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When considering an investment into a country, one has to take into
consideration income received from the investment country in the
form of dividends, interest and royalties, as well as any possible
capital gains that might arise from such investment.
In Argentina, dividends as well as branch remittances
are not subject to tax to the extent that the amount paid does not
exceed the after-tax accumulated taxable income. If so, a 35% withholding
tax is imposed on the exceeding amount. Such may be an obstacle
when profits accumulated for several years are distributed to shareholders
those whether or not resident in a treaty country.
As general rule, interest from loans other than
granted by local or foreign financial entities (countries which
signed exchange-of-information agreements except the ones located
in low tax jurisdictions) are subject to a final withholding tax
of 35%. The rate may be reduced to 12% under the treaty provisions.
Payments of royalties are also subject to a 31,5% withholding tax
that may be reduced to 3% under the treaty.
Regarding shareholders’ loans, a 2:1 ratio is applied to Argentinean
corporations on loans which are not subject to the 35% withholding
tax.
As it is mentioned above, there is no withholding
tax on dividends paid to non residents to the extent that the amount
of such dividends does not exceed the after-tax accumulated taxable
income of the payer. Consequently, just by taking some precautions
regarding the amount of payments it is possible to transfer dividends
to non-residents without being obliged to pay any withholding tax.
On the other hand, it is also possible to use some double tax treaties
signed by Argentina and to mitigate the high withholding tax rates
applicable to dividend payments to non-treaty countries.
Tax Treaties
Argentina has concluded double tax treaties with the following
countries:
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Australia |
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10/15
(b) |
0/12 |
10/15 |
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Austria |
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15 |
0/12,5 |
15 |
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Belgium |
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10/15
(b) |
0/12 |
3/5/10/15
(d) |
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Bolivia |
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35 |
15,05/35 |
21/28/31,5
(f) |
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Brazil |
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35 |
15,05/35 |
21/28/31,5
(f) |
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Canada |
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10/15
(b) |
0/12,5 |
3/5/10/15
(d) |
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Chile |
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35 |
15,05/35 |
21/28/31,5
(f) |
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Denmark |
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10/15
(b) |
0/12 |
3/5/10/15
(d) |
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Finland |
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10/15
(b) |
0/15 |
3/5/10/15
(d) |
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France |
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15 |
15,05/20 |
18 |
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Germany |
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15 |
10/15 |
15 |
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Italy |
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15 |
15,05/20 |
10/18
(e) |
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Netherlands |
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10/15
(b) |
0/12 |
3/5/10/15
(d) |
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Norway |
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10/15
(b) |
0/12,5 |
3/5/10/15
(d) |
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Spain |
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10/15
(b) |
0/12 |
3/5/10/15
(d) |
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Sweden |
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10/15
(b) |
0/12 |
3/5/10/15
(d) |
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Switzerland |
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10/15
(b) |
0/12 |
3/5/10/15
(d) (f) |
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UK |
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10/15
(b) |
0/12 |
3/5/10/15
(d) |
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Non
Treaty Countries |
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35 |
10,05/35
(g) |
21/28/31,5
(g) |
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(a) The rates shown in the table apply to the amount of the dividend
distribution exceeding the after-tax accumulated taxable income
of the payer. Because tax treaties generally limit the withholding
tax rate that may be applied to the gross amount of the dividends,
it is not clear that the reduced rates in the table will be applied
to the excess amount referred to in the preceding sentence. However,
it appears that taxpayers will be able to apply the reduced treaty
withholding tax rates listed in the table to the excess amount,
even if the application of the statutory rate of 35% to the excess
would result in a withholding tax that is less than the withholding
tax resulting form application of the treaty rate to the gross amount
of dividends.
(b) The 10% rate applies if the beneficial owner
of the dividend is a company that controls, directly or indirectly,
at least 25% of the voting power of the payer. The 15% rate applies
to other dividends.
(c) The rates listed are the lower of the treaty or statutory rates.
(d) In general, the rates apply to the following
categories of payments: 3% for the use of, or right to use, news,
5% for the use of, or right to use, copyrights of literary, dramatic,
musical or other artistic works (but not royalties with respect
to motion picture films and works on film or videotape or other
means of production for use in connection with television ; 10%
for the use of, or right to use, industrial, commercial or scientific
equipment or patents, trademarks, designs, models, secret formulas
or processes, or for the use of or information concerning scientific
experience, including payments for the rendering of technical assistance
; and 15% for other royalties. These categories may differ slightly
from treaty to treaty.
(e) The 10% rate applies to royalties for the use
of, or the right to use, copyrights of literary, artistic or scientific
works. The 18% rate applies to other royalties.
(f) Under a protocol to the treaty, as long as
Swiss domestic law does not impose a withholding tax on royalties
paid to residents, royalties are taxable only in the contracting
state where the beneficial owner of the royalties is resident.
Salient Features
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Corporate
Income Tax |
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The
companies incorporated in Argentina are taxed on their world
wide income at a rate of 35%. |
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Dividends
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Dividends
received by a non resident from an Argentinean company are
exempt from the withholding tax to the extent that they do
not exceed the after tax accumulated income. The amount in
excess shall be subject to the withholding tax of 35%. |
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Interest
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In
the absent of a tax treaty, interest payments to non-residents
are subject to withholding tax at the rate of 35%. |
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Royalties
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Royalties
have a 31,5% of withholding tax. |
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Loss
Relief |
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Losses
incurred in a one year can be offset against the income that
may be earned in the following five years. |
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CFC
& thin-capitalisation |
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Argentine
has CFC and debt-to-equity ratio rules (2:1). |
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Case Studies
Offshore Investing Into Argentina
EU Company Investing Into Argentina
Argentinean Individual Investing Into
Argentina
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