Pistrelli, Henry Martin y Asociados SRL 25 de Mayo 487
Fourth Floor
C1002ABI Buenos Aires Argentina
Executive contacts
Javier Sabin
+54 (11) 4318-1658
Fax: +54 (11) 4318-1777 Email: javier.sabin@ar.ey.com
Elizabet Lozada +54 (11) 4510-2201 Fax: +54 (11) 4318-1777 Email: elizabet.lozada@ar.ey.com
Valeria Dworski
+54 (11) 4318-1623
Fax: +54 (11) 4318-1777 Email: valeria.dworski@ar.ey.com
Valeria Kissling, +54 (11) 4318-1668 Global Mobility Fax: +54 (11) 4318-1777 Email: valeria.kissling@ar.ey.com
Mayra Celentano, +54 (11) 4318-1242 Global Mobility Fax: +54 (11) 4318-1242 Email: mayra.celentano@ar.ey.com
Lucio Sabena, +54 (11) 4318-1669 Global Mobility Fax: +54 (11) 4318-1777 Email: lucio.sabena@ar.ey.com
Maria Folmer, +54 (11) 4318-1638 Global Mobility Fax: +54 (11) 4318-1777 Email: maria.folmer@ar.ey.com Elsa Vidal, +54 11 4318-1600
ACR Global Payroll Operations Fax: +54 (11) 4318-1777 Email: elsa.vidal@ar.ey.com Sebastian Calciati, +54 (11) 4318-1665 ACR Global Payroll Operations Fax: +54 (11) 4318-1665 and Labor and Employment Law Email: sebastian.calciati@ar.ey.com Paula Mandrafina +54 (11) 4318-1665
Labor and Employment Law Fax: +54 (11) 4318-1665 Email: paula.mandrafina@ar.ey.com
Immigration contact
Anabel Ragno
A. Income tax
+54 (11) 4875-4842
Fax: +54 (11) 4318-1777 Email: anabel.ragno@ar.ey.com
Who is liable. Residents are subject to tax on worldwide income. Nonresidents are taxed on Argentine-source income only.
The following individuals are deemed to be resident in Argentina:
• Native and naturalized Argentine citizens
• Foreign individuals who are granted permanent residence in Argentina
• Foreign individuals who remain in the country under temporary authorization for a period of 12 months or longer
Individuals in the third category who have not been granted per manent residence are deemed to be nonresident if they can prove that they do not intend to stay permanently in Argentina.
Foreign individuals who can prove that they are in Argentina because of their employment, and who remain in the country for a period not exceeding five years, are not considered to be resident in Argentina. This rule also applies to members of the indi vidual’s family who accompany the individual to Argentina.
Income subject to tax. The taxability of various types of income is discussed below.
Employment income. Taxable income from employment includes all salaries, regardless of the taxpayer’s nationality or the place where the compensation is paid or the contract is concluded.
In general, taxable compensation also includes most employerpaid items, except the following main items:
• Moving expenses
• Overtime worked on Saturday (after 1:00 p.m.), Sunday and/or holidays
• Severance payments, except when the employee has held posi tions of manager or director in the last 12 months and his/her gross monthly salary taken for the calculation base of severance payment exceeds at least 15 times the Minimum, Life and Mobile salary (in Spanish, SMVM) in force at the date of separation
Educational allowances provided by employers to their local or expatriate employees’ children who are 18 years old or under are taxable for income tax and social security purposes.
Monthly gross employment income that is less than ARS175,000 is exempt from income tax.
Self-employment income. Self-employment and business income is taxable, regardless of the recipient’s nationality, the place of payment or where the contract was concluded.
Investment income. If a company pays a dividend in excess of its accumulated taxable income, the excess is subject to a final with holding tax at a rate of 35%. This tax applies to dividends derived from income accrued in fiscal periods beginning before 1 January 2018. Under the December 2017 tax reform, withholding tax is imposed on dividends distributed by Argentinian companies to Argentinian individuals and foreign shareholders at a rate of 7%. The tax operates as a “sole and definitive tax payment.” It is imposed in addition to the 35% equalization tax described above. Dividends from foreign corporations paid to residents are taxable at regular tax rates.
