A comment on taxes

[Quilombo]

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.

 

[redlobster]

I think it is pretty easy to spot new arrivals by their overly maximalist attitude to life. But it passes with years.

 

[IslandTime808]

Haven’t there been people who have been in Argentina for several years but doing visa runs solely on tourists visas? (Without residency). I’m guessing they (assuming they aren’t stopped by immigration during a visa run) avoid this?

 

[Alby]

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 is a neat summary, although it overlooks the taxation treaties Argentina has with a number of countries (but not the US) and which can offer protection to those who are eligible and are willing to surface with AFIP to invoke the mechanism. It also needs to be said that tax residency only arises after 12 months of temporary residency and can be lost by subsequently leaving the country for 13 months.

Triggered initially by the December 2019 increase in the bienes personales rates and the linking of its eligibility criteria to the criteria for ganancias, various live threads filled with similar amateur sleuthing poking around the taxation legislation have been running now for a couple of years; for example, Argentina's New Tax On Residents Global Wealth; Argentina introduces major tax reform; Wealth Tax; How do you pay your taxes here?; tax for foreigners; Anyone familiar with the way AFIP works?

So, we are probably about to rehash a few things. Which may not be a bad thing.

In particular, and as has already been hinted at, is the vexed question of whether AFIP has any interest in, or capacity to try to extract ganancias and bienes personales tax from a foreigner who becomes tax resident. Opinions for and against this are strongly held on this board, but evidence to support the opinions has been singularly lacking. Those who believe AFIP is not interested may be correct, or may have been convinced by their own wishful thinking. Those who believe AFIP is interested have never produced a case of someone having been caught in its net. The only plausible argument I can recall came from Bajo (July 31 “Anyone familiar with the way AFIP works?”), who has long been on the side of those who say AFIP is not interested: “The government is K, they are Peronist, so they focus on the behavior of nationals, specially those who bough large amounts of usd and sent them abroad during the M regime and those who got help during the Pandemic and didn't use it for salaries payment…They are worried about money flight not many comming into the country.”

 

[Quilombo]

Haven’t there been people who have been in Argentina for several years but doing visa runs solely on tourists visas? (Without residency). I’m guessing they (assuming they aren’t stopped by immigration during a visa run) avoid this?

There had been, but then Black Monday in September 2019 happened with Alberto, resulting in Macri's admin reinforcing the MULC, the whole reason for having to pesify at the official exchange rate in the first place, then COVID happened, so I'm not sure where this stands now. I have a feeling most people who were doing the visa runs either went home or regularized their status here in Argentina due to COVID, but I could be wrong.

This is a neat summary, although it overlooks the taxation treaties Argentina has with a number of countries (but not the US) and which can offer protection to those who are eligible and are willing to surface with AFIP to invoke the mechanism. It also needs to be said that tax residency only arises after 12 months of temporary residency and can be lost by subsequently leaving the country for 13 months.

Yes, I left that out for a reason as that's way above my non-existent pay-grade in international tax law, and from my amateur understanding, unless you're working for a company from the country you have citizenship/legal residency in, most tax treaties oblige you to declare your income where you're physically present, but I could be wrong. Also good catch RE: 12 months not 6 for tax residency.

Triggered initially by the December 2019 increase in the bienes personales rates and the linking of its eligibility criteria to the criteria for ganancias, various live threads filled with similar amateur sleuthing poking around the taxation legislation have been running now for a couple of years; for example, Argentina's New Tax On Residents Global Wealth; Argentina introduces major tax reform; Wealth Tax; How do you pay your taxes here?; tax for foreigners; Anyone familiar with the way AFIP works?

What's the law vs. what happens in practice are two different things as any of us know that have spent a bit of time in Argentina. That being said, I can't speak to it myself as I'm not wealthy enough to have $3,000,000 ARS at either exchange rate, hopefully someday soon haha.

