Taxation Of Overseas Income For Argentinian Citizens.

[el_expatriado]

Thanks. So I can be an official resident of the USA while at the same time be a citizen of Argentina. Not earn an income in Argentina and therefore only pay income tax on my US earned income. Sounds great for me. If I understand it then, my residency status is what determines my tax liability. If this is correct, it's great.

In Argentina your residency determines your tax status. In the USA you owe tax on worldwide income just because you are a citizen or green card holder. You get a $100k yearly exemption for earned income while working abroad (passive or self employment income doesn't count).

 

[Chaya]

Again thanks. It's so mind numbing wh I learned at the same time so very interesting learning the differences at Law between the United States and Argentina. Thanks for helping me understand. By the way, I earn far more than the foreign earned exemption. Thanks.

 

[Girino]

You get a $100k yearly exemption for earned income while working abroad (passive or self employment income doesn't count).

Are you sure about self-employment? According to my CPA you still have the foreign earned income exemption, but you still owe self-employment tax in the US (which is not small,a round 15%). If you have a company in the US (let's say a C-corp) then it is a different think because you'd pay yourself a salary.

 

[steveinbsas]

Are you sure about self-employment? According to my CPA you still have the foreign earned income exemption, but you still owe self-employment tax in the US (which is not small,a round 15%). If you have a company in the US (let's say a C-corp) then it is a different think because you'd pay yourself a salary.

This is correct as far as I know. The foreign earned income exemption applies to active income (including self employment income) that is earned outside of the United States. Nonetheless, if someone is living outside of of the USA I don't believe that they qualify for the exemption if the income is generated (aka earned) in the USA, and I don't think that an individual who is paid a salary by a C-corp in the USA would qualify for the exemption just because they are "living" abroad.

I have read on several websites that self employment income earned outside of the USA is subject to self employment taxes in the USA (even if the income is exempt from US income tax).

 

[steveinbsas]

So I can be an official resident of the USA while at the same time be a citizen of Argentina. Not earn an income in Argentina and therefore only pay income tax on my US earned income. Sounds great for me. If I understand it then, my residency status is what determines my tax liability. If this is correct, it's great.

This conclusion might not be correct. Even if you are earning an income in the USA (and even if the first $100K is exempt from taxation in the USA just because you are living abroad), if you become an Argentine citizen living in Argentina you will be considered a "tax resident" of Argentina by AFIP.

Foreigners living in Argentina more than six month of the year are either temporary or permanent residents or pseudo-tourists. The only way I know of to "avoid" paying taxes on foreign income while living in Argentina is to remain a pseudo-tourist (but that doesn't mean that they are legally exempt from paying taxes)

You never mentioned what your current immigration status is. If you currently don't have temporary or permanent residency you may think you are under the radar. Perhaps for now you are, but if you own property in Argentina and living the lifestyle of someone earning more than $100K USD per year I wonder how long that will be the case.

If you become a citizen and don't declare your USA income to AFIP you may be committing the crime of tax evasion. Even if you don't become a citizen, if, at some point in the future AFIP asks how you support yourself in Argentina and/or how you are able to buy property and that you are living here and not reporting any income, you might find a note in your mailbox informing you of an "embargo" tax lien against your property...at the least

The fine for working in Argentina without a DNI is now $300.000 pesos.

Penalties and interest for not reporting income that is actually subject to taxation in Argentina are staggering.

I don't know what criminal penalties might also apply, but if your USA income is well over $100K per year I think you would be considered a pretty big fish.

 

[Chaya]

So it's the case that if you spend more than 6 months in Argentina no matter what your legal status is then you are subject to Argentina income tax? Is that 6 months in one stretch or cumulative over a 12 month period? I have my residence in the United States. I come to Argentina regularly to rest, think and be with my friends. I never overstay my entry and am usually out after max 8 weeks.

So you are not contradicting the earlier poster in saying that taxation liability is based on residency and not citizenship?

Then the critical issue is the calculation of the 6 month period for determining if you are liable to pay taxes on your worldwide income and assets.

