Argentina's New Tax On Residents Global Wealth

[jeff1234]

Argentina's new tax law requires everyone living in Argentina to pay a tax of up to 2.25% of all their assets worldwide, every year. In 10 years you will pay 22.5% of all your savings, real estate, stocks, etc.
It's tempting to think that we will just ignore it but from what I've read, failure to pay leaves you open to serious penalties whenever they catch up to you.
This seems to be an invitation for people with any form of financial security to leave Argentina.
For those of you that have experience dealing with AFIP, are they likely to enforce this law? Can they access accounts, tax info, property records in the US?

Will the last person to leave Argentina please turn out the lights.

 

[steveinbsas]

Will the last person to leave Argentina please turn out the lights.

The last expat to leave Argentina will be very fortunate if the lights are still on then.

 

[steveinbsas]

In answer to Jeff's question about the foreign asset tax, BC2 posted this in the thread about the five who were denied reentry at the border....

If accurate, it contains some information that will bring great relief to the expats who acquired wealth abroad before getting residency in Argentina...

...and I'm very happy for all but two of them.

Welll, well, well, no. Read the law.

A. When the law refers to assets abroad, it means to assets that were transferred from Argentina, not wealth you created abroad before coming to Argentina.

B. The law refers to domiciled persons in Argentina as tax payers. Here you are in a mistake: legal residence means domicile / address in Argentina.

C. Citizenship, instead, it is based in a politic relationship but not address. It means that once you have the citizenship, you make your DNI with an address abroad and that’s it. Then you are not a tax payer for this tax.

 

[steveinbsas]

PS to the previous post:

If an Argentine citizen has a "DNI with an address abroad" must they live outside Argentina for at least 182 days of the year in order not to be a taxpayer for the bienes personales on their foreign assets?

 

[TheDonald]

Given what I have read and what has been written, I remain with a question:

How would the law apply to a naturalized Argentine citizen who has transferred wealth out of Argentina?

Let's say an American marries an Argentine and buys a house in Argentina. Then sells the house and transfers the money out of Argentina.

Another hypothetical: a naturalized Argentine citizen that has played in any of the Argentine financial markets and then transferred that money out. There have been several articles over the last year about little loopholes in the capital controls that can be exploited in Argentine financial markets.

 

[jeff1234]

PS to the previous post:
If an Argentine citizen has a "DNI with an address abroad" must they live outside Argentina for at least 182 days of the year in order not to be a taxpayer for the bienes personales on their foreign assets?

Steve, If you have a DNI, are you a citizen?

In reading the AFIP website and articles like this, it seems clear that the law refers only to assets acquired by Arg citizens (not DNI holders) who have transferred money out of Argentina, not expats who arrived with assets outside. The intent is to bring back money earned here, "repatriation".

Oficializan las nuevas alícuotas de Bienes Personales

www.eleconomista.com.ar

The Government formalized the new tax rates for Personal Property through decree 99 published today in the Official Gazette, which regulates the Law of Social Solidarity and Productive Reactivation in the framework of Public Emergency.
In a measure aimed at stimulating the repatriation of Argentine assets abroad, a differential rate of up to 2.25% was established for goods outside the country, as benefits are also granted to those who return them to Argentina.
Article 9 of the aforementioned decree establishes that the total value of goods abroad that exceeds the non-taxable minimum not computed against the country's assets, will pay a rate of 0.7% when they reach up to $ 3 million; from 1.20% between $ 3 and $ 6.5 million; 1.8% between $ 6.5 and $ 18 million and 2.25% if they exceed $ 18 million.
However, the subjects that have repatriated financial assets as of March 31 of each year and that represent at least 5% of the total value of the assets located abroad are exempted from the lien payment.
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It was also provided that “the benefit will be maintained to the extent that these funds remain deposited until December 31, inclusive, of the calendar year in which the repatriation had been verified, in entities included in the regime of Law 21.526 and its amendments, in the name of its owner ”.
In the recitals of the decree, the Executive Branch also recalled that the link “domicile” of the subject of the tax was modified by that of “residence”, with the possibility of setting differential rates to tax the goods located abroad and reduce them when Your repatriation is verified.
Decree 99 signed today in the Official Gazette is signed by President Alberto Fernández, the Chief of Staff, Santiago Cafiero; and the ministers of Economy, Martín Guzmán, of Productive Development, Matías Kulfas, and of Labor, Claudio Moroni

 

[steveinbsas]

Steve, If you have a DNI, are you a citizen?

