Taxes for foreigners

[BA2021]

Hi guys. Not living in Argentina but considering.

Taxes seem complex, just wondering if people with experience here could elaborate.

Regarding tax residency, I know that Argentina taxes worldwide income for residents. However, I have heard there is a condition that a foreigner coming to Argentina to work <5 years is only liable to tax on their Argentine income, not worldwide income. ('Non-resident with permanent presence' I believe it's called). How is it defined though? Is it only for 'expats' seconded to an Argentine company on an assignment, or also regular people migrating to Argentina and working there locally? Anybody here that fits that status?


Separately, regarding people with online income, I saw posts which state that receiving payment in dollars needs to be "peso-fied" shortly after receiving USD. Does this only apply to companies or also regular "freelancers" even if they don't remit the money to Argentina from abroad?
Thanks.

 

[ventanilla]

if you are a freelancer all of your money is generated from within Argentina, regardless of if it's paid to a foreign bank account. Worldwide income refers to money generated outside of argentina, for example rent from a property you own in another country. If you earn the money from things you do while in Argentina, it is Argentine income.

 

[Cordoba]

US S-corp might make it viable if that is where you do business. Could at least control the amount of employment taxes paid into both systems. Pay a reasonable Argentine wage for whatever you do. Defer the entire wage portion into a solo 401k. Then nothing left in wage earnings to convert at the official rate. The 35% top rate on the pass through company profit wouldn't be bad at all if the difference between official and blue holds.

 

[MercyRego]

Update (in Spanish):

Freelancers, en la mira del Gobierno: cómo afecta la Ley Penal Cambiaria a quienes no liquiden divisas

Los freelancers ingresan dólares que ganan en el exterior por vías que les permite evitar liquidarlos al dólar oficial, pero pueden ir a la cárcel

www.iproup.com

 

[Cordoba]

I might be reading that wrong but it looks like you would receive some protection by forming a taxable entity abroad subjecting it to those taxes abroad.

I'm curious how a net-zero W2 would be treated. Not sure if they would subject it to Argentine social security tax/income tax at Gross, Taxable, or Net rates. Probably get a different answer from each local Accountant. Whether it is paid into a retirement account or extra federal tax withholding. You would be left with nothing remaining to convert.

There is a possible transfer pricing issue but that is targeted at subsidiaries, not individual employees.

 

[lost]

Update (in Spanish):

Freelancers, en la mira del Gobierno: cómo afecta la Ley Penal Cambiaria a quienes no liquiden divisas

Los freelancers ingresan dólares que ganan en el exterior por vías que les permite evitar liquidarlos al dólar oficial, pero pueden ir a la cárcel

www.iproup.com

Interesting article. And what a #$&@*! country where you can go to jail for 4 years when exchanging your earned dollars at the "real" exchange rate (e.g. via dólar MEP).

I found the following paragraph interesting:

"Si nos pagan con un criptoactivo, su liquidación debe transferirse dentro de esos mismos cinco días, ya se reciba en el país o el exterior, y también ingresarlo a una cuenta bancaria", advierte."

So, basically getting paid in crypto is fine. You just have to sell it within 5 days and get the pesos onto a local bank account (caja de ahorro). That way you get effectively an exchange rate near the dólar MEP (maybe a little less after all the fees for exchanging crypto - but still good enough). Or am I missing something?

Or you close your business all together. Then let a close relative abroad earn the money for you and then support you through Western Union family support wires.

 

[lunar]

I'm curious how a net-zero W2 would be treated. Whether it is paid into a retirement account or extra federal tax withholding. You would be left with nothing remaining to convert.

If you have income that is exempt from the US taxes, it is not necessarily exempt from the Argentinean ones. So, even if your W2 is zero, you do have Argentinean taxable income.

Not sure if they would subject it to Argentine social security tax/income tax at Gross, Taxable, or Net rates. Probably get a different answer from each local Accountant.

Do local accountants even work with money outside of the country (beyond personal property taxes)? I thought they say "bring your money in", then we will do something about it. Do you think they can calculate Argentinean income tax on some amount in dollars that you put into your retirement account in the States?

 

[antipodean]

. Do you think they can calculate Argentinean income tax on some amount in dollars that you put into your retirement account in the States?

Yes based on what is declared and the source of income. There is an AFIP formula for it. Many Argentines and residents have foreign rental or dividend income etc “en blanco”. There is no obligation to bring that income into Argentina.
It all ends up calculated at official or something a little lower. You pay in Pesos, not dollars. Meaning Argentine tax liabilities for foreign earnings are not so bad in times of brecha, especially if the tax payer has access to CCL or sufficient local income to pay them with.

Example for illustrative purposes only:
US$50.000 income * 100 = ARS 5.000.000
ARS 5.000.000*35% = ARS 1.750.000 tax liability
ARS 1.750.000 = US$8.750 tax paid (or 17,5% instead of 35%)

Of course in times of no brecha and without a DTA to offer relief, that would certainly bite.

To the OP - the five year rule is only for those employed by an Argentine company registered with Migraciones and with a temporary work permit. Your taxes and aportes will be deducted automatically from payroll and no obligation to file a tax return unless you also own property of some kind in Argentina. Additionally as I understand, if you get married or into a serious relationship to an Argentine permanent resident/ citizen or something like that during those five years, you become a tax resident immediately liable to pay on global.

 

[FrankPintor]

"Si nos pagan con un criptoactivo, su liquidación debe transferirse dentro de esos mismos cinco días, ya se reciba en el país o el exterior, y también ingresarlo a una cuenta bancaria", advierte."

So, basically getting paid in crypto is fine. You just have to sell it within 5 days and get the pesos onto a local bank account (caja de ahorro). That way you get effectively an exchange rate near the dólar MEP (maybe a little less after all the fees for exchanging crypto - but still good enough). Or am I missing something?

Or you close your business all together. Then let a close relative abroad earn the money for you and then support you through Western Union family support wires.

I think you're missing that you have to convert at the official rate, and if the work is for a foreign company you also need to pay export duties.

You wont need to account for family support as income?

 

[lost]

I think you're missing that you have to convert at the official rate,

That is the thing. If you get paid in crypto then the "official" rate at all the argentinian exchanges is very close to the "dolar MEP" (if you do the math calculating crypto value to dollar value to peso value). So, pretty good.

and if the work is for a foreign company you also need to pay export duties.

Is that still the case for services? AFIP's website says the 5% tax regulation for exporting services is in effect until December 31, 2020

Also, it was my understanding that if your business is registered as a Pyme (small business) at the AFIP and you invoice less than 600.000 USD per year then you were/are exempt from paying export duties for services. All Monotributos invoice less than that per year.