Royalties and income derived from renting real property are taxed as ordinary income.
Interest is taxed as ordinary income, except interest from certain bank deposits in Argentina, such as saving accounts, which is exempt from tax. Interest from bank deposits paid to nonresidents is exempt from Argentine tax only if the income is also exempt from foreign tax.
For residents and nonresidents, interest derived from term deposits in Argentinean pesos, public bonds (government securities, treasury bills and others), corporate bonds, mutual funds and other securities issued by Argentina are exempt from tax. However, inter est derived from term deposits in dollars allocated in Argentina is taxable for residents at the progressive income tax rates (5% to 35%) and for nonresidents (the 35% rate will apply to 43% of the collected interest).
Under Section 90.5 (Schedular Tax) of the Income Tax Law, gains derived from the sale of real estate purchased on or after 1 January 2018 are taxable at a rate of 15%. However, if the property is the taxpayer’s home, the sale is exempt from tax.
Directors’ fees. Directors’ fees are taxed as self-employment income to the extent that they are deducted by the payer company (allowable up to the greater of 25% of book profit or ARS12,500 per director per year). The portion of fees not deductible at the corporate level is not taxable to the director if the amount of the company’s income tax increases by an amount equal to the tax attributable to the directors’ fees. Directors’ fees paid by Argen tine companies are considered Argentine-source income, regard less of where the services are performed.
Taxation of employer-provided stock options. Stock options grant ed to employees are deemed to be payments in kind and are there fore subject to income tax and social security withholding. Income related to stock options becomes taxable when the option is exercised. No tax is imposed at the time of grant or vesting, and the employees are not required to pay income tax with respect to stock options at such time.
Capital gains. An exception applies for shares that are traded in an Argentinian stock market (authorized by the Argentine Securities and Exchange Commission). Capital gains on such shares are exempt. Otherwise, if the capital gains arise from the sale of shares that are not traded on an Argentinian stock market, they are subject to income tax at a flat tax rate of 15%.
Capital gains derived by tax residents on shares of foreign com panies are taxable at a flat rate of 15%. The taxable profit equals the difference between the sales price and the purchase price in foreign currency based on the exchange rate at the time of the sale, with the exchange-rate difference between the time of the purchase and sale considered to be nontaxable.
Capital gains on Argentinian securities and sponsored American Depositary Receipts (ADRs) from Argentinian companies are exempt for foreign investors, provided that they do not reside in noncooperative jurisdictions and/or the invested funds do not proceed from noncooperative jurisdictions.
The law establishes an income tax on the indirect transfer of assets located in Argentina. The tax is triggered on the sale or transfer by nonresidents of shares or other participations in for eign entities if both of the following two conditions are met:
• At least 30% of the value of the foreign entity is derived from assets located in Argentina (at the moment of the sale or during the 12 prior months).
• The participation being transferred represents (at the moment of the sale or during the 12 prior months) at least 10% of the equity of the foreign entity.
The applicable rate is generally 15% (calculated on the actual net gain or a presumed net gain equal to 90% of the sale price) of the proportional value that corresponds to the Argentine assets.
The law provides that the tax on indirect transfers applies only to participations in foreign entities acquired after the effective date of the tax reform, which was 1 January 2018. Also, the law indi cates that indirect transfers are not taxable to the extent that it can be proved that the transfer took place within the same economic group, in accordance with requirements to be established by additional regulations.
