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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

Special rules applicable to real property

Argentina

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.

Australia

Foreign residents are generally exempt from Australian CGT except where the relevant asset is a direct or indirect interest in Australian real property (including through an interposed entity).

From May 9, 2012, the 50% CGT discount allowed for gains made by individuals on Australian real property is reduced for any periods in which the taxpayer has been a foreign resident during the period of ownership. From July 1, 2016, a new foreign resident CGT withholding tax (CGT WHT) regime applies in Australia. From July 1, 2017, changes came into effect for the CGT WHT rules. Under the current and updated CGT WHT rules, unless an exemption applies, purchasers of direct or indirect interests in Australian real property are required to withhold 12.5% of the purchase price and remit this to the ATO if at least 1 of the vendors is a foreign resident. The CGT WHT is not a final tax as the vendor may claim a credit for the tax withheld when lodging its tax return for the relevant year.

Austria

In addition to the real estate transfer tax (up to 3.5% from the purchase price) and the real estate registration duty (1.1%), in case of direct transfer of at least 95% of the shares in an Austrian or foreign company possessing Austrian real estate, a real estate transfer tax of 0.5% from the fair market value of the real estate becomes due.

Belgium

Certain real property fund structures benefit from a favorable tax regime in Belgium.

Brazil

Brazil provides for a special and optional tax regime for real estate developments.

Canada

Generally, any gain realized by a non-resident person on the disposition of Canadian real property may be taxable in Canada.

China

Income from direct or indirect transfers of real property located in China is considered income sourced in China.

Colombia

Real property is subject to municipal taxation, which depends on the value of the property, the economic use of each property and the municipal regulations. In general, this tax is levied annually on the ownership, usufruct or possession of real estate property. It is collected by the municipality where the property is located and the tax rate varies between 0.3% and 3.3%.

Finland

Transfer tax on acquisition of Finnish real estates is 4% on purchase price payable by the buyer. In case real estate transaction is carried out by acquiring shares in a real estate company, transfer tax is 2% on equity value added with value of debt transferred to the buyer.

France

A 3% tax applies in principle to all entities having immovable properties in France, irrespective of their form and whether they have the legal capacity to act as a legal entity. The 3% tax applies to corporations, funds, trusts and other institutions. In practice, this 3% tax is not due if the chain of ownership of the real property is duly disclosed to the French tax authorities.

The transfer of ownership of a real estate asset is usually subject to registration duty of 5% to 6% which may be reduced under certain conditions to 0.815% (including the real estate security contribution of 0.1%) (eg, asset dealer transactions) or to €125 (eg, acquisition of a plot of land with commitment to build on the land).

Specific rules apply to

  • office sales in the Paris region and
  • the sale of building plots or new buildings subject to VAT

Germany

Real property tax is levied by the municipality of real estate where it is located. The rate is 3.5% of the property's tax value, multiplied by a municipal coefficient. Real property tax will have to be substantially reformed until the end of 2019 as its calculation base (ie, property values as of 1935 respectively 1964) has been viewed as non-compliant with constitutional equality requirements by the German Federal Constitutional Court. Several different proposals are in political discussions.

Hong Kong

Income derived from renting out real properties by owners in Hong Kong is subject to property tax, which is charged at a standard rate of 15% of the property's net assessable value. It may be more beneficial for individuals to elect personal assessment, depending on actual income position. A corporation may also seek exception if the relevant rental income has already been included for profit tax assessment. Save for specific exemptions, ad valorem stamp duty is levied on sale or transfer of real properties in Hong Kong.

In addition, residential property transactions in Hong Kong can attract Stamp Duty, Buyer's Stamp Duty and Special Stamp Duty.

India

Foreign investment in real estate in India is highly regulated. A foreign company may acquire immovable property for business purposes, but amounts received for sale of such immovable property may only be repatriated to the extent paid for such immovable property.

