A comment on taxes

[jlynch]

So there's three answers to this question, and they're the same ones I give when I've been DMed about this (again, reminder I'm layman, not a lawyer/accountant). Here's the AFIP/BCRA answer:

• Businesses, including monotributistas must use the MULC, si o si, when exporting goods or services abroad
• Monotributistas must issue facturas "E" (export receipts) to their clients abroad
• Monotributistas who earn more than $3,969,420 ARS/year (for 2022) at the official exchange rate must transition to the "general regime" but, like all things Argentina, AFIP only really seems to enforce this once you bill around 25% above this limit annually

Steve asked: what happens if you get caught?

• Tens of thousands of Argentines are doing this every month, most in Programming, IT, and translation services
• I have read 1st hand accounts in Spanish of 3 people who were caught
• It wasn't AFIP that caught them for violating the MULC
• They were caught by their bank/Uala/MercadoPago's KYC regulations for receiving digital transfers from peer-to-peer crypto resale
• Person 1 was allegedly referred to the UFI/put on a banking blacklist because he did this receptively until he was locked out of all the banks and digital wallets (CVUs)
• Person 2 got a KYC request from MercadoPago who froze their account. Last I heard they were kissing the money goodbye instead of risking a UFI blacklisting
• Person 3 got KYC request from their bank, wasn't even registered as a monotributista, paying no taxes at all, and asked if it was possible to register as one and then claim the funds were from work he was preforming; the consensus was no, as he needed to be registered previously/where is the factura to justify the payment via peer-to-peer crypto resale? He was contemplating saying goodbye to the money and learning a valuable lesson.

All this being said, tens of thousands of people still work remotely for salaries in dollars and don't use the MULC without being caught (which, again, is illegal) but that's because, from my Googling and reading they: A) pay taxes as a Monotributista, B) Spend the same or less via credit, debit, or transferia that they declare in income to AFIP, and C) They don't use digital peer to peer crypto exchanges (as this creates a paper trail), but rather they use a digital cave which, like a cave on Florida Street, asks for no ID/CUIL/etc and their dollars always stay outside of Argentina and they receive their pesos in cash.

I don't condemn nor condone this behavior (unless someone isn't paying any taxes, then I condemn it), but just like selling dollars on Florida Street is illegal, so is trading dollars outside of the MULC. I don't know of anyone who has been punished for either, but in theory it can happen, so keep that in mind...

As far as I know operations using the Contado Con Liqui are valid under the MULC (buying argentine bonds or some of the 19 argentine shares https://es.investing.com/equities/argentina-adrs quoted in NY in USD and in Argentina in pesos and selling for pesos which can be done through a broker such as bullmarketbrokers. No idea what the fees are like. Interesting, Uala have a new brokerage service Ualintec Capital coming out.

Other option to buy shares through CEDARs such as MELI (Mercado libre) quoted in USD in NY but not quoted in argentina in pesos. https://es.wikipedia.org/wiki/Certificado_de_Depósito_Argentino . There are 102 shares listed here. Not sure if this can facilitate transferring USD outside to argentina to Argentina and complying with the MULC.

 

[Quilombo]

As far as I know operations using the Contado Con Liqui are valid under the MULC (buying argentine bonds or some of the 19 argentine shares https://es.investing.com/equities/argentina-adrs quoted in NY in USD and in Argentina in pesos and selling for pesos which can be done through a broker such as bullmarketbrokers. No idea what the fees are like. Interesting, Uala have a new brokerage service Ualintec Capital coming out.

Other option to buy shares through CEDARs such as MELI (Mercado libre) quoted in USD in NY but not quoted in argentina in pesos. https://es.wikipedia.org/wiki/Certificado_de_Depósito_Argentino . There are 102 shares listed here. Not sure if this can facilitate transferring USD outside to argentina to Argentina and complying with the MULC.

My apologies, I didn't explain the MULC clearly in relation to the exportation of goods and services abroad, you're absolutely correct that the CCL is part of the MULC, but it has a different meaning in relation to remote work/exporting, which I should have specified.

The MULC, when used in reference to exporting goods and services (including work preformed by freelancers), is often used as a short hand reference to BCRA Comunicación A 6770 1 de septiembre de 2019, and extensions of it by the Fernandez administration.

BCRA Comunicación A 6770 1 de septiembre de 2019 was an emergency resolution issued by the Macri administration to try and help stem the run on dollars following the results of the 2019 PASO. As many of us remember, the market panicked following Fernandez's performance, resulting in basically a bank run on dollars; Comunicación A 6770 re-implemented the previously suspended requirement that exporters of goods and services, including freelancers, pesify their dollars within 5 days of receiving payment.

