A comment on taxes

[jlynch]

I looked at doing this briefly, the amount of taxes and fees to make yourself legal is oppressive. You basically need to have a shadow company in Argentina hiring you and then paying them to pay you. The shadow company will take a cut. The accountant i spoke with said you'll lose about 40% of income in various taxes and cuts.

for a freelancer earning outside of monotributo limits (https://www.afip.gob.ar/monotributo/categorias.asp) the following article presents that playing by the rules "aquel que gane US$ 5.000 tendrá más costos e impuestos y terminará ganando US$ 1.465" https://www.infotechnology.com/fina...rior-por-cada-us-1000-solo-les-llegan-us-450/

 

[steveinbsas]

https://www.infotechnology.com/fina...rior-por-cada-us-1000-solo-les-llegan-us-450/

Google translate:

"More and more local workers specialized in technology prefer to work abroad from Argentina and work as "freelancers". These professionals offer their services to companies located outside the country and charge in foreign currency and local regulation establishes that all their income in dollars or euros must be pesified at the Banco Nación (which today is around $ 107) and also must be paid taxes as monotax holders of category "E". "Those who work in the world of technology independently, or as a freelancer, face this situation directly.

Today, if you are a freelancer who works as a monotributista within the justice system, for every US $ 1,000 that you invoice you US $ 450 remains that are charged to the official dollar. And this percentage is even worse when the limit that forces to leave the monotax and jump to something more confusing is exceeded; in this case, the one who earns US $ 5,000 will have more costs and taxes and you will end up earning US $ 1,465, almost the same as if you won the portion, "explains Gustavo Guaranga, CEO of Snoop Consulting.

In this context, Argentine freelancers turn to the informal market to collect salaries in dollars and avoid the stocks. Today, the most popular method is cryptocurrencies, since Argentines can easily convert them to Argentine pesos or to a dollar bill. How it works and what it is about. How do Argentine freelancers collect in dollars without stocks or limits Cryptocurrencies The most popular digital assets to receive collections from abroad are DAI, USDT, USDC and BUSD, since they are cryptocurrencies paired one to one with the US dollar and are not volatile. As they hold a value of US $ 1 in the jargon they are called "digital dollars" or "crypto dollars". When it comes to exchanging them for pesos, freelancers do so on person-to-person transaction platforms (better known as P2P) because they get a price higher than or similar to the blue dollar.

If you are a freelancer who works as a monotributista within the justice system, for every US $ 1,000 that you invoice, you have US $ 450 left that is charged at the official dollar PayPal Freelancers can directly receive dollars in a Paypal account and convert them into cryptocurrencies to finally receive Argentine pesos. In this case, they use Airtm, a virtual wallet that Argentines use to convert dollars into cryptocurrencies and then into pesos to avoid paying the 30 and 35% taxes and operate without limits.

Like Binance, Airtm operations are person to person but the difference is that cryptocurrencies were received directly in the first and dollars in the second, therefore, an extra step is needed to carry out the operation in Argentine pesos and avoid the Central stocks. At Airtm, according to the platform's official calculator, Argentines receive $ 210 for every digital dollar they sell. That is, if they charge US $ 1,000 at the end of the month in PayPal and sell it through Airtm, they will receive US $ 210,000 in their bank account. In all P2P platforms, freelancers receive the weights deposited in a bank account or a Mercado Pago or Ualá digital wallet. As it was a person-to-person transfer, that is, a counterparty sent the money directly to you, no taxes are paid."

PS: This may work, but (IMO) the questions to ask are. "Is it is legal?" and "What will happen if I get caught?"

 

[antipodean]

Hi all. I'm waiting to hear whether the Digital Nomad Visa being discussed might actually come to fruition any time soon. I understand that would provide a visa for 1-year for remote workers here and would at least be free of tax as far as Argentina is concerned.

I've just accepted a job offer as a consultant with a UK company who are happy for me to work from Argentina. I'm a dual US/UK citizen and need to figure out what the tax implications would be. Does anyone have an accountant they would recommend who might be able to help me in this situation?! Thank you for any advice.

I’d suggest to start with an account / tax planner in the US or UK and explore setting up an LLC or similar (in the US or elsewhere) to give yourself more flexibility in the future. As a US citizen you will need to deal with US taxes anyway, so might as well see it there are any efficiencIes to be gained. On the UK side check for potential VAT issues depending on where you’re invoicing from. Depending on the type of company you set up and as company owner, it is then up to you when, where and how much dividends you pay yourself after deducting your business expenses - which in some jurisdictions like the US can be quite broad.

That way you’re not waiting for Argentina to make a policy it doesn’t have just yet and less vulnerable to the different rules for freelancers anywhere else you may decide to be in future if you don’t like it here or need to move on. You will also be able to provide a fixed address/ domicile from which to invoice your client that doesn’t depend on where you physically are or are personally tax resident.

 

[BsAs2022]

Thank you all for your thoughts. A lot to look into (and on a final, related note, if anyone has an accountant here in Argentina they'd recommend who could help me dig a bit more into my situation and the options, I'd gratefully accept any recs).

 

[Quilombo]

PS: This may work, but (IMO) the questions to ask are. "Is it is legal?" and "What will happen if I get caught?"

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...

 

[lunar]

Quilombo,

In my opinion, for a person who spent significant portion of his productive life elsewhere before moving to Argentina, there is no expectations that the money he spends here is coming from his immediate taxable income. So, many of the views that you can find on Argentine freelancers forums are not directly applicable to the general expat crowd.

Your examples of people who got "caught" here can rather be described as "Their activity raised some eyebrows, but instead of dealing with it, they preferred to abandon their funds". I remember a few years ago in the USA some people got their bank accounts closed for buying crypto on Coinbase. Were they also "caught"?

 

[Quilombo]

Quilombo,

In my opinion, for a person who spent significant portion of his productive life elsewhere before moving to Argentina, there is no expectations that the money he spends here is coming from his immediate taxable income. So, many of the views that you can find on Argentine freelancers forums are not directly applicable to the general expat crowd.

Your examples of people who got "caught" here can rather be described as "Their activity raised some eyebrows, and instead of dealing with it, they preferred to abandon their funds". I remember a few years ago in the USA some people got their bank accounts closed for buying crypto on Coinbase. Were they also "caught"?

Oh I don't disagree, however, Steve and I were specifically speaking about freelancers.

As for expats, especially those over say 50 or 60, I think that's the reason so many people on here have never encountered issues with AFIP, despite some people sending upwards of 3K USD or more a month via WU, and clearly lying (by choice, or omission) about their personal assets world wide is that the government probably assumes it's from savings, or passive income, and since they're pesifying it to buy things here which is good for domestic consumption/employment they simply shrug it off.

Regarding freelancers again, I can only speak for myself, but I wouldn't want to be blacklisted by the UFI from holding bank/digital wallet accounts, and/or AFIP labeling me a high risk for money laundering, even if they know it's just from not wanting to pesify at the official exchange rate. Again, to me, that's a bit more serious than simply having a single bank account closed in the US. Let's also not forget that this can happen even if someone is using a digital cave, never uses sells crypto P2P, and simply deposits something as small as 3 times the salario minmo vital y movil (currently $99K ARS or $495) that can activate some financial institutions' KYC protocols.

Sure, it's not jail, but why risk it to save, at the very most, $19,525.54 pesos a month in taxes (assuming you declare the maximum annual income for a monotributista in 2022 of $3,969,420 ARS) if you are young and freelancing from Argentina as a legal resident? My point is simply to pay something if you chose to do this so you have plausible deniability, and more so, if you ever want make a large purchase here that is registered with AFIP.

Just like we tell newcomers and tourists to not sell dollars at the bank, I would say the same to monotributistas selling their dollars via the MULC, the difference is if you're a young, working age person you should want to keep a low profile, whether it's the IRS, AFIP or any other tax authority. If you're a retired/retiring expat, well, that's a different story, as most members can tell you.

 

[lunar]

Just like we tell newcomers and tourists to not sell dollars at the bank, I would say the same to monotributistas selling their dollars via the MULC...

This is inconsistent, actually. If you want to play by the rules all the way, you are supposed to sell dollars at the bank

 

[jlynch]

I’d suggest to start with an account / tax planner in the US or UK and explore setting up an LLC or similar (in the US or elsewhere) to give yourself more flexibility in the future. As a US citizen you will need to deal with US taxes anyway, so might as well see it there are any efficiencIes to be gained. On the UK side check for potential VAT issues depending on where you’re invoicing from. Depending on the type of company you set up and as company owner, it is then up to you when, where and how much dividends you pay yourself after deducting your business expenses - which in some jurisdictions like the US can be quite broad.

That way you’re not waiting for Argentina to make a policy it doesn’t have just yet and less vulnerable to the different rules for freelancers anywhere else you may decide to be in future if you don’t like it here or need to move on. You will also be able to provide a fixed address/ domicile from which to invoice your client that doesn’t depend on where you physically are or are personally tax resident.

other considerations depending on the country involved are corporate tax rate for funds held within the company after the end of the year and the rate of dividend withholding taxes.

 

[Quilombo]

This is inconsistent, actually. If you want to play by the rules all the way, you are supposed to sell dollars at the bank

But it's not black or white, while we don't recommend people to sell dollars in banks, but we also don't recommend they go to a cueva in Villa 31 even if they're paying 205 per dollar vs. 200 on Florida Street; it's about a risk/reward balance, and all I'm saying is when people get too greedy, such as paying no taxes while being a young freelancer with legal and fiscal residency in Argentina, they shouldn't be surprised if something bad were to happen. You're welcome to hit on 17, but I'm going to stand.