Ireland

Stamp duty applies to documents which effect certain transactions, including transfers and lease transactions involving real property. The rate of stamp duty varies depending on the transaction (ie whether the creation of a lease or the transfer of a property interest) and whether the land is residential or non-residential. Stamp duty arises on the transfer of non-residential land at a rate of 6%. Stamp duty arises on the transfer of residential land at a rate of 1% up to the first €1 million and 2% thereafter.

Irish CGT is chargeable on the disposal of Irish land or buildings irrespective of whether the disposer is an Irish tax resident company or a non-Irish tax resident company.

If the consideration for the sale of Irish land or buildings exceeds €500,0001, the purchaser is required to withhold tax of 15% of the consideration and remit it to Revenue within 30 working days of closing. This requirement may be avoided where a form CG50A is produced. A form CG50A can be obtained where:

  • The vendor is resident in Ireland
  • No CGT is payable pursuant to the transfer, or
  • CGT has already been paid

An annual self-assessed Local Property Tax is charged on the market value of all residential properties.

VAT can arise on the supply of real property.

1 €1,000,000 in the case of residential property.

Israel

Disposition of real estate assets (or shares in real estate companies) is subject to land betterment tax which is similar to capital gain tax.

Purchase of real estate assets (or shares in real estate companies) is generally subject to a purchase tax at a rate of 6%. A purchase of a residential apartment is subject to a purchase tax in a progressive rate of up to 10%.

Italy

Not applicable for this jurisdiction.

Japan

Capital gain on sales of real estate in Japan accruing to a foreign corporation is subject to Japanese corporate tax at regular corporate tax rates. In addition, if a foreign corporation sells shares of a Japanese corporation of which 50% or more of its assets are real estate assets, the capital gain on the sale of shares will be included in taxable income subject to regular corporate tax, unless otherwise stated under the applicable tax treaty.

Luxembourg

Municipalities impose a land tax of 0.7% to 1% on the unitary value of real property.

A transfer tax is applied to a transfer of immovable property. A 6% basic rate and a 1% transcription tax are applicable. For real estate located in Luxembourg City, an additional charge amounting to 50% of the transfer tax (ie, 3%) is imposed (exemptions are available).

Mexico

There is a state level property transfer tax (ie Impuesto sobre Adquiscion de Inmuebles) that could range from 2% to 4.5% depending where the property is located, and is generally based on the market value of the property. This tax should be paid by the purchaser, and cannot be creditable or offset against other taxes.

Netherlands

Corporate taxpayers owning real estate located in the Netherlands that is used for the purpose of their own business can annually depreciate the cost price of the real estate to its residual value, but not more than when the tax book value has reached 50% of its estimated market value (WOZ value). The estimated market value is assessed annually by the municipality where the real estate is located. As of 2019, the threshold is increased from 50% to 100%, which heavily restricts the  ability to depreciate the real estate for tax purposes. The 100% threshold already applies to Dutch real estate that is rented out to third parties. The depreciation rules for real estate owned before January 1, 2019 and actively used within the company of the corporate taxpayer are grandfathered for three years.

Norway

Municipal authorities levy real estate tax on the ownership of real estate. Real estate tax applies to the assessed real market value of the real estate, at rates ranging between 0.2% and 0.7%. Some municipalities do not levy real estate tax.

Poland

In 2018, an income tax that is payable on certain commercial properties (fixed assets) was introduced. The tax applies to office buildings, shopping centers, department stores, and other retail and service buildings with an initial value of more than PLN 10 million. The tax is payable on a monthly basis; the rate is 0.035% of property value if it exceeds the sum of PLN 10 million, determined at the first day of each month. The tax so calculated will reduce the "standard" corporate income tax and any surplus over the standard corporate income tax may be refunded to the taxpayer upon its application and after tax authorities verify the correctness of the taxpayer's tax calculation.

No specific real estate transfer tax.