So, we are probably about to rehash a few things. Which may not be a bad thing.

In particular, and as has already been hinted at, is the vexed question of whether AFIP has any interest in, or capacity to try to extract ganancias and bienes personales tax from a foreigner who becomes tax resident. Opinions for and against this are strongly held on this board, but evidence to support the opinions has been singularly lacking. Those who believe AFIP is not interested may be correct, or may have been convinced by their own wishful thinking. Those who believe AFIP is interested have never produced a case of someone having been caught in its net. The only plausible argument I can recall came from Bajo (July 31 “Anyone familiar with the way AFIP works?”), who has long been on the side of those who say AFIP is not interested: “The government is K, they are Peronist, so they focus on the behavior of nationals, specially those who bough large amounts of usd and sent them abroad during the M regime and those who got help during the Pandemic and didn't use it for salaries payment…They are worried about money flight not many comming into the country.”

I have some mixed feelings on this too. As I said in a banking thread, there's only 2 cases I know of in which people got in some form of trouble related to tax evasion, and even then, they got flagged as "potential money launderers" by the BCRA as opposed to audited by AFIP.

IMO, they got greedy; paid no taxes either working in a dependency relationship nor as a monotributista, and then traded their remote work income for crypto, and sent it to Argentine exchanges to get pesos/did peer to peer via transferia, and the KYC red flags went up. Argentine registered exchanges of course comply with AFIP/BCRA/KYC regulations, along with banks, and when guy 1 failed to provide a proof of income compliant with AFIP standards, they closed his accounts, and guy 2 ignored the requests knowing he couldn't, they closed his accounts too.

Does this mean you're ok to avoid the MULC and pesify via digital caves/Xoom/WU provided you pay some taxes? Of course not, you're still violating both the spirit and letter of the law, but it's also only illegal to run a red/speed if a cop or camera sees you. I personally don't know anyone who has been busted for not adhering to the MULC, and this is my own personal opinion but I think AFIP/BCRA/etc. knows people are sending themselves money via Xoom/WU, and don't care provided they pay some form of taxes, they spend the money domestically, and it's dollars coming in, not going out as others have pointed out. If WU wants to give over double the exchange rate what do they care? WU of course is adhering to the MULC via Pago Facil, so I assume they're getting their cut there, and as others have said too, the focus of AFIP is people doing the inverse, looking to send earnings made domestically in Argentina abroad.

The reason I think it's important to start thinking about this more and more is the increase in e-commerce/digital payments due to inflation. If past is prologue, then there is a 0% chance the BCRA is going to print higher denomination bills, because that would require admitting inflation is real, meaning it's going to be a pain in the ass to pay in cash more than when Cristina finally left at the end of 2015. On December 1st, 2015 $100 ARS, the largest bill in circulation was worth $6.94. Alberto's still got about 2 years and $1,000 ARS is worth less than $5.00

I do enjoy gambling, so if anyone wants to make a pool for when we get a new denomination/currency/impuesto count me in (dollars only :^) )

 

[Alfred_Arnold]

I have some mixed feelings on this too. As I said in a banking thread, there's only 2 cases I know of in which people got in some form of trouble related to tax evasion, and even then, they got flagged as "potential money launderers" by the BCRA as opposed to audited by AFIP.

IMO, they got greedy; paid no taxes either working in a dependency relationship nor as a monotributista, and then traded their remote work income for crypto, and sent it to Argentine exchanges to get pesos/did peer to peer via transferia, and the KYC red flags went up.

Any chance for a further elaboration regarding amounts and frequencies in question? BRCA flagging sounds a bit unsavory for the non thrill-seeking expat, and I imagine discretion may have been thrown to the wind a bit by these two individuals.

 

[Quilombo]

Any chance for a further elaboration regarding amounts and frequencies in question? BRCA flagging sounds a bit unsavory for the non thrill-seeking expat, and I imagine discretion may have been thrown to the wind a bit by these two individuals.

