Argentina's New Tax On Residents Global Wealth

[¡Sencillamente yo!]

The average house in the UK is worth 32.75 million Argentine pesos (at official rate 131 GBP - 1 ARS).
So would that make an annual wealth tax payment (assuming it was your only asset) a simple case of calculating 2.25% of 32.75 million?
i.e. 736k pesos annual bill? Wow.

I am not in Argentina at the moment, I hope to never come back apart from on holiday. However, life is not simple, and for family reasons I could be coming back in the next year. This wealth tax is a real dilemma. I do sympathise with honest taxpayers like Irelander and Alby, who want to do the right thing and do not want the AFIP to one day darken their door with a horrendous bill or worse. But, I would be a non-payer. Why? Because I do not think its enforceable and I think the benefits of non payment far, far, far outweigh the risk of one day getting a bill. Who wants to be paying 10K USD a year in taxes (lets face it most on here are going to have assets north of what I used in my example) that hardly anyone else is bothering to pay? Especially, if it is not really aimed at expats. Apart from Irelander, I can't see any comments on here from anyone who sounds like they are actually paying (yeah I know, what people say on a forum and do in real life are two quite different things....).

It's an interesting idea.

I think, at least for me, it is a balance between honesty / compliance with the law / and not worrying about getting caught in the future because one ignored their responsibility to comply. Having said that, it's a tough thing to voluntarily show The Argentine Government all your cards with respect to your assets in your native country. (Quite a different thing if you are Argentine born and hiding what you have acquired outside of the country over the years.)

And I am not exactly sure what is right, just or fair with respect to people who have a presence in two or more countries. Double taxation hurts, particularly if you are just an emerge person in the non Argentine country. (Although from Argentina's point of view, you would be RICH!)

So, I would say if it can possibly be avoided, in whatever manner, it might be morally wrong, but financially just. To dip your hand into someone's foreign pocket, in the name of taxation, WITHOUT REPRESENTATION (I am guessing???) or even with representation??? - Seems like putting too much of a burden on the ExPat. And it's things like this, that discourage people from coming here and propping up the economy with their exterior bank notes of one kind or another (USD EUROS etc.).

If you can avoid it legally. ie staying / visiting the country for just under the maximum yearly time of 6 total months per year - DO IT!

I never encourage cheating or breaking laws, but my best guess is that the network of countries sharing asset information needs to built out a bit more before that net can catch a person. It will eventually come, just not yet!

 

[SecretShopper]

I've been trying to read through this but the vast amount of back and forth has me a little confused. I'll lay out my situation:

I'll be coming on a long term student visa. Goal from the beginning is second passport. We will leave out the why as it's not relevant.

I have a savings account with a good amount of money in it and I have a job where I generate income.

My plan is to do the required 180 days each year for two years and apply after that.

So my question is how am I affected with the taxes discussed in this thread?

 

[antipodean]

I've been trying to read through this but the vast amount of back and forth has me a little confused. I'll lay out my situation:

I'll be coming on a long term student visa. Goal from the beginning is second passport. We will leave out the why as it's not relevant.

I have a savings account with a good amount of money in it and I have a job where I generate income.

My plan is to do the required 180 days each year for two years and apply after that.

So my question is how am I affected with the taxes discussed in this thread?

You’ll be a tax resident and liable to pay on your global income and wealth (eg savings) once you get PR and/ or become a citizen, since at that point you’ll no longer be a foreign student. Punto.
After that you then have the burden of becoming a non-resident for tax purposes, which pretty much means you can’t live in Argentina at all for 12 months and to maintain that you can’t spend much time here or have close links here that could jeopardize that status.

https://www.oecd.org/tax/automatic-exchange/crs-implementation-and-assistance/tax-residency/Argentina_Tax_Residency.pdf

Sometimes I feel this kind of government are running out of new ways to tax people here and would not be half surprised if they eventually implemented global taxation on citizens without residency requirements (as the new “one off” great fortunes tax in some ways creates a vague precedent for), like other oddball countries like the US or Eritrea. Not sure if I personally would consider Argentine citizenship future proof or not due to having such a weak, polarized and untrustworthy political institution ... things can change drastically one day to the next.

 

[SecretShopper]

You’ll be a tax resident and liable to pay on your global income and wealth (eg savings) once you get PR and/ or become a citizen, since at that point you’ll no longer be a foreign student. Punto.
After that you then have the burden of becoming a non-resident for tax purposes, which pretty much means you can’t live in Argentina at all for 12 months and to maintain that you can’t spend much time here or have close links here that could jeopardize that status.

https://www.oecd.org/tax/automatic-exchange/crs-implementation-and-assistance/tax-residency/Argentina_Tax_Residency.pdf

Sometimes I feel this kind of government are running out of new ways to tax people here and would half be suprised if they eventually implemented global taxation on citizens without residency requirements (as the new “one off” great fortunes tax in some ways creates a vague precedent for), like other oddball countries like the US or Eritrea. Not sure if I personally would consider Argentine citizenship future proof or not due to having such a weak, polarized and untrustworthy political institution meaning things can change drastically one day to the next.

So if I understand things correctly, the student visa would stop me from getting taxed up until the point of citizenship. After that, my global income and wealth are taxable since I'll no longer be a student and the only way around it is to leave for 12 months. Correct?

