All remuneration paid in cash or in kind, including allowances, reimbursements, or paid expenses (e.g. housing and cost-of-living allowances, school fees, tax reimbursements), is taxable without regard to length of residence or source of income.
Business expenses paid directly or reimbursed on an actual basis by the employer are not considered taxable income. However, lump-sum payments would be subject to taxation. The use of a company car for business purposes is not considered taxable income. However, the deductibility of the related costs and expenses by the employer is subject to limitations.
Equity compensation must be reported and taxed through the individual payroll.
Income from stock options is determined as the difference between the fair market value of the stock when the option is exercised, and the price actually paid by the individual. Taxation is triggered at the moment of the option exercise.
There are no further rules in force regarding the taxation of other equity compensation plans or taxation in cross-border scenarios.
Earnings from carrying out a commercial activity, professional work, rental, etc. in Argentina are subject to tax. Self-employment income is taxable at the same progressive income tax rates as income of employees ranging from 5% to 35% (see PIT rates in the Taxes on personal income section).
As of 2018, capital gains derived from the transfer of shares and other participations in collective investment funds are liable to PIT at a 15% tax rate. A tax exemption is applicable for these securities to the extent they have been issued in an IPO or they have been traded in stock markets under the jurisdiction of the Argentine Security Exchange Commission (Comisión Nacional de Valores).
Capital gains derived from the transfer of government or corporate bonds and other securities are subject to a 5% capital gains tax to the extent issued in Argentine pesos without indexation mechanisms or 15% if issued in foreign currency or in Argentine pesos with indexation mechanisms. Capital gains derived from digital currencies are subject to a 15% capital gains tax.
The transfer of Argentine shares, bonds, and quotas by non-residents is exempted from capital gain taxes in Argentina to the extent they reside or the funds derive from cooperative jurisdictions for Argentine tax purposes. To the extent the exemption is not applicable, non-residents are subject to the above 5% or 15% capital gain taxes calculated by applying the corresponding tax rate on a presumed gross margin of 90% (effective tax rate: 4.5% or 13.5%) or on the actual gain.
As of 2018, transfer of real property by Argentine individuals is subject to a 15% capital gains tax calculated on the actual gain. The transfer of real property will only be subject to tax if said assets have been acquired after 1 January 2018.
Dividends paid by foreign companies are treated as foreign source income. They are taxable if distributed to residents at general PIT rates, but are not taxable if the beneficiary is a non-resident.
In case of dividends distributed by an Argentine company corresponding to year 2017 or earlier, distributing entities are required to make a flat and final income tax withholding of 35% from dividend payments or profit distributions to resident individuals or non-resident payees, to the extent that the amount of such dividends or profit distributions exceeds the taxable income of the distributing company, determined by applying the general tax rules (i.e. without considering any exemptions, abatements, and other adjustments arising from special promotional laws) included in their retained earnings at the end of the fiscal year immediately preceding the date of payment or distribution.
Dividends distributed in connection with years 2018 and 2019 are subject to a 7% WHT, whereas dividends in relation to years 2020 and after will be subject to a 13% WHT.
Interest income from Argentine or foreign sources are subject to PIT. However, the interest on savings bank accounts in Argentine banks is exempt from income tax.
Residents must report their worldwide rental income. Non-residents are taxable only on rental income from assets, including real estate, located in Argentina. Actual expenses incurred to maintain the property are deductible.
Rental income must be included in the annual PIT return and will be taxed at the general PIT rates. However, it should be considered that income tax withholding may be applicable on rental payments, depending on the tax status of the paying entity, which will be creditable in the annual tax return.
The most relevant exempt income items include the following:
- Interest from saving accounts in Argentina.
- Author's royalties up to an annual amount of ARS 10,000.
- Dividends distributed by Argentine companies in connection with years 2017 and prior, provided they are paid from profits that have been subject to CIT.
- Compensation received in the performance of their duties by diplomatic agents, consular, and other official representatives of foreign countries in Argentina.
- Severance payments paid as seniority in accordance to the Labor Contract Law, subject to limitations.
- Overtime paid to employees for duties performed on weekends, non-working days, and other holidays according to Labor Contract Law.
- Shares and other participation in entities’ capital gains, provided the respective transactions are publicly traded in stock markets under the jurisdiction of the Argentine Security Exchange Commission (Comisