Agreement between Argentina and Spain to avoid double taxation and prevent tax evasion with respect to taxes on income and assets

On March 11, 2013 Ricardo Etchegaray, head of the Tax Authorities (AFIP) and Roman Oyarzun, Ambassador of the Kingdom of Spain, signed an agreement that aims to avoid double taxation and prevent fiscal evasion with respect to taxes on income and assets (hereafter, the “Agreement”).

This Agreement replaces the one signed by both countries on July 21, 1992, which was unilaterally denounced by Argentina on June 29, 2012, which ceased to have effect from January 1st, 2013. The previous agreement was replaced for the purpose of avoiding abuses on Spanish companies.

The new Agreement corresponds with the model of the Organization for Economic Cooperation and Development (OCDE) of agreements to avoid double taxation. The Agreement facilitates the cooperation between the tax authorities of both countries, promoting the exchange of tax information. It is expressly stated that the exchange of information not only includes taxpayers involved in the issue of double taxation, but it includes all citizens of both Argentina and Spain.

Etchegaray stated that “the agreement will avoid distortions in taxation internationally.” Meanwhile, Marchesi affirmed “the firm is very good news for the relations between Spain and Argentina, and I’m sure it will cause a very favorable impact on our businessmen, since they can be satisfied as they have a clear and predictable tax horizon ahead. “

The parties also signed a memorandum of understanding which includes clauses limiting benefits for the purpose of preventing the abuse of the Agreement.

In connection with the date the Agreement came into force, its application will be retroactive to January 1st, 2013, to avoid the existence of a time-lapse in which there is an absence of an agreement, which would be a disincentive to Spanish investments.

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