Deductions
Deductible expenses. For purposes of computing tax to be withheld from an employee’s salary, employers may deduct certain allowable expenses, including the following:
• Mandatory social security contributions
• Medical insurance payments for employees and their families, with certain limitations
• 40% of invoiced medical expenses up to a maximum of 5% of the taxpayer’s annual net income
• 40% of invoiced expenses for the rental of a house up to an annual nontaxable amount (generally ARS167,678.40)
• 40% of expenses incurred by traveling salespeople, up to an annual nontaxable amount (generally ARS167,678.40)
• Donations to the government and certain charitable or non profit institutions, up to 5% of net taxable income
• Burial expenses, up to ARS24,000 annually
• Life insurance premiums, up to ARS24,000 annually
• Retirement insurance premiums, up to ARS24,000 annually
• Mortgage interest, up to ARS20,000 annually, for the purchase of a dwelling destined to be a permanent abode
• Contributions made to Mutual Guarantee Companies (SGRs; special companies that guarantee loans)
• Compensation and employer contributions related to domestic help personnel, up to an annual nontaxable amount (generally ARS167,678.40)
Self-employed individuals may deduct expenses incurred in pro ducing income, in addition to the expenses listed above.
Personal deductions and allowances. Employed and selfemployed individuals are entitled to standard deductions in amounts established by law. Employed and self-employed indi viduals are entitled to standard deductions in amounts established by law. The amounts for 2021 are ARS156,320.63 for a spouse, ARS78,833.08 for each child not older than 18 and ARS157,666.16 for a disabled child. To qualify, dependents must reside in Argentina for more than six months in the tax year and may not have income exceeding ARS167,678.40.
A deduction of ARS167,678.40 is granted to taxpayers who are resident in Argentina for longer than six months during the calen dar year.
A special deduction is available against compensation derived from personal services. The annual amount is ARS804,856.34 for employees but, under Decree 620/2021, if the employment income is between ARS175,000 and ARS203,000 a higher special deduction applies. For self-employed individuals, the amount of the special deduction is ARS335,356.79. For “new professionals” and “new entrepreneurs” (to be defined by the Law Regulating Decree), the special deduction is ARS419,196.02.
Nonresidents residing in Argentina longer than six months in a calendar year may claim the deductible expenses actually incurred and exemptions available to residents.
Rates. The progressive tax rates applicable to Argentine residents for 2021 range from 5% to 35%.
The following table presents the 2021 individual income tax rates.
Annual taxable income Tax on lower Rate on Exceeding Not exceeding amount excess ARS ARS ARS ARS 0 64,532.64 0 5 64,532.64 129,065.29 3,226.63 9 129,065.29 193,597.93 9,034.57 12 193,597.93 258,130.58 16,778.49 15 258,130.58 387,195.86 26,458.39 19 387,195.86 516,261.14 50,980.79 23 516,261.14 774,391.71 80,665.80 27 774,391.71 1,032,522.30 150,361.06 31 1,032,522.30 230.381.54 35
Nonresidents residing temporarily in Argentina, that is, for six months or less, are subject to final withholding tax. A standard deduction of 30% of compensation is allowed for expenses incurred in earning income. The remaining 70% of compensation is taxed at a flat rate of 35%, with no other allowable deductions or exemptions, resulting in an effective withholding tax rate of 24.5%.
Relief for losses. Business losses of self-employed persons may be carried forward for five years. Foreign-source business losses may offset foreign-source income only.
B. Other taxes
Transfer tax. Sales of real estate are subject to transfer tax at a rate of 1.5% on the sale price. This tax only applies to sales of real estate purchased before 1 January 2018.
Personal assets tax. Individuals who have total assets subject to tax of up to ARS2 million and/or who have a real estate destined to be their place of living of up to ARS18 million are exempt from the personal assets tax. Individuals who are deemed to be tax resident in Argentina according the definition in the income tax law of Argentina and who have assets totaling more than ARS2 million are required to pay the personal assets tax.
The personal assets tax is calculated using the two tables below.
The following table applies to assets located in Argentina.
Total value of assets that exceed the nontaxable minimum Tax on lower Rate on Exceeding Not exceeding amount excess ARS ARS ARS %
3,000,000
0.5 3,000,000 6,500,000 15,000 0.75 6,500,000 18,000,000 41,250 1.00 18,000,000 — 156,250 1.25
The following table applies to assets held abroad.
Total value of assets that exceed the nontaxable minimum Rate on Exceeding Not exceeding amount ARS ARS % 0 3,000,000 0.7 3,000,000 6,500,000 1.25 6,500,000 18,000,000 1.80 18,000,000 — 2.25
Under the Substitute Taxpayer Regime, individuals domiciled in foreign countries are subject to personal tax on Argentine assets only at a rate of 0.5%. In this case, the minimum of ARS2 million does not apply.
