on indirect transfer may apply if a non resident entity is transferred provided that at least 30% of value of the entity is represented by assets located in Argentina and provided that the transferor owns at least 10% of the capital of such entity. When the transfer is carried on intragroup the income tax on indirect transfer is not applicable.

Australia

Capital Gain Tax forms part of the income tax regime. CGT applies to net capital gain relating to assets and notional assets acquired after September 19, 1985. Where the sale proceeds are less than the unindexed cost base, the taxpayer will incur capital losses. These losses may only be offset against current or future capital gain. Capital gain is calculated on the proceeds from the disposal of the asset less its cost base and any incidental costs associated with its purchase and disposal. The taxable part of the gain is treated as assessable income. Some assets are exempt from CGT, and certain concessions are available for eligible Australian entities (eg, 50% CGT discount for resident individuals and trusts and 33.3% discount for complying superannuation funds).

Austria

Capital gains resulting from the sale of a shareholding in a resident company are subject to corporate income tax. Capital gains resulting from the sale of a shareholding in a foreign company are, in general, exempt from corporate income tax. However, there are detailed special provisions and restrictions that apply in such cases.

Belgium

Capital gains realized on the disposal of business assets are treated as business income. Standard corporate tax rates apply in such case. Subject to reinvestment of the sales proceeds and certain other conditions, the taxation of the capital gain realized on business assets may be deferred.

Subject to certain conditions, capital gains realized on the disposal of shares may be tax exempt.

Capital losses may be deductible depending on the underlying asset.

Brazil

Capital gain recognized by a legal entity is taxed at the same rate as ordinary income for IRPJ and CSLL purposes. Non-operating losses are deductible. However, non-operating losses accrued in previous years can only be offset in future years with profits of the same nature.

For individuals and non-residents, as from January 1, 2017, capital gains earned as a result of the disposal of assets and rights of any nature are taxed at progressive rates varying from 15% up to 22.5%.

Canada

One-half of a capital gain earned by a corporation is required to be included in computing the taxable income of the corporation. Capital losses may be applied to reduce capital gains, but not regular income, of a corporation for tax purposes.

China

Capital gain is included in taxable income and is not otherwise differentiated from other types of income.

Colombia

The capital gain tax rate is 10%. This tax rate will apply in general to:

  • Gains obtained on the sale of assets held for at least two years
  • Gains obtained on the liquidation of a company that has been in existence for at least two years in excess to paid-in capital
  • Inheritances and legacies
  • Gifts or donations

Capital gains obtained from lotteries, gaming or similar activities are taxed at a 20% tax rate.

Finland

Capital gain is the difference between the sales price and acquisition price and taxed with 20% corporate tax rate.

France

Capital gains realized by corporations that are subject to corporate income tax are treated as regular income, subject to exceptions. One exception is the one that applies to long-term capital gains on shares benefiting from the participation exemption regime, as described above.

Germany

Capital gain of corporations, except those derived from sales of shares (ie, participation exemption) are treated as ordinary income.

In general, a capital loss is deductible. However, a capital loss is not deductible if a gain resulting from the underlying transaction would have been exempt from tax. Consequently, a capital loss from sales of shares or write-downs on shares are not deductible.

Hong Kong

Hong Kong does not tax capital gains. However, the net gains on transactions deemed speculative may be taxable as a taxpayer's trading income.

India

Capital gain is taxed in India according to its classification as long term capital gain (capital assets held for over 3 years) or short term capital gain. Short term capital gain is taxed at the normal tax rates, whereas adjustments for inflation are permissible in relation to long term capital gain. Capital gains on disposal of shares of companies qualify for shorter holding period as well as different rates depending on whether they are publicly listed on recognized stock exchange in India or not.

Ireland

Capital gains of a company are taxed at 33%. Capital losses may be set off against chargeable gains arising in the same tax year. Unused capital losses can be carried forward and set off against chargeable gains in future years. Excess capital losses can generally only be carried forward.

Israel

Capital gains derived by corporations are generally taxed at the same rate as ordinary income. The inflationary component of the capital gain accrued from 1994 and onwards is exempt from tax. With few exceptions, capital gains are not eligible for the reduced tax rates under the tax incentive regimes mentioned above.