No, temporary and permanent residents are not citizens and the front of their DNI's are emblazoned with the word EXTRANJERO in bold red letters.

 

[Bajo_cero2]

Given what I have read and what has been written, I remain with a question:

How would the law apply to a naturalized Argentine citizen who has transferred wealth out of Argentina?

Let's say an American marries an Argentine and buys a house in Argentina. Then sells the house and transfers the money out of Argentina.

Another hypothetical: a naturalized Argentine citizen that has played in any of the Argentine financial markets and then transferred that money out. There have been several articles over the last year about little loopholes in the capital controls that can be exploited in Argentine financial markets.

Here you are wrong in the approach.
As far as I understand, the US tax system is based on citizenship while ours is based in domicile (wealth tax) or residence (income tax).

a. If you brought the money to purchase the house from abroad, there is no issue because this is not capital flight but, instead, repatriation of a foreign capital.
B. I’m clueless about the regulations regarding financial markets. You should ask an accountant. The key is if they are based on domicile or residency.

 

[NeoWonk]

This is going to put a damper on those considering obtaining a second passport in Argentina. Someone that is in the business of assisting foreigners acquiring Argentina nationality may have a conflict of interest in providing accurate information on this topic.

It's going to be difficult in many cases to prove where the assets originated from. It will be simpler to just levy the tax on all assets regardless of where they theoretically originated - money is fungible after all.

 

[Alby]

Thanks for the comments so far. The issue is a huge one for anyone seeking to begin to, or to continue to live here under any residency category (or with citizenship) and who also has assets outside the country. In the worst case scenario, it would be the end of road for us and for people in the future thinking about coming; unless we were to decide to take the risk avoiding the tax in a structured way over a number of years. The only people who could come to Argentina from overseas would be people with no financial security overseas. So I read with interest the opinions being placed here.

Can I just reinforce something I have said in other posts: it seemed very clear in press reporting in December, that, following a last minute amendment in the lower chamber of parliament, the eligibility to pay the Wealth Tax on overseas assets was changed from a declared “domicile” (which the tax payer—presumably an Argentine or a foreigner with residency who was aware of the tax—could set as the overseas address and thus avoid the tax) to align with the eligibility to pay Income Tax, which the same press reports stated was 90 days per calendar year in the country (not 183). Perhaps the press reports were mistaken, but I took from them (i) that in order to avoid paying Argentine Income Tax, any Argentine based overseas has historically been unable to spend more than 90 days in Argentina, and (ii) that henceforth the overseas “domicile” loophole for the Wealth Tax would disappear and the eligibility for it would become the same as for Income Tax: to avoid it, an Argentine must spend no more than 90 days per year in Argentina. So I am concerned that two things being said on these threads may not be correct: that the Wealth Tax will continue to be based on a "domicile" which the tax payer can set as overseas; that one can spend up to 183 days in the country and still avoid both Income and Wealth taxes. Again, happy to be shown to be wrong, but the press reports in December about the amendment introduced in the Deputies did seem to contradict both assertions

Finally, it is heartening to think that this is a measure only directed at Argentine’s who have taken their wealth offshore. But even if that is the case, the devil will be in the detail. If those of us who have assets overseas predating any interest whatsoever in coming to Argentina are to be exempt from the Wealth Tax on those assets, the regulations and the tax declaration documents must have considered this and must give us a way to perform that exemption. It would useful if those contributing here who believe we should not worry about the Wealth Tax could explain how and when in the annual tax process the issue of overseas assets arises, and how someone who believes they are exempt from the Wealth Tax on those assets, would, this year and in the future, exercise/perform/claim/demonstrate that exemption at the appropriate moment of their annual interactions with AFIP.