Liabilities, other than those incurred for the purchase, construc tion or improvement of a taxpayer’s home, are not deductible for purposes of the personal assets tax. A tax credit is allowed for similar taxes paid abroad.
Expatriates residing in Argentina on work assignments for a period not exceeding five years are considered to be nonresidents and they are taxed only on personal assets located in Argentina.
C. Social security
Contributions. Social security contributions are paid by employ ees, employers and self-employed persons.
. Employees’ social security contributions are withheld from their monthly salary.
Employees make contributions to the pension fund at a rate of 11%, to the retiree’s fund at a rate of 3% and to the health care system at a rate of 3%. The maximum monthly tax base for the calculation of these contributions is ARS208,357.30 for January 2021 and February 2021, ARS225,171.69 from March 2021 to May 2021, ARS252,462.5 from June 2021 to August 2021 and ARS283,742.61 from September 2021 to November 2021. The cap is updated every three months.
Monthly salary that exceeds the maximum tax base is not subject to contributions. For this purpose, a year comprises 13 months.
Employers. Employers pay social security contributions at a rate of 20.4% or 18%, depending on the company’s activity and turn over (amount of sales). A 6% contribution for medical care is required in addition to the social security contributions. For the tax base with respect to employer social security contributions, a
minimum nontaxable amount of ARS7,003.68 is applied, but the tax base for employer health care contributions is not capped.
Other. No employee or employer social security taxes are payable with respect to directors’ fees. However, a director must pay fixed monthly amounts that are allocated to the social security’s SelfEmployed System.
The social security tax law provides an exemption for all profes sionals, researchers, scientists, and technicians who are contracted outside of Argentina to render services in Argentina for a period of not more than two years. The individuals must have a tempo rary residence, be covered by the social security system of their countries, and provide evidence of their technical qualifications as well as of their coverage for death, disability and old age in their home countries or countries of residence. This exemption is available only once and, after being granted, it is in force from the date of the application for as long as the conditions for the exemption are met.
Totalization agreements. Social security taxes for nonresidents are collected as outlined above. However, both the employer and the nonresident employee may be exempt from contributions to the Argentine pension fund and health care system if certain conditions are met.
To provide relief from double social security taxes and to assure benefit coverage, Argentina has entered into totalization agree ments with the following countries.
Belgium Italy Southern Common Market Chile Luxembourg (Mercado Común del Sur, Colombia Peru or MERCOSUR) countries Ecuador Portugal (Brazil, Paraguay and France Slovenia Uruguay) Greece Spain
Argentina has also entered into the Ibero-American Multilateral Agreement on Social Security, which is in force with respect to Bolivia, Brazil, Chile, Ecuador, El Salvador, Paraguay, Peru, Portugal, Spain and Uruguay.
D. Tax filing and payment procedures
The tax year for individual taxpayers is the calendar year. Tax returns must be filed between 11 June and 13 June (depending on the taxpayer’s registration number) of the following year unless the taxpayer’s only income is from employee compensation. No extensions to file tax returns are allowed.
National and foreign employees must file an income and per sonal assets tax return for informational purposes if their gross compensation exceeds ARS2 million per year. The deadline for tax returns for informational purposes is 30 June.
Self-employed taxpayers must register with the tax authorities. Tax returns are filed annually in June, declaring earnings for the previous calendar year.
Individuals with non-wage income, including self-employment income, must make advance tax payments bimonthly from
August to April, based on the previous year’s tax. Under a with holding system for payments to resident individuals, withholding is imposed at various rates on income exceeding a minimum threshold. Amounts withheld are treated as advance payments.
Advance payments are also required for purposes of the personal assets tax (see Section B).
For married couples, a wife is taxed separately on income derived from personal activities (including employment, self-employment and business), on assets acquired before marriage and on assets acquired during marriage with income earned from personal activities.