Don't forget Argentinians have in their tax code taxation not only on income but as well assets. I'm already paying an assets tax on my assets owned in Argentina.

It is very bad that there is not a single person from my Realtors to accountants that have given proper advise on these issues. It is disgusting that innocent people who have brought gard earned dollars into this country and have invested and who like to visit regularly can be treated like this.

I do not work in Argentina. I work for a company in the United States. I stay max 90 days but usually 60 days then I fly around the world doing business for my USA company. I have my legal residency in the United States and my home. I have a holiday residence in Argentina and investment rental. So what if I take long legal vacations in Argentina? It would be insane if I had to pay tax as a resident just because I visit my vacation home a lot.

 

[Chaya]

By the way. If it's a cumulative 6 month period for becoming liable to pay taxes on your worldwide income and assets then anyone with money and assets should be warned to not have a vacation home in Argentina and keep the heck away.

 

[steveinbsas]

So it's the case that if you spend more than 6 months in Argentina no matter what your legal status is then you are subject to Argentina income tax? Is that 6 months in one stretch or cumulative over a 12 month period? I have my residence in the United States. I come to Argentina regularly to rest, think and be with my friends. I never overstay my entry and am usually out after max 8 weeks.

So you are not contradicting the earlier poster in saying that taxation liability is based on residency and not citizenship?

Then the critical issue is the calculation of the 6 month period for determining if you are liable to pay taxes on your worldwide income and assets.

Don't forget Argentinians have in their tax code taxation not only on income but as well assets. I'm already paying an assets tax on my assets owned in Argentina.

It is very bad that there is not a single person from my Realtors to accountants that have given proper advise on these issues. It is disgusting that innocent people who have brought gard earned dollars into this country and have invested and who like to visit regularly can be treated like this.

I do not work in Argentina. I work for a company in the United States. I stay max 90 days but usually 60 days then I fly around the world doing business for my USA company. I have my legal residency in the United States and my home. I have a holiday residence in Argentina and investment rental. So what if I take long legal vacations in Argentina? It would be insane if I had to pay tax as a resident just because I visit my vacation home a lot.

At this point, based on the amount of time you spend in Argentina you have no income tax liaility in Argentina and "long" vacations shouldn't cause a problem.

Did you know that you can extend each 90 day visa once at migraciones?

Foreigners who are temporary or permanent residents of Argentina (and are actually living in Argentina more than six months of the year) are subject to paying taxes in Argentina on their worldwide income. At least that's what a number of members have posted here. That might not apply to all temporary residents (students, those seeking medical treatment, etc.).

Foreigners who have temporary residency and spend six months of the year outside of Argentina cannot renew their temporary residency so taxation will not be an issue if that happens. I believe that as long as they have (and continue to renew) their temporary residency that they have the tax liability.

Perhaps there is an exemption for paying taxes on foreign income if a permanent resident or citizen of Argentina spends more than six months of the year outside of Argentina. I'm rather certain that there are permanent residents living and working outside of Argentina who are not reporting foreign income or paying taxes in Argentina, even though they plan to return.

I don't know if Argentine citizens who are working abroad (and are out of the country for more than six moths of the year) are exempt from paying taxes on their foreign income in Argentrina, but I seriously dobut it.

I would love to be wrong about that one.

 

[steveinbsas]

By the way. If it's a cumulative 6 month period for becoming liable to pay taxes on your worldwide income and assets then anyone with money and assets should be warned to not have a vacation home in Argentina and keep the heck away.

If you don't become a temporary or permanent resident, the odds of becoming liable to pay taxes on your worldwide income and assets are virtually non-existent, even if you (by coming and going often enough) manage to stay a total of more than six months without an overstay. You will only have to pay the property taxes (ABL/ARBA etc) and the bienes personales.

You cannot become an Argentine citizen living in Argentina more than six months of the year (cumulatively) and be exempt from paying taxes on your worldwide income.

If it's possible to avoid the tax liability by staying out of the country more than six months of the year, then why bother becoming a citizen in the first place?

 

[sergio]

There is a great deal of speculation on this board. See a tax expert who has knowledge of your situation, preferably someone who knows how things work in Argentina.