While the exchange/sale/resale of securities via the CCL fall under the auspices of the MULC, the requirement to pesify via the official exchange rate is a separate component of the larger MULC overall, which itself isn't a single law, but rather various BCRA regulations dating back to 2003, that govern international exchange, trade, imports, exports, etc. that were created via Decreto 260/2002, which itself was a modification of Decreto 71/2002, which dates back to the Corralito, hence keeping with the Byzantine (Argzantine?) system of ad-hoc/on-the-fly regulations we all know and love.

 

[lunar]

But it's not black or white ... it's about a risk/reward balance ...

I wholeheartedly agree with you on that!

You're welcome to hit on 17, but I'm going to stand.

Frankly, I am not qualified. You are doing much better than me at your age.
I am questioning your perception of risk/reward balance, though.
If we were discussing, say, statistics of bus accidents that involve pedestrians in the same details here, no forum member would ever leave his apartment.

 

[Cordoba]

If you are a resident or citizen and move away not to return for a full year to establish yourself as a nonresident for taxes. Then continue to maintain a residency abroad. If you return for less than 6 months of the year are you exempt tax on all earned income abroad and wealth/income taxes on anything held outside the country.

 

[jlynch]

My apologies, I didn't explain the MULC clearly in relation to the exportation of goods and services abroad, you're absolutely correct that the CCL is part of the MULC, but it has a different meaning in relation to remote work/exporting, which I should have specified.

The MULC, when used in reference to exporting goods and services (including work preformed by freelancers), is often used as a short hand reference to BCRA Comunicación A 6770 1 de septiembre de 2019, and extensions of it by the Fernandez administration.

BCRA Comunicación A 6770 1 de septiembre de 2019 was an emergency resolution issued by the Macri administration to try and help stem the run on dollars following the results of the 2019 PASO. As many of us remember, the market panicked following Fernandez's performance, resulting in basically a bank run on dollars; Comunicación A 6770 re-implemented the previously suspended requirement that exporters of goods and services, including freelancers, pesify their dollars within 5 days of receiving payment.

While the exchange/sale/resale of securities via the CCL fall under the auspices of the MULC, the requirement to pesify via the official exchange rate is a separate component of the larger MULC overall, which itself isn't a single law, but rather various BCRA regulations dating back to 2003, that govern international exchange, trade, imports, exports, etc. that were created via Decreto 260/2002, which itself was a modification of Decreto 71/2002, which dates back to the Corralito, hence keeping with the Byzantine (Argzantine?) system of ad-hoc/on-the-fly regulations we all know and love.

rather than export goods and services, I have heard of some that structure it as their company selling a product using a company abroad, and hence pay themselves in dividends. But Im not familiar with the details involved.

 

[steveinbsas]

If you are a resident or citizen and move away not to return for a full year to establish yourself as a nonresident for taxes. Then continue to maintain a residency abroad. If you return for less than 6 months of the year are you exempt tax on all earned income abroad and wealth/income taxes on anything held outside the country.

This is a great point.

Isn't it ironic that it only applies to citizens and permanent, but not temporary residents (at least those who want to be able to renew their residency in order to eventually obtain permanent residency)?

 

[Alby]

Isn't it ironic that it only applies to citizens and permanent, but not temporary residents (at least those who want to be able to renew their residency in order to eventually obtain permanent residency)?

I don't think ironic is quite the right word. It's just an unfortunate natural consequence of how the residency and tax rules intersect. You gain temporary migrations residency and, if you hold it for a year, you become a tax resident too. The only way to then lose the tax residency is to leave the country for 12 months, which in turn triggers loss of your temporary migrations residency and you are no closer to permanent residency.

The only path is to comply with (or ignore) the tax obligations from months 13 to 36 of the temporary residency, then seek permanent residency (at month 36) and leave the country for 12 months (i.e., months 37-48). Assuming you are successful in converting your temporary residency into permanent migrations residency, after you return (say from month 49) there is a question about you would manage your time each year in the future in order to not fall back into the tax residency category. It's reasonably clear you would need to own a home in your home country and divide your time between that home and Argentina, but the question of how much time spent in each country each year seems less clear. Some do maintain that if you stay 183 days in Argentina in one of those future years, you do once again become tax resident; that may be on advice from accountants, but the tax law itself doesn't appear to specify it to that level of detail.

 

[Anei646]

This as a general comment not directed at anyone specifically as I've said this in another thread, but anybody thinking of/planning to/already staying in Argentina for 6 months of the year or longer and earning income from remote work/holding assets abroad should speak to an Argentine accountant (I'm not one myself, and this is based on my own understanding/research).

The issue isn't that you're sending money from yourself to yourself, many people have dual nationalities, and this is even a service offered by banks for normal countries (i.e. not Argentina/Venezuela/Lebanon/etc. countries that have a black market for dollars), the issue is how you come in to possession of these funds abroad, how much money you have abroad, and your tax residency status.