Nonresidents subject to the 35% withholding tax are not required to file tax returns.
E. Double tax relief and tax treaties
Resident taxpayers are entitled to a tax credit for income taxes paid abroad, up to the increase in Argentine tax resulting from the inclusion of the foreign-source income.
Argentina has tax treaties in force with the following jurisdictions.
Australia Finland Qatar
Austria* France Russian Federation Belgium Germany Spain Bolivia Italy Sweden Brazil Japan* Switzerland Canada Luxembourg* Turkey* Chile Mexico United Arab China Mainland* Netherlands Emirates Denmark Norway United Kingdom
* The procedures required for the entry into force of these treaties are currently in progress.
F. Types of residence
Under Law 25,871, the following are the three categories of entry:
• Transitory residence
• Temporary residence
• Permanent residence
These types of residence and other key aspects of the immigra tion process in Argentina are discussed below.
Transitory residence
Technical residence. Technical residence applies to foreigners who will perform technical or professional activities for a short time period. This type of residence can be obtained at the Argentine consulate in the country of residence of the expatriate or at the Argentine migratory office after arrival in Argentina.
Technical residences granted by the Argentine consulate are for a 30-day period, which can be extended up to 90 days, at discretion of the immigration office.
Transitory Work Authorization. A Transitory Work Authorization (TWA) is a short-term, single-entry work permit valid for a period of up to 90 days. This type of short-term work permit allows assignees to reside legally in Argentina and perform paid or unpaid activities for a local entity in Argentina. The assignee can apply for this benefit twice in a 365-day period beginning on the date of the first application. To apply for a second TWA, the assignee must leave and re-enter the country.
Business visas. Business visas are issued to foreign nationals who were invited by a local commercial entity established in Argentina. This type of visa can be obtained only at the Argentine consulate in the country of residence. It is issued by the consulate directly or through a prior application to the immigration office in Argentina. This type of visa is for business issues only.
Visitor visas. Nationals from the following jurisdictions require a visitor visa to enter Argentina.
Afghanistan Eswatini Oman Albania Ethiopia Pakistan Algeria Equatorial Guinea Palau Angola Fiji Palestinian Antigua Gabon Authority and Barbuda Gambia Papua New Azerbaijan Ghana Guinea Bahamas Guinea Philippines Bahrain Guinea-Bissau Qatar Bangladesh India Rwanda Belarus Indonesia Samoa Belize Iran São Tomé
Benin Iraq and Príncipe Bhutan Jordan Saudi Arabia Bosnia and Kenya Senegal Herzegovina Kiribati Seychelles Botswana Korea (North) Sierra Leone
Brunei Kuwait Solomon Darussalam Kyrgyzstan Islands Burkina Faso Laos Somalia Burundi Lebanon Sri Lanka Cambodia Lesotho Sudan Cameroon Liberia Syria Cape Verde Libya Tajikistan
Central African Madagascar Tanzania Republic Malawi Taiwan Chad Maldives
Timor-Leste China Mainland* Mali Togo
Comoros Marshall Islands Tunisia Congo (Democratic Mauritania Turkmenistan Republic of) Mauritius Tuvalu Congo Micronesia Uganda (Republic of) Moldova United Côte d’Ivoire Mongolia Arab Emirates Cuba Morocco Uzbekistan
Djibouti Mozambique Vanuatu Dominica Myanmar Vietnam
Dominican
Republic
Egypt
* Chinese citizens not born in Argentina who hold Chinese ordinary passports and are going to Argentina for tourism do not require a visa if they have a valid United States visa (Category B2) or a Schengen visa, but must pay an entry fee to visit the country.
Resolution No. 137-E/2017 (March 2017) issued by the Interior Ministry establishes an exemption to transitory visas for indi viduals from member jurisdictions of the Organisation for Economic Co-operation and Development (OECD) who hold ordinary passports issued by their country of nationality or valid travel documents according to the MERCOSUR regulations. The exemption applies to transitory matters (only business activities) of up to 90 days, according to Section 24 of Law 25,871.