Israeli resident corporations are subject to tax on capital gains regardless of the of the asset location.

Nonresident corporations are subject to tax in Israel on capital gains from disposition of:

  • Assets located in Israel
  • Assets located outside of Israel if the assets are essentially a direct or indirect right to assets or inventory located in Israel, real estate in Israel, or an Israeli real estate company (with respect to the part attributable to Israeli assets)
  • Shares in an Israeli company or
  • Shares of a foreign company that is essentially a holder of Israeli assets (with respect to the part attributable to Israeli assets)

Capital gains of a foreign resident from the disposition of securities purchased on the TASE, except for interests in REITs (including a company that ceased from being a REIT) and short term governmental bonds, are exempt from tax.

Capital gains of a foreign resident from the disposition of private company shares, which were bought during or after 2009, are generally exempt from tax, unless the Israeli company value is mainly derived, directly or indirectly, from Israeli real estate, the right to use Israeli real estate or the right to exploit natural resources in Israel.

These exemptions will not apply if the capital gains are attributed to a permanent establishment in Israel.

Capital gains may also be exempt under an applicable tax treaty.

Italy

Capital gain is generally included in taxable income. If the asset has been held for at least three years, the capital gain can be included over up to five years. 95% of the capital gain on sales of participation can be exempted if certain requirements are satisfied, as described above.

Japan

Generally, capital gain recognized by a corporation is taxed at the same rate as ordinary income. Capital loss may reduce capital gain but not ordinary income. However, with respect to share transfers in certain types of reorganizations, no capital gain is recognized.

Luxembourg

Capital gains generally are taxed as ordinary income and the standard corporate tax rate is levied. Nonetheless, capital gains derived from the sale of shares may be exempt from corporate income tax if the conditions for the participation exemption are met.

Mexico

Under domestic rules, capital gains obtained by Mexican companies are treated as ordinary income and taxed at the regular 30% tax rate. Nonresidents are subject to a 25% tax rate on the gross proceeds, or a 35% rate on net gain realized to the extent that certain requirements are met. Capital gains derived from sales of publicly traded shares by individuals or non-Mexican residents are taxed at a rate of 10%. To determine the deductible basis for sales of real estate, fixed assets and shares, the law allows for indexation of the original cost for inflation.

Netherlands

Capital gains are taxed as ordinary income, unless exempted by the participation exemption. Capital losses are deductible, unless attributable to the disposal of a shareholding qualifying for the participation exemption (certain liquidation losses are deductible).

Norway

Please see Participation exemption. If the participation exemption regime does not apply, the capital gain will be taxed at the ordinary corporate tax rate of 22%.

Poland

Capital gain constitutes separate source of income starting from 2018 and is taxed at the same rate as ordinary income (19%). Exemption is available only in specific circumstances – share-for-share swaps, in-kind contribution of an enterprise or its part, profit distributions exempt based on EU Parent Subsidiary Directive. There is no general participation exemption applicable to capital gains. 

Portugal

Capital gain is taxed at the same rate as ordinary income. Capital gain arising from the disposal of shares may be exempt from tax under the participation exemption regime (see Participation exemption).

50% of the gains derived from the disposal of tangible fixed assets and intangible assets held for at least one year may be excluded from taxation if the total disposal proceeds are reinvested within the prescribed period.

Romania

Capital gain realized by a resident entity is included in its taxable profits and taxed at the same rate as ordinary income. Capital gain derived by a foreign entity from Romania is also taxed at the standard corporate income tax rate. Capital gain tax may be eliminated under the participation exemption regime or under the provisions of tax treaties.

Russia

Income or capital gain received from the sale of shares or participation interest in other companies less applicable deductions is taxed at a regular 20% corporate profits tax rate.

Income from the sale of unquoted shares and participation in Russian companies held for at least five years is taxed at a 0% corporate profits tax rate. It is no longer required that the qualifying participations must have been acquired after January 1, 2011 in order for the capital gain exemption to apply for sellers.  

