Statement of Tax Liability in Argentina needed

[Alby]

OK, good luck. I'm fairly experienced too with legal language, but even so was caught out by a drafting slight of hand in my agreement. There is poor drafting in mine that needs professional interpretation. And some terms aren't defined: the lawyers can supply their real world meaning.

 

[Alby]

OK, good luck. I'm fairly experienced too with legal language, but even so was caught out by a drafting slight of hand in my agreement. There is poor drafting in mine that needs professional interpretation. And some terms aren't defined: the lawyers can supply their real world meaning.

and the agreement can't be fully understood in isolation from a detailed understanding of each country's tax residency loss and acquisition legislation.

 

[desde_Holanda]

and the agreement can't be fully understood in isolation from a detailed understanding of each country's tax residency loss and acquisition legislation.

Tax residency in my situation won't be a big issue. The moment I pass my permanent residence (married to an Argentine woman), we will already own a house together in Argentina, and no home in NL. The only connection that will remain with NL is the pension being paid on a Dutch bank account.

 

[Alby]

While Argentina moves to soften its wealth tax, suddenly Uruguay (often cited as a better option for people wishing to emigrate to this part of the world) threatens to start taxing wealth held outside the country--probably at least in part targeting the large number of Argentines who changed their tax residency by moving (at least on paper) TO Uruguay after Argentina's bienes personales tax rose to 2.25% at the end of 2020:

Alerta en Uruguay por la posibilidad de que el Gobierno grave los depósitos en el exterior: “Kirchnerismo tributario”

El Ministerio de Economía evalúa incluir la medida en el Presupuesto. El diputado Diego Echeverría manifestó preocupación: “Genera inseguridad jurídica, es matar a la gallina de los huevos de oro”

www.infobae.com

 

[LuckyLuke]

Thanks Steve and Alby!

The Tax Treaty says the following:
1. Employee/employer pension from Holland will be taxed in the country of residence (which will be Argentina). (note: Argentina taxes 'worldwide income')
2. State pension is taxed in Holland, even though my country of residence will be Argentina. To prevent double taxation, the paid tax in Holland will be deducted in Argentina, as long as the amount is not higher than the originally calculated income tax in Argentina (including this state pension).

Based on the resident criterium, I expect to be Argentine tax payer starting the fiscal year 2025, which is also when I want to start my private pension to pay out. So my question is about 1, employee/employer pension. My Dutch private pension fund will need proof from the tax authorities in Argentina that I will be in the picture regarding Income Tax. Only if I come up with such an (Argentine!) paper, it will pay out my pension without holding back Dutch tax.

One of these possible outcomes is not like the other...I would tread carefully with between AFIP and Holland tax authorities.

If AFIP says they don't tax it, don't push it.

If Holland doesn't need to see an actual tax return, don't push it.

I certainly would consult an immigration lawyer or accountant because you may end up accidentally informing Holland tax authorities that Argentina doesn't currently tax foreign pensions and Holland will happily disqualify you for the double tax exemption.

 

[desde_Holanda]

One of these possible outcomes is not like the other...I would tread carefully with between AFIP and Holland tax authorities.

If AFIP says they don't tax it, don't push it.

If Holland doesn't need to see an actual tax return, don't push it.

I certainly would consult an immigration lawyer or accountant because you may end up accidentally informing Holland tax authorities that Argentina doesn't currently tax foreign pensions and Holland will happily disqualify you for the double tax exemption.

Thanks for your reply. I have read multiple times that Argentina doesn't tax foreign pensions, but that's simply not true. Argentina taxes its tax residents on worldwide income, that is: including pensions. Important is that the general rule is that pensions are taxed. So there's no tax evasion. Apart from that, the more important questions are: (1) In which country are you tax resident? (2) What does the tax treaty (if exists) tell you about where what will be taxed. Levels of taxation are irrelevant.

So, in general pensions will be taxable, as part of worldwide income. What ís true though, is that pensioners in Argentina can profit from a relatively big deduction on their (pension) income: the deductable amount is equal to 8 times the minimum guaranteed pension. So taxable income is reduced and for pensioners with low pensions even zero. I believe that that's why some people are saying pension is not taxed.

In my case, I have calculated that my income tax percentage on my total pension income will be about 15% (based on current EUR/ARS). Very reasonable!

 

[LuckyLuke]

Thanks for your reply. I have read multiple times that Argentina doesn't tax foreign pensions, but that's simply not true. Argentina taxes its tax residents on worldwide income, that is: including pensions. Important is that the general rule is that pensions are taxed. So there's no tax evasion. Apart from that, the more important questions are: (1) In which country are you tax resident? (2) What does the tax treaty (if exists) tell you about where what will be taxed. Levels of taxation are irrelevant.

So, in general pensions will be taxable, as part of worldwide income. What ís true though, is that pensioners in Argentina can profit from a relatively big deduction on their (pension) income: the deductable amount is equal to 8 times the minimum guaranteed pension. So taxable income is reduced and for pensioners with low pensions even zero. I believe that that's why some people are saying pension is not taxed.

In my case, I have calculated that my income tax percentage on my total pension income will be about 15% (based on current EUR/ARS). Very reasonable!

It sounds like you are making progress. It's crucial to consult an Argentine accountant to understand the mechanism by which the income is reported and the taxes paid. Only then will you have confirmation on your net effective tax rate.

 

[desde_Holanda]

It sounds like you are making progress. It's crucial to consult an Argentine accountant to understand the mechanism by which the income is reported and the taxes paid. Only then will you have confirmation on your net effective tax rate.

Fully agree! The ARCA website has good information about deductable amounts per month and income tax percentages, but I do have some practical questions left. E.g.: reporting as a pareja, other (general) deductions, the exchange rates to use. I will need an expert to help me at least the first time.

 

[jeff8128]

I can’t afford to become a tax resident of Argentina or Colombia or Spain (except Madrid) because of their Wealth or Equity tax. Taxing INCOME from my US SS, dividends and interests for brokerage, IRA, 403s is one thing, but claiming the right to tax YEARLY the assets I’ve accumulated over a lifetime in my own country is extreme overreach and unethical in my opinion as not even the US taxes my assets while alive. So, I’d be essentially paying estate taxes every year.

The wealth tax is probably not an issue for most expats whose number one reason for moving is cost of living, but for folks who have accumulated modest wealth by US standards it’s a deal breaker. I estimated my wealth tax would be high 5 figures each year if I actually reported my assets. Then add on top of that the tax of my annual income from those assets!

I imagine people just don’t report it. Or somehow restructure their wealth using foreign trusts or other tricks. I’m curious how people handle this.

Tax residency in Chile and Paraguay is much friendlier.

The flexpat approach of max 182 days per country fits more my interest of exploring the world and avoids any tax headaches.

 

[Alby]

I estimated my wealth tax would be high 5 figures each year if I actually reported my assets.

You might find your number is lower now, since the current government has reduced the alicuotas considerably from the 2.25% high of the Fernandez (A) years, and plans to keep reducing them. But, what a future government would do is anybody's guess.