Argentina: Taxes and Costs

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Rental income taxes are punitively high in Argentina

Effective Tax Rate on Rental Income
Monthly Income	US$1,500	US$6,000	US$12,000
Tax Rate	21%	21%	21%
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INDIVIDUAL TAXATION

Persons residing for less than six months per year in Argentina are taxed only on Argentine-sourced income, but after that period they are taxed on their global income. Nonresidents do not enjoy the standard income tax deductions.

National tax collection is the responsibility of the Federal Administration of Public Revenue (Administracion Federal de Ingresos Publicos). The Argentine tax system is based on self-assessment. Individuals with significant non-wage income are required to make five advance payments towards their final tax liability, bi-monthly, from June to February, calculated as a percentage of the previous year’s payments.

The tax laws establish very detailed rules on how tax is to be calculated. It is important to keep records. Penalties for failing to make tax returns or omitting tax income can be 50% to 100% of the tax obligation.

INCOME TAX (Impuesto a las ganancias)

Nonresidents’ income is subject to a withholding tax of 35%, calculated on presumed revenues, in a manner that varies depending on the type of income.

Real estate rental income from property located in Argentina is subject to tax at a flat rate of 35%, withheld by the tenant. The taxable income is presumed to be 60% of the gross income; therefore, the effective rate is 21% on gross rental income (i.e. 35% tax on 60% of the gross income).

The taxpayer may choose to be taxed on the actual net income. The actual expenses incurred which are necessary for obtaining the rental income, or preserving its source can be deducted. Expenditures are deductible only if they are properly supported by valid documents. The withholding tax is 35% of the amount thus established.

Depreciation is deductible on a straight-line basis; the normal annual rate for real property is 2% of the building or construction costs plus expenses incurred in connection with the purchase of the property, such as taxes, realtors’ commissions, etc. Improvements carried out on rented properties are also subject to depreciation, in which case depreciation will be computed as a deductible expense by the renting party, as opposed to the owner of the building.

Gross Revenue Tax (Impuesto sobre los ingresos brutos)

Gross revenue is taxed by the Provincial Government. at rates ranging from 3% to 5%, depending on the jurisdiction. However rental income paid to individuals is exempt from this tax, provided the maximum number of rented real properties does not exceed the maximum established by each jurisdiction, i.e.

• Buenos Aires City: two properties, provided the rental value does not exceed ARS1,200 (US$390)
• Province of Buenos Aires City: two properties.

Stamp Tax

Rental contracts are subject to stamp duty by the Provincial Government at rates varying between 0.5% and 2.5%. In Buenos Aires City, the tax rate is 0.5% but rental contracts of real properties non-destined for commercial activities are exempt.

CAPITAL GAINS TAX

Capital gains earned by nonresident individuals through selling their real estate properties are not considered as income and are not taxed at the standard income tax rate. However, the nonresidents must prove to the tax authorities that the property in question is owned by individuals or estates and not by a company.

Transfer of real property located in Argentina that is not subject to income tax is then subject to transfer taxes. The standard rate for the transfer of properties is 1.5%. The tax base is the transfer price or the market value of the property. For nonresidents, this tax is withheld at source.

When selling one primary residence in order to acquire another, it is also possible to include the option of not paying any capital gains tax in the deed of sale. The buying of the new property may precede the sale but the two transactions must take place within one year.

VALUE ADDED TAX (Impuesto al valor agregado)

Rental value corresponding to real estate properties belonging to taxpayers exceeding ARS1,500 (US$487) a month is assessable at 21%, except for rentals of residential properties or rural properties related to farming activities.

CORPORATE TAXATION

INCOME TAX

Rental income earned by companies is subject to the standard corporate income tax rate at 35%. Income-generating expenses are deductible. Other deductions to corporate income tax are advertising costs, amortization, interest expenses, local and property taxes, insurance premiums, bad debts, gifts, and entertaining expenses.

Gross Revenue Tax (Impuesto sobre los ingresos brutos)

Gross revenue is taxed by the Provincial Government. at rates ranging from 3% to 5%, depending on the jurisdiction.

Business Net Worth Tax (impuesto a la ganancia mínima presunta)

Companies are subject to a minimum deemed income tax on their properties at a flat rate of 1%. Immovable properties used to generate profits up to ARS200,000 (US$64,901) are exempted from this tax. The value of investments on the construction of new business properties and the improvements on existing properties are not taxable. This tax can be credited to the company’s income tax.

CAPITAL GAINS

Capital gains earned by companies are subject to corporate income tax at the rate of 35%. Deductions that are allowed for the capital gains tax must be wholly and exclusively incurred for the purpose of the company’s trade and be related to the taxable profits.

The taxable income is presumed to be 50% of the gross capital gains; therefore, the effective withholding rate is 17.5% on the gross gains (i.e. 35% tax on 50% of the gross income).

The company can choose to deduct the actual expenses incurred and be taxed at the 35% rate on the net income. Income-generating expenses are deductible. Other deductions to corporate income tax are advertising costs, amortization, interest expenses, local and property taxes, insurance premiums, bad debts, gifts, and entertaining expenses.

PROPERTY TAX

Tax on Personal Assets (Impuesto sobre los bienes personales)

Aside from income tax, non-residents pay personal assets tax to the national government on their assets owned in Argentina, except on urban properties used to generate profits. The standard rate for non-residents is 1.25%.

Business Net Worth Tax (Impuesto a la ganancia minima presunta)

Urban properties used to generate profits owned by nonresidents are subject to business net worth tax at 1%.

Municipal Taxes

Local governments also assess the cadastral value of the real estate and levy a real estate tax. The taxable base for the local taxes will not exceed 80% of the property’s market value. The tax rates 1.20% for rural properties, 1.35% for sub-rural and sub-urban properties, and 1.50% for urban properties.

The municipality also imposes a charge of 0.55% for lighting, sweeping and cleaning services.

Argentina - more data and information

• Guide to buying houses and registering property sales in Argentina

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