Income from the sale of quoted shares in high-technology Russian companies and held for at least one year is no longer eligible for capital gain exemption that used to exist until January 1, 2019. This capital gain exemption in relation to high-technology companies has been suspended until January 1, 2023.

Income or capital gain from the sale of shares in Russian subsidiaries whose immovable property located in Russia represents directly or indirectly more than 50% of assets (as well as finance instruments backed by these shares or participation interests, except for shares traded on the stock exchange) is taxed at a regular corporate profits tax rate.

Reduced tax rates or full protection from withholding tax can be available under an applicable double tax treaty.

Singapore

There is no capital gains tax in Singapore.

South Africa

Capital gains tax (CGT) applies to a resident's worldwide assets and in the case of a non-resident, to their immovable property or assets of a permanent establishment in SA.

CGT is triggered on the disposal or deemed disposal of an asset and is calculated as being the difference between the proceeds and the base cost of the asset. Assessed capital losses are carried-forward and may be set-off against capital gains in the following year of assessment.

Provision is made for exclusions and rebates, as well as rollover relief, where the gain made from a disposal is disregarded until ultimate disposal of the assets. The effective capital gains tax rate for corporates is 22.4%.

South Korea

Capital gain or loss recognized by a corporation is included in corporate ordinary income or loss.

Spain

Capital gain recognized by a corporation is taxed at the same rate as ordinary income (ie, 25%).

Sweden

Please see Participation exemption. If the participation exemption regime does not apply, the gain will be taxed at the ordinary corporate tax rate of 21.4%.

Switzerland

There are no special rules applicable other than the above mentioned participation exemption rules and special rules in certain cantons for real estate capital gains.

Taiwan

Taiwan does not impose a separate capital gain tax (ie, gains from the sale of securities and futures transactions are exempt from income tax). However, a domestic company or a foreign company with a PE in Taiwan is required to include any gains arising from securities and futures transactions in its AMT calculation in accordance with the Income Basic Tax Act.

A 5% profit retention tax is imposed on undistributed profits.

Turkey

Capital gains derived by all companies are generally taxable as ordinary income. However, if gains arising from the sale of a depreciable fixed asset is reinvested in a new fixed asset, such capital gain will not be subject to tax.

In case of a sale of the shares of a resident company by a non-resident company, capital gains arising from such transaction will be subject to corporate tax.

Capital gains derived from the disposal of shares will be exempted from corporate tax at a rate of 75% if the term of ownership is at least 2 years and the capital gain is in a special fund under shareholder's equity for 5 years following the sale.

Ukraine

Capital gain is treated as a part of taxable income and is subject to standard 18% corporate income tax rate. The Tax Code provides for special adjustment of taxable profit in  respect of capital gain.

United Arab Emirates

At present, there is no capital gains taxation in the UAE. For taxpaying entities (such as oil and gas producing companies), capital gains are taxed as part of business profits. 

United Kingdom

Capital gains realized by a company is taxed at the same rate as trading income. Capital losses may reduce capital gains but not trading income. Certain types of profits and losses – those from debt and intellectual property – are always treated as income under special regimes which reflect the accounting treatment of those types of assets.

Capital gains realized by non-resident companies are not taxed in the UK, even if they arise on the disposal of UK assets, unless:

  • The asset is used for the purpose of a trade carried on by the company through a UK permanent establishment, or
  • The asset comprises an interest in UK residential property which is subject to non-resident capital gains tax (NRCGT) or ATED CGT

From April 2019, non-resident companies will be liable to UK tax on gains realized on the direct or indirect disposal of UK real estate generally, subject to certain exemptions, and special rules for collective investment vehicles.

United States

Long-term capital gain of non-corporate tax payers may be eligible for reduced tax rates. Capital gain recognized by a corporation is taxed at the same rate as ordinary income. Capital loss may reduce capital gain but not ordinary income.

Zimbabwe

Capital gains tax is administered separately from income tax in terms of a separate piece of legislation, namely the Capital Gains Tax [Chapter 23:01] (the CGT Act). Capital Gains Tax is payable on the disposal of a specified asset as defined in the CGT Act.