And for wealth tax, it isn't the 1 time tax on millionaires, but an annual taxe on anything more than a few thousand in the bank. Correct?

 

[antipodean]

So if I understand things correctly, the student visa would stop me from getting taxed up until the point of citizenship. After that, my global income and wealth are taxable since I'll no longer be a student and the only way around it is to leave for 12 months. Correct?

And for wealth tax, it isn't the 1 time tax on millionaires, but an annual taxe on anything more than a few thousand in the bank. Correct?

That’s what it says in the attachment on other sources like PwC and KPMG. You of course need to talk to an tax professional to assess your specific case if you want to take it as gospel since Argentine tax rules have numerous ins and outs.

There are two wealth taxes:
1. Reoccurring wealth tax for everyone - you pay on your houses, appliances, furniture, cars, bikes, cash, savings - pretty much everything you own.
2. “One off” great fortunes tax - well what Argentina considers “great fortune” - essentially a solidarity tax for millionaires due to the pandemic in 2020.

 

[SecretShopper]

Understood. I guess I should ask whether it's a well known fact that people using a student visa don't have to pay taxes while they maintain that visa, or is that also a Grey area?

 

[toongeorges]

I have a savings account with a good amount of money in it and I have a job where I generate income.

My plan is to do the required 180 days each year for two years and apply after that.

So my question is how am I affected with the taxes discussed in this thread?

About your foreign savings, check https://www.afip.gob.ar/gananciasYB...s/conceptos-basicos/bienes-en-el-exterior.asp for the rates that apply. (This is the annually returning tax)

For your foreign income, if you are to become a tax resident in Argentina and want to comply with the law: you are obliged to convert all your income to pesos at the official rate. If you decide not to save in pesos (because of the inflation) and want to convert pesos back to a foreign currency, you can only convert up to 200 USD per month and if you do so, you will have to pay a 30% tax on top of that. You could of course exchange more pesos to USD on the black market, but then your money becomes black again, so why then go to the trouble of declaring it and paying taxes on it?

Once you have converted your dollars to pesos, you still have to pay the regular income tax.

 

[toongeorges]

In retrospect, wealthy Argentines must feel sour now about the biggest tax regularisation ever under Macri (over 110 billion USD) https://www.bbc.com/mundo/noticias-39437795.amp . I doubt they will soon fall for another blanqueo.

 

[SecretShopper]

About your foreign savings, check https://www.afip.gob.ar/gananciasYB...s/conceptos-basicos/bienes-en-el-exterior.asp for the rates that apply. (This is the annually returning tax)

For your foreign income, if you are to become a tax resident in Argentina and want to comply with the law: you are obliged to convert all your income to pesos at the official rate. If you decide not to save in pesos (because of the inflation) and want to convert pesos back to a foreign currency, you can only convert up to 200 USD per month and if you do so, you will have to pay a 30% tax on top of that. You could of course exchange more pesos to USD on the black market, but then your money becomes black again, so why then go to the trouble of declaring it and paying taxes on it?

Once you have converted your dollars to pesos, you still have to pay the regular income tax.

I'm guessing not too many want to follow the rules with that setup.

 

[Alby]

Understood. I guess I should ask whether it's a well known fact that people using a student visa don't have to pay taxes while they maintain that visa, or is that also a Grey area?

As the OECD link posted by Antipodean says (although it--the link--contains bad grammar and the unfortunate omission of a key word): "an individual is [tax] resident in Argentina when...is a foreigner who has obtained its permanent residence status in Argentina or has legally been living in the country for twelve or more [months]." (My emphasis and my addition of the missing words.) This statement is backed up by PwC as follows:

• Foreign individuals residing in Argentina (for reasons other than work) for more than 12 months, as of the 13th month of presence in Argentina. (https://taxsummaries.pwc.com/argentina/individual/residence)

Perhaps most importantly, the Argentine income tax law itself says: "Las personas humanas de nacionalidad extranjera que hayan obtenido su residencia permanente en el país o que, sin haberla obtenido, hayan permanecido en el mismo con autorizaciones temporarias otorgadas de acuerdo con las disposiciones vigentes en materia de migraciones, durante un período de DOCE (12) meses." http://servicios.infoleg.gob.ar/infolegInternet/anexos/330000-334999/332890/texact.htm (article 116B).

It is hard to conclude that when the law refers to "temporary authorizations issued in accordance with prevailing migrations regulations", it is not referring to temporary residencies granted to students, rentistas, pensionistas, investors, religiosos etc. Anyone, in fact, other than employees on contracts of up to five years, who, as we have established on this and other threads, seem to be the only ones who escape the broad sweep of the tax law (unless a double tax treaty comes into play and to the rescue). Again, get professional advice about how to operate in this context, but the wording of the law is reasonably clear and would seem to indicate that at the conclusion of the first 12 months of almost any temporary residency issued under any of the categories, one becomes a tax resident here.

Whether "autorizaciones temporarias" is confined only to temporary residencies, or would also include precarias issued by Migraciones that have dragged on for more than 12 months, or even tourists stuck or who have stayed for over 12 months due to COVID (the subject of a separate taxation thread currently running), is a matter for interpretation that I guess a good lawyer would be happy to take up in the event AFIP took a broad view of the case and bothered to try and pursue anyone in these situations.