Temporary residence
Labor contract residence. Labor contract residence applies to foreigners who are regularly employed by a local company for a long period. This type of residence is valid for one year and may be extended indefinitely.
Intracompany transfer residence. Intercompany transfer resi dence applies to employees who are transferred from a home country company to an Argentine company for a long period. This type of residence is valid for one year and may be extended indefinitely.
Family reunification with temporary resident relative. Family reunification with temporary resident relative residence applies to foreigners who have a relative with temporary residence in Argentina. This type of residence is valid for the period of the temporary residence of the relative and may be extended indefinitely.
Rentier residence. Rentier residence applies to proprietors or pen sioners who receive money in Argentina. This type of residence is valid for up to one year and may be extended indefinitely.
Study residence. Study residence applies to foreigners entering the country with the intention of carrying out studies at private or state-run establishments that are officially recognized. This type of residence is valid for up to one year and may be extended for the period of the course of study.
MERCOSUR temporary residence. MERCOSUR temporary residence applies to foreigners born in the MERCOSUR coun tries (Bolivia, Brazil, Chile, Colombia, Ecuador, Guyana, Paraguay, Peru, Suriname, Uruguay and Venezuela) who will work for a long period. This type of residence is valid for two years and may be extended indefinitely.
Investors. The immigration office considers an investor to be a foreign national that would make a minimum investment of ARS1,500,000 in a productive, commercial or service-supplying activity in Argentina or who convincingly proves that he or she has ARS1,500,000 destined for investment in these types of activities. Prior experience in the relevant activities is desirable.
The investor visa is valid for up to one year and may be extended indefinitely.
Permanent residence
Family reunification with a permanent resident relative. Family reunification with a permanent resident relative residency applies to foreigners who have a relative (parent, child or spouse) with permanent residence in Argentina.
Family reunification with Argentine relative. Family reunification with Argentine relative residency applies to foreigners who have an Argentine relative (parent, child or spouse) in Argentina.
MERCOSUR citizens who live in Argentina for two years. After two years of temporary residency in Argentina, MERCOSUR nationals can apply for permanent residency. Brazilian nationals can apply for permanent residence from the beginning of the assignment under an agreement between Argentina and Brazil.
Non-MERCOSUR citizens who live in Argentina for three years. Non-MERCOSUR citizens can request permanent residence after they live in Argentina for at least three years.
Registration of local companies. The National Registry of Foreign Personnel Requestors (Registro Nacional Único de Requirentes de Extranjeros, or RENURE) is the national registry in which all the local entities requiring foreign staff must be enrolled. The requesting person (private or public, physical or juristic) must be registered at RENURE to obtain the following types of residence:
• Technical residence
• Business residence
• Transitory Work Authorization
• Labor contract residence
• Intracompany transfer residence
• Religious residence
• Study residence
Home country required documentation. To obtain temporary or permanent residence, a criminal record certificate from the coun tries where the employee lived for at least one year in the past three years is required as well as the criminal record certificate from the country of birth.
The criminal record certificate needs to be legalized for Argentina. Under the Hague Convention, the document can have an apostille issued by the home country foreign affairs ministry. If the home country is not part of the convention, double legaliza tion must be performed by the home country foreign affairs ministry and by the Argentine consulate.
For an employee who is accompanied by dependents, criminal records are not required for individuals who are younger than 16 years old. Furthermore, in this case, legalized family-ties certifications must be attached.
Translation of required documents. All of the documents that are issued in a language other than Spanish must be translated by an Argentine sworn translator and legalized by the Argentine Sworn Translators Association. An exception applies to documents issued in Brazilian Portuguese.
National Identity Card. The National Identity Card (Documento Nacional de Identidad, or DNI) is issued to foreigners with any type of temporary residence valid for three months or more.
The first application for the DNI can be made simultaneously with the application for temporary or permanent residence at the immigration office. Subsequent applications need to be sched uled in advance at the Register Office for Natural Persons (Registro Nacional de las Personas, or RENAPER).
Social security number for Argentina. A social security number (Codigo Unico de Identificación Laboral, or CUIL) for Argentina is required for all regularly employed foreigners.