On May 8th, 2018, the Federal Tax Authorities (“AFIP”) published the General Resolution No. 4236/2018 in the Official Gazette, which regulates the way to determine the tax residence, the loss of resident status and certain double residence’s cases.
The Income Tax Law (“ITL”) determines that resident individuals in Argentina, residents pay taxes on their whole earnings obtained in the country and abroad[1]. Non-residents are taxed exclusively on their Argentine source earnings through a
On May 8th, 2018, the Federal Tax Authorities (“AFIP”) published the General Resolution No. 4236/2018 in the Official Gazette, which regulates the way to determine the tax residence, the loss of resident status and certain double residence’s cases.
The Income Tax Law (“ITL”) determines that resident individuals in Argentina, residents pay taxes on their whole earnings obtained in the country and abroad[1]. Non-residents are taxed exclusively on their Argentine source earnings through a withholding mechanism at its source.
Tax residency
The tax residence determines in which way the taxpayers will pay taxes in Argentina.
– Regarding human persons, ITL anticipates that residents are:
i.- Argentine individuals, even those with acquired citizenship, excluding those that lost their tax resident status.
ii.- Foreign individuals that obtained their Argentine permanent residence permission, or those who were authorized to stay in the country with lawful immigration temporary permanence, during a period of 12 months. During this term, temporary absences comply with the terms and conditions established by the regulations in this regard.[2]
– About taxpaying legal entities, it is determined based on the address consigned in their files. That address must coincide or be in the same jurisdiction as the one verified by the recent documentary evidence issued by a competent public body, or that is included in an affidavit of the individual holder of the account.
Tax detachment
In order to define residence for tax purposes, the I.T.L. determines the degree of linkage of the taxpayer with the territory of the Nation. Also, the law determines that this condition is lost when:
(i) The status of permanent resident of another State is acquired;
(ii) If this situation has not been verified, the person remains continuously abroad for a period of 12 months with temporary presences in the country that do not exceed a total of 90 continuous or alternating days during that 12-month period.
In those cases, in which the taxpayer obtains residence in another State, but maintains his / her house in Argentina, it is considered to have double residence. In case there is housing in both countries, priority will be given to the center of vital interests.[3] If it cannot be determined, it must be analyzed if the taxpayer spends more time in Argentine territory than in the other State, and if they are equal, Argentine nationality will prevail.
The loss of resident condition in the country must be demonstrated by the taxpayer that invokes it, by means of one of the elements indicated below:
- Certificate of permanent residence issued by the competent authority of the foreign State concerned.
- Passport, consular certification or other reliable document proving departure and stay outside the country for the period provided in Article 120 of the I.T.L.
Said paperwork must be attached when requesting cancellation of the registration in the Income Tax.
Tax dischargement
When a human person acquires the quality of beneficiary from abroad, he/ she must communicate that change of residence or, as the case may be, the loss of the condition of a resident in the country, to the corresponding withholding agents for the purpose of being discharged from the Income Tax.[4]Until the corresponding dischargement to the Income Tax is not obtained, the human persons shall continue to comply with their formal and material tax obligations.
Loss of resident status causes effects as applicable: – from the first day of the month immediately following that in which the permanent residence was acquired in a foreign state,- the period that determines the loss of resident status, has been completed.
[1] Art. 1 Law No. 20.628
[2] Art. 119, Law N° 0.628
[3] Closer personal and economic relationships
[4] Art. 123 Law No. 20.628