Here are the 2 most common situations I've seen, and what I, a layperson, understand to be the tax implications:

Digital Nomad (less than 6 months)
- Exempt from domestic taxes (except IVA)
- Exempt from Bienes situados en el exterior
- Can in theory access the Savings Account for Tourists once available, and receive a better exchange rate
- Not required to pesify via the MULC
- Possible to use WU, even though current regulation stipulates it is for familiar support (rarely, if ever enforced, users here been doing it for years)
- Must earn income from foreign companies/persons (i.e. visa/passport stamp prohibits working for an Argentine employer)

Digital Nomad (more than 6 months)/Working Remotely for a Foreign Employer as a Citizen or Resident (Temporary or Permanent)
- Has a form of legal residency
- Must obtain a CUIT/CUL/CDI
- Must register with AFIP
- Must adhere to monotributista regime (provided annual income for 2021 is under $2.6 Million pesos at the official exchange rate)
- Must subscribe to an Obra Social
- Required to issue type E facturas to foreign clients
- Must pesify and repatriate (send to Argentina) funds within 5 days of receiving payment for goods/services rendered via the MULC (official exchange rate)
- Depending on province, pay Ingresos Brutos
- For Bienes situados en el exterior that exceed $3,000,000 ARS (not including a primary residency up to $18,000,000 ARS or bonds/Argentine/Provincial debt) you pay a graduated wealth tax with a floor of 0.70% up to a maximum of 2.25%
- If you repatriate at least 5% of the total assets valued abroad (i.e. $150,000 if you have $3 Million ARS worth of assets abroad) AND you keep these assets in Argentina until December 31st of the year, you can become exempt from paying the Bienes Personales

Again, I'm not an accountant, so don't make your personal financial decisions based on the above. I don't condone tax evasion, but I do sympathize with all of us who know the true value of the dollar being $200 pesos, not $100, so with this information I again strongly recommend you speak with an accountant you can help you identify tax saving measures one can take, and can answer specific questions you have that are applicable to your financial circumstances.

This as a general comment not directed at anyone specifically as I've said this in another thread, but anybody thinking of/planning to/already staying in Argentina for 6 months of the year or longer and earning income from remote work/holding assets abroad should speak to an Argentine accountant (I'm not one myself, and this is based on my own understanding/research).

The issue isn't that you're sending money from yourself to yourself, many people have dual nationalities, and this is even a service offered by banks for normal countries (i.e. not Argentina/Venezuela/Lebanon/etc. countries that have a black market for dollars), the issue is how you come in to possession of these funds abroad, how much money you have abroad, and your tax residency status.

Here are the 2 most common situations I've seen, and what I, a layperson, understand to be the tax implications:

Digital Nomad (less than 6 months)
- Exempt from domestic taxes (except IVA)
- Exempt from Bienes situados en el exterior
- Can in theory access the Savings Account for Tourists once available, and receive a better exchange rate
- Not required to pesify via the MULC
- Possible to use WU, even though current regulation stipulates it is for familiar support (rarely, if ever enforced, users here been doing it for years)
- Must earn income from foreign companies/persons (i.e. visa/passport stamp prohibits working for an Argentine employer)

Digital Nomad (more than 6 months)/Working Remotely for a Foreign Employer as a Citizen or Resident (Temporary or Permanent)
- Has a form of legal residency
- Must obtain a CUIT/CUL/CDI
- Must register with AFIP
- Must adhere to monotributista regime (provided annual income for 2021 is under $2.6 Million pesos at the official exchange rate)
- Must subscribe to an Obra Social
- Required to issue type E facturas to foreign clients
- Must pesify and repatriate (send to Argentina) funds within 5 days of receiving payment for goods/services rendered via the MULC (official exchange rate)
- Depending on province, pay Ingresos Brutos
- For Bienes situados en el exterior that exceed $3,000,000 ARS (not including a primary residency up to $18,000,000 ARS or bonds/Argentine/Provincial debt) you pay a graduated wealth tax with a floor of 0.70% up to a maximum of 2.25%
- If you repatriate at least 5% of the total assets valued abroad (i.e. $150,000 if you have $3 Million ARS worth of assets abroad) AND you keep these assets in Argentina until December 31st of the year, you can become exempt from paying the Bienes Personales

Again, I'm not an accountant, so don't make your personal financial decisions based on the above. I don't condone tax evasion, but I do sympathize with all of us who know the true value of the dollar being $200 pesos, not $100, so with this information I again strongly recommend you speak with an accountant you can help you identify tax saving measures one can take, and can answer specific questions you have that are applicable to your financial circumstances.

Anyone who can recommend an English-speaking, Argentine accountant that is familiar with international i.e. US taxes?