Taxation of income from outside of Argentina?

[gouchobob]

Gouchobob,

Can you verify, if you know, that the worldwide tax on permanent residents applies only if you live in Argentina SIX months of the year or more.

This is a good question. I think once you have permanent residency you are saying Argentina is your permanent home, therefor you would be expected to pay tax on your worldwide income.

The definition of who is a resident for tax purposes is as follows:

They are foreign individuals who have become permanent residents of Argentina (and have a permanent visa) or who are not residents but have spent sufficient time in Argentina during a 12-month period.

 

[gouchobob]

If you simply want to live in Argentina and you generate income from business assets, investments, private/government pensions that are located in your home country, you will not be required to pay income taxes in Argentina.


There is an immigration lawyer on this forum who has over 30 threads. His username is "Attorney"

I have invited this attorney who can be found at: celano.com.ar
to come onto this thread and settle this whole thing once and for all.

He is very busy right now but when he gets the time he may come
onto this thread and help. So I can not guarantee he will be on the
thread.

The question is: is the bold lettering at the top of this post correct? If a person from the U.S. simply wants to live in Argentina and he or she generates income from business assets, investments, private/government pensions that are located in his or her home country, will he or she be required to pay taxes to the Argentine gov. or are they exempt from paying taxes on their income coming from outside of Argentina?

Thanks, David

P.S. If you do not tell them you have passive income from outside of Argentina then how are they going to know? And if they do not know how are they going to demand taxes from you? If you bring the money in via an ATM machine it can be from savings you had and not from present earnings that are taxable. Who would know?

Again residents are suppose to pay taxes based on their worldwide income. You may be correct that they would never find out about income from your home country. However if they wanted to get tough they could simply look at a persons standard of living and calculate the income required to support it. If that happens you could be in a world of hurt, subject to fines, back taxes, even jail time.

 

[RWS]

. . . on ARCA's site: . . .
Argentina taxes residents on worldwide income. As an Argentina permanent resident, you pay taxes on income generated within and outside Argentina. However if you do not generate income IN Argentina, then you are not requested to pay taxes over income generated abroad. If you simply want to live in Argentina and you generate income from business assets, investments, private/government pensions that are located in your home country, you will not be required to pay income taxes in Argentina. . . .

I suspect that the key here is the word "required". I'd guess that "ARCA" advocates tax evasion (distinct from tax avoidance, the legal minimization of tax liability), often practiced but immoral, illegal, and, as "gouchobob" and others have pointed out, potentially very dangerous.

Why not required? Simply because Argentina to date lacks sufficient information-sharing agreements with other countries, something that likely will change in the not-too-distant future.

 

[Recoleta Carolina]

This is a good question. I think once you have permanent residency you are saying Argentina is your permanent home, therefor you would be expected to pay tax on your worldwide income.

The definition of who is a resident for tax purposes is as follows:

They are foreign individuals who have become permanent residents of Argentina (and have a permanent visa) or who are not residents but have spent sufficient time in Argentina during a 12-month period.

My accountant tells me that a person with permanent residency must spend SIX months or more in Argentina a year to be taxed on worldwide income. But, as I stated in a previous post that if you ask 10 different professionals you will get 11 different answers. It is very frustrating.

I think the bigger issue though is that the laws are changing rapidly. And, what is law today might be something completely different in one year or five years. So, it almost makes it impossible to plan ahead.

 

[gouchobob]

My accountant tells me that a person with permanent residency must spend SIX months or more in Argentina a year to be taxed on worldwide income. But, as I stated in a previous post that if you ask 10 different professionals you will get 11 different answers. It is very frustrating.

I think the bigger issue though is that the laws are changing rapidly. And, what is law today might be something completely different in one year or five years. So, it almost makes it impossible to plan ahead.

These types of issues are ripe for misunderstandings given the confusing nature of the rules and regulations in Argentina. Add in language difficulties and it's easy to see how things can be misinterpreted or unintentionally misstated.

My guess is that your accountant is probably correct for people who don't have permanent residence. It would make sense for people with only temporary residence and spending less than six months there not to be taxed in Argentina on their world wide income, it's not their home country. However I think anyone with permanent residency and claiming Argentina as their home country would be subject to taxes on their world wide income regardless of how many months you spend there in a given year. After all having permanent residency there makes Argentina your home country and it would seem to follow that you should pay your taxes there as well.

 

[davejohnson333]

My guess is that your accountant is probably correct for people who don't have permanent residence. It would make sense for people with only temporary residence and spending less than six months there not to be taxed in Argentina on their world wide income, it's not their home country. However I think anyone with permanent residency and claiming Argentina as their home country would be subject to taxes on their world wide income regardless of how many months you spend there in a given year. After all having permanent residency there makes Argentina your home country and it would seem to follow that you should pay your taxes there as well.

I have often heard that there are only a couple of countries in the world that tax on citizenship alone and not on residency and Argentina has never come up in that very short list. So if a person comes to Argentina to get their passport after two years of living there then they can roam the world and not have to pay taxes to the Argentine govt. as long as they do not stay in Argentina over that magic number of months.

 

[gouchobob]

I have often heard that there are only a couple of countries in the world that tax on citizenship alone and not on residency and Argentina has never come up in that very short list. So if a person comes to Argentina to get their passport after two years of living there then they can roam the world and not have to pay taxes to the Argentine govt. as long as they do not stay in Argentina over that magic number of months.

You are correct and I believe the U.S. is the only country that taxes based on citizenship and not residency(i.e. if you are a U.S. citizen you are still liable for U.S. taxes even though you don't live there). The rules vary by country but usually its going to based on the number of days you spend in a given country. I suppose you could check out the rules for 4 or 5 countries and make sure you are never in any one long enough to owe taxes but I would guess the hassle and cost of moving frequently would probably be worse than paying the tax.

By the way you don't have to be a resident in Argentina to owe taxes there. After you are there for the magic number of days they consider you a resident for tax purposes even if you have never applied for legal residency.