Argentina's New Tax On Residents Global Wealth

[on the brink]

During the last Amnesty - Blanqueo de capitales - some of my Argentine friends declared foreign $$ and some didn't. The ones who did are heartily sorry now - they are in the AFIP's sights and endlessly scrutinized.

 

[Iznogud]

^^^^^^
Those who believed something would change radically in the ways of our State financial behaviour and manners are delusional.
One wonders if they had undeclared assests, in the first place, why would they leave the status quo and jump into the fire.

Dumb move. They painted the bullseye themselves.

Blanqueos and Moratorias are a regular thing.

Iz

 

[jeff1234]

How will AFIB identify expats American or European assets iif the US and EU are not participating in CRS?

 

[Alby]

Given the exposure, a person would have to have their head examined for going the Rentista visa route. It would be far better to share time between two or three countries 90 days at a time rather than volunteer a good view of your taxable assets to The Argentine Government.

Correct. Everything changed from the last week of December. Prior to that date, if you could demonstrate tax "domicile" elsewhere, you were fine; as an Expat you could, for example, be liable for Argentine income tax, liable for the Argentine wealth tax on your in-Argentine assets, but exempt from the wealth tax on your overseas assets. From that date, if you are eligible for income tax (other than those on 5 year employment contracts and those who can find protection in a double tax treaty) you are also eligible for the wealth tax on your overseas assets. (The tax domicile loophole for the wealth tax was expunged by parliament). This thread has warned about the change for months and one poster has had it confirmed by a professional accountant. It makes the Rentista category now obsolete other than for the insane, and is a risk for anyone who is currently using it, or used it in the past to reach permanent residency, and who must now count on AFIP never talking to Migraciones.

 

[antipodean]

How will AFIB identify expats American or European assets iif the US and EU are not participating in CRS?

https://www.treasury.gov/resource-center/tax-policy/treaties/Documents/US-Argentina-TIEA.pdf

Since 2016 there is information exchange with the US, like with most EU countries. I doubt they are doing it on a proactive and automatic basis especially for expats, but if they investigate they can get the information and use it against tax Dodgers.

 

[Alby]

Precisely. It is doubtful that AFIP is currently, or necessarily will in the future be tracing Expat assets through this mechanism, or similar, or asking Migraciones for records of Rentistas. But, in the end, we can only ever guess at their approach, so it is a good idea to be aware our individual risk profile, and do whatever we each think necessary to manage the risk.

Some on this thread (and another thread where the issue cropped up) have expressed complete confidence that AFIP would never target Expats and their wealth: not a confidence I share, but it is a legitimate point of view. Others have argued you could, if caught, pay a lawyer to litigate it into oblivion: not a position I would want to find myself in.

It is useful to follow news stories on the Bienes Personales tax, because the situation could change over time. For better, or worse.

 

[FallenAngel]

I personally am not worried about this. The expected loss of reporting is way, way higher than the expected loss of non-reporting. The probability of Argentina 1) finding out 2) pursuing it 3) having the amount not get inflated away during this time period is nearly nil.

Institutions do not change culture over night and as time moves they quit wanting to prosecute cases far back in time. Maybe in 15 years AFIP will become efficient, but it is far from it today. And in 15 years they won't be prosecuting cases from 15 years ago they will full with the cases of that time period.

Regarding AFIP's lack of desire to go after expats I would say this is very true. In my experience AFIP cares little for expats. Even when being told of enormous tax dodging by a tax-resident expat they laugh at it. I once went to AFIP to try and pay taxes and the employees literally asked me why I would even want to do that. It was such a strange concept for them.

 

[gracielle]

Given the exposure, a person would have to have their head examined for going the Rentista visa route. It would be far better to share time between two or three countries 90 days at a time rather than volunteer a good view of your taxable assets to The Argentine Government.

Actually a traveler entering ARG on a tourist visa can stay up to 6 months minus 1 day.

Turistas

**Turista:** Es aquel extranjero que ingrese al país con propósito de descanso o esparcimiento, con un plazo de permanencia autorizado de hasta **tres (3) meses, prorrogable por otro período similar.** ##Prórroga Se puede efectuar en la Dirección Nacional de Migraciones, en el horario de 8 a 14...

www.argentina.gob.ar

Tourist: A foreigner who enters the country for the purpose of rest or recreation, with an authorized term of stay of up to three (3) months, extendable for another similar period.

 

[Sequoia1321]

What's the longest you can live there continuously without being taxed on your wealth and income?

 

[Alby]

I personally am not worried about this. The expected loss of reporting is way, way higher than the expected loss of non-reporting. The probability of Argentina 1) finding out 2) pursuing it 3) having the amount not get inflated away during this time period is nearly nil.

Institutions do not change culture over night and as time moves they quit wanting to prosecute cases far back in time. Maybe in 15 years AFIP will become efficient, but it is far from it today. And in 15 years they won't be prosecuting cases from 15 years ago they will full with the cases of that time period.

Regarding AFIP's lack of desire to go after expats I would say this is very true. In my experience AFIP cares little for expats. Even when being told of enormous tax dodging by a tax-resident expat they laugh at it. I once went to AFIP to try and pay taxes and the employees literally asked me why I would even want to do that. It was such a strange concept for them.

I have thought about these arguments over the months this issue has been around. The flaw in the argument that in 15 years AFIP won't care about old cases is that assets are held over time. You could go 15 years holding an overseas assets undectected, then get caught; at that point they are not chasing a 15-year old case, but instead a current case with a 15 year history of failure to declare. They are hardly going to just charge you for the year they detected you, but instead back taxes, and fines for the entire period.

Still, it is useful to hear from someone who has experience with AFIP on this question. Do you have more details of the two experiences you mention, for example, how far in the past they occured?