Discretion was most definitely thrown to the wind, and iirc either 130K or 150K, so while several times the minimum wage, not a ton of money in dollars. Their biggest mistake IMO was trading on an AFIP compliant exchange. I know of a few people that work remotely and send money here via crypto to a digital cave and they never have an issue, but the rate is bad compared to WU, it's usually the Blue minus 4-6%.

 

[Cordoba]

Wouldn't the vast majority of western union payments be actual family support. No company would pay your salary or customer for services through western union. Probably why Crypto is being looked at more closely for actual money laundering where it could be paid direct. I think the digital nomads using western union to move money out of foreign accounts must be a tiny fraction of the overall transfers.

 

[Alpinista]

The reason I think it's important to start thinking about this more and more is the increase in e-commerce/digital payments due to inflation. If past is prologue, then there is a 0% chance the BCRA is going to print higher denomination bills, because that would require admitting inflation is real, meaning it's going to be a pain in the ass to pay in cash more than when Cristina finally left at the end of 2015. On December 1st, 2015 $100 ARS, the largest bill in circulation was worth $6.94. Alberto's still got about 2 years and $1,000 ARS is worth less than $5.00

That is an interesting point that you bring up. That would undoubtedly lead to some problems for those here managing their daily life without a bank account.

As you say it is an admission of high inflation (although at least we have now not a discrepancy btw real inflation and faked official numbers). And reducing cash transactions might also help to reduce the informal economy and to increase the tax base (AFIP’s wet dream, so to speak).

However, not printing higher denomination bills would effectively make cash transactions almost impossible over the years (assuming 60% inflation, in 4 years you could buy with a 1000 peso bill the equivalent of 75 cents). And i guess that a large number of the people do not have bank accounts here (probably more than 50% of the population). So i think they have no choice but eventually to print 5000 and 10000 bills.

 

[Quilombo]

Wouldn't the vast majority of western union payments be actual family support. No company would pay your salary or customer for services through western union. Probably why Crypto is being looked at more closely for actual money laundering where it could be paid direct. I think the digital nomads using western union to move money out of foreign accounts must be a tiny fraction of the overall transfers.

I think the plurality of WU transfers are true familiar support (i.e. Argentines living abroad sending money back home), but I'm confident in overall dollars sent, a large chunk are what many people on BA Expats are doing: sending money to themselves. I've read of maybe 1 person saying they were able to get an employer to do this, so I think it's incredibly rare, and the crypto thing is only an issue if you keep a paper trail, i.e. using an Argentine/BCRA complaint exchange, or using a foreign exchange that enables direct deposit to a CBU/CVU.

That is an interesting point that you bring up. That would undoubtedly lead to some problems for those here managing their daily life without a bank account.

As you say it is an admission of high inflation (although at least we have now not a discrepancy btw real inflation and faked official numbers). And reducing cash transactions might also help to reduce the informal economy and to increase the tax base (AFIP’s wet dream, so to speak).

However, not printing higher denomination bills would effectively make cash transactions almost impossible over the years (assuming 60% inflation, in 4 years you could buy with a 1000 peso bill the equivalent of 75 cents). And i guess that a large number of the people do not have bank accounts here (probably more than 50% of the population). So i think they have no choice but eventually to print 5000 and 10000 bills.

The BCRA will have to print a higher denomination bill, but the question is when. Cristina managed to leave office without doing it, but $100 pesos back then got you almost $7.00, and digital payments were far less ubiquitous prompting the need for paper currency. I'm convinced they're going to resit printing a higher denomination for as long as possible to try and get people used to digital wallets/debit as this will also serve AFIPs aims as you mentioned. At the current inflation/devaluation rate, I don't think it will be possible for Alberto to end his term without doing so, but we'll see. I've had to pay my rent and some bills with bricks of 10K in Evitas more than once lately because there's not enough $1,000 bills, so the fun is just beginning.