Portugal

Not applicable for this jurisdiction.

Romania

Gains derived by a foreign entity from transfer of a real estate located in Romania or from the disposition of any rights related to such real estate are subject to the standard corporate income tax rate. Tax treaties can reduce or eliminate these taxes.

Russia

Income from the sale of real property located in Russia is considered to be income sourced in Russia.

Singapore

Not applicable for this jurisdiction.

South Africa

In 2013 South Africa introduced a special regime for real estate investment trusts (REIT). This new regime, currently only applicable to listed REITS, offers certain tax advantages to qualifying entities and provides certainty on the tax treatment of property loan stock companies, which previously did not exist in South Africa.

South Korea

A land transaction is not subject to VAT (value added tax). Property tax varies on the type of real property.

Spain

Not applicable for this jurisdiction.

Sweden

Stamp duty may be triggered on the sale of real estate. If the buyer is a legal person, the tax rate is 4.25% of the basis. The basis for the tax is the higher of the purchase price and the tax assessment value of the real estate. The buyer and the seller are equally liable to pay the tax, but contractually that liability is normally the buyer’s.

Switzerland

Capital gain on Swiss immovable property is subject to a special cantonal real estate gains tax or to ordinary corporate income tax depending on the system that is applied in the canton where the immovable property is located.

Moreover, about half of the cantons levy a special wealth tax on real estate. This tax is due every year in addition to the general wealth tax. The tax is levied at the place where the property is situated and is assessed on the market or taxable value of the real estate without allowing for the deduction of debts. The applicable tax rates are between 0.02% and 0.30%.

Taiwan

According to the Business Mergers and Acquisitions Act, stamp duty, deed tax, VAT and the Land Value Increment Tax are exempt under certain M&A transactions if they involve the sale and purchase of real property.

Turkey

The real property tax is calculated based on the relevant real property's value at different rates (eg, 0.1% for lands and 0.2% for buildings). Square meter rates are determined based on  location and are increased in large cities.

Ukraine

Residents and non-residents pay property tax on real property that they own and on leased land. Reporting and payment of property tax is separate for land and real estate.

Property tax on land is set by local authorities depending on the type of land and its monetary evaluation. Tax on leased land is paid in the form of rent.

Property tax on real estate is established by local authorities as a fixed rate per one square metre of real estate. 

United Arab Emirates

Not applicable for this jurisdiction.

United Kingdom

An additional annual tax charge (the annual tax on enveloped dwellings or ATED) is made on companies which own or control residential property of more than £500,000 in value. Various exemptions apply to companies which develop, lease or trade property or use the property for other business purposes, which should have the effect of restricting the charge to companies which are used to avoid tax on the private homes of high net worth individuals. The amount of the charge varies from £3,600 to £226,950 according to the value band into which the property falls.

Certain capital gains incurred by companies owning UK residential property within the ATED charge on the sale of such property is also subject to an ATED-related capital gains tax at 28%. NRCGT may also be chargeable on any gains on residential property held by a non-UK tax resident (at rates of either 18% or 28% for individuals or 20% for companies). Where the property is subject to both ATED-related CGT and NRCGT, ATED-related CGT will take precedence, with any excess gains being charged to NRCGT.

From April 2019, direct and indirect disposals by non-residents of all types of UK real property (residential and commercial) will be subject to UK tax and the ATED-related CGT will be abolished.

United States

Under the Foreign investment in Real Property Act (FIRPTA), any gain recognized by a foreign person on a disposition of stock of a domestic corporation that is treated as a United States Real Property Holding Corporation may be taxable as effectively connected income, taxable on a net income basis at regular US income tax rates.

Zimbabwe

Receipts and accruals of a licensed investor from the sale of a property forming the whole or part of the investment to which his investment licence relates are exempt from payment of CGT. A licensed investor is a foreign investor who has obtained a licence from the Zimbabwe Investment Authority to invest in Zimbabwe.