Argentina Personal Income Tax

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 per­manent 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 indi­vidual’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 employer-paid items, except moving expenses.

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.

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 with­holding tax at a rate of 35%. Under the September 2013 tax reform, a 10% withholding tax is imposed on dividends distrib­uted by Argentinian companies to Argentinian individuals and foreign shareholders. 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.

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 and term deposits, and interest from Argentine government bonds, 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.

Directors’ fees. Directors’ fees are taxed as self-employment in come 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 de ductible 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 Argen­tine companies are considered Argentine-source income, regard­less of where the services are performed.

Taxation of employer-provided stock options. Stock options grant­ed to employees are deemed to be payments in kind and are there­fore 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. Income arising from the transfer of shares, quotas, equity interests, bonds and other securities is determined under Section 61 of the Income Tax Law (the cost is deducted from the sales price) and is subject to a 15% tax rate.

Law 26,893 provides that profits from the sale, exchange or dis­position of public shares, public securities or public bonds are exempt if they are derived by individuals or undivided estates resident in Argentina and if they are traded in a stock exchange or publicly traded. Further regulations provide that such trading includes transactions done through exchange markets authorized by the Argentine Securities and Exchange Commission (Comisión Nacional de Valores, or CNV).

In addition, income derived by tax residents (other than Argentine corporations) from the sale, exchange, disposition or transfer of securities issued by financial trusts, negotiable obligations issued by Argentine corporations and public bonds is exempt from income tax under specific laws if certain requirements are met.

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
  • Expenses incurred by traveling salespeople based on estimates established by the tax authorities
  • Donations to the government and certain charitable or non­profit institutions, up to 5% of net taxable income
  • Burial expenses, up to ARS996.23 annually
  • Life insurance premiums, up to ARS996.23 annually
  • Mortgage interest, up to ARS20,000 annually, for the purchase of a dwelling destined to be a permanent abode
  • Tax on Bank Debits and Credits, subject to certain limitations
  • 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 non-taxable amount (generally ARS42,318)

Self-employed individuals may deduct expenses incurred in pro­ducing income, in addition to the expenses listed above.

Personal deductions and allowances. Employed and self-employed individuals are entitled to standard deductions in amounts established by law. The amounts for 2016 are ARS39,778 for a spouse, ARS19,889 for each child and ARS19,889 for each other dependent. To qualify, dependents must reside in Argentina for more than six months in the tax year and may not have income in excess of ARS42,318.

A deduction of ARS42,318 is granted to taxpayers who are resi­dent in Argentina for longer than six months during the calendar year.

A special deduction is available against compensation derived from personal services. The annual amount is ARS203,126.40 for employees and ARS42,318 for self-employed persons.

Nonresidents residing in Argentina longer than six months in a calendar year may claim the deductible expenses actually in curred and exemptions available to residents.

Rates. The progressive tax rates applicable to Argentine residents for 2016 range from 9% to 35%.

The following table presents the 2016 individual income tax rates.

Exceeding ARS Not Exceeding ARS Tax on Lower Amount ARS Rate on Excess %
0 10,000 0 9
10,000 20,000 900 14
20,000 30,000 2,300 19
30,000 60,000 4,200 23
60,000 90,000 11,100 27
90,000 120,000 19,200 31
120,000 28,500 35

Nonresidents residing tem porar ily 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 in – curred in earning income. The re main ing 70% of compensation is taxed at a flat rate of 35%, with no other allowable deductions or ex emptions, 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.

Other taxes

Transfer tax. Sales of real estate are subject to transfer tax at a rate of 1.5% on the sale price.

Personal assets tax. Individuals with total assets subject to tax of up to ARS305,000 are exempt from the personal assets tax. Individuals domiciled in Argentina with assets totaling more than ARS305,000 are required to pay the personal assets tax for 2016 at the rates listed in the following table.

Total value of taxable assets

Exceeding ARS Not Exceeding ARS Rate %
305,000 750,000 0.5
750,000 2,000,000 0.75
2,000,000 5,000,000 1
5,000,000  – 1.25

Under the Substitute Taxpayer Regime, individuals domiciled in foreign countries are subject to personal tax on Argentine assets only at a rate of 1.25%. In this case, the minimum of ARS305,000 does not apply.

Liabilities, other than those incurred for the purchase, construc­tion 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 domiciled in Argentina but they are taxed only on personal assets located in Argentina.

Social security

Contributions. Social security contributions are paid by employ­ees, employers and self-employed persons.

Employees. 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 ARS48,598.08 for January 2016 and February 2016 and ARS56,057.93 from March 2016 onward.

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 21% or 17%, depending on the company’s activity and turn­over (amount of sales). A 6% contribution for medical care is required in addition to the social security contributions. The tax base for employer social security contributions and 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 Self-Employed System.

The social security tax law provides an exemption for all profes­sionals, 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 tempo­rary 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 if certain conditions are met.

To provide relief from double social security taxes and to assure benefit coverage, Argentina has entered into totalization agree­ments with the following countries.

Chile                      Italy                       Southern Common Market

Colombia               Peru                       (Mercado Común del Sur,

France                    Portugal                 or MERCOSUR) countries

Greece                   Slovenia                 Spain

Argentina has also signed the Latin American Treaty of Social Security, which is not yet in force.

Tax filing and payment procedures

The tax year for individual taxpayers is the calendar year. Tax returns must be filed between 11 April and 15 April, 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 per­sonal assets tax return for informational purposes if their gross compensation exceeds ARS300,000 per year. If their compensa­tion is higher than ARS200,000, but lower than ARS300,000, national and foreign employees must file tax returns reporting only their assets as of 31 December of the current year with the tax authorities. 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 April, declaring earnings for the previous calendar year.

Individuals with non-wage income, including self-employment in come, must make advance tax payments bimonthly from June to February, based on the previous year’s tax. Under a withhold­ing system for payments to resident individuals, withholding is im pos ed 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 em ployment, self-employment and business), on assets acquired be fore 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.

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 countries.

Australia                     Finland                              Russian

Belgium                      France                               Federation

Bolivia                        Germany                           Spain

Brazil                          Italy                                   Sweden

Canada                       Netherlands                       Switzerland

Chile*                         Norway                             United Kingdom

Denmark

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 immigra­tion 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. Technical residences obtained at the Argentine migratory office are granted for a 90-day period, which cannot be extended and can be requested only twice a year.

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.

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 resi­dence 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 pensioners 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 coun­tries (Bolivia, Brazil, Chile, Colombia, Ecuador, Paraguay, Peru, 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.

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
  • 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 coun­tries where the employee lived for at least one year in the past three years is required.

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 legaliza­tion 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.

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 sched­uled 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.

Regulations on exchange foreign currency transactions

Residents in Argentina can access the foreign-exchange market without prior authorization from the Central Bank of Argentina (Banco Central de la República Argentina, or BCRA) if the total amount purchased does not exceed USD2 million per month. Under BCRA regulations, passengers and crew members over 21 years old may take up to USD10,000 (or its equivalent in other currencies, precious metals, foreign banknotes or coins) out of the country. In addition, passengers and crew members between 16 and 21 may leave Argentina with a maximum of USD2,000 (reduced to USD1,000 for individuals younger than 16).

Professional advice should be obtained regarding transactions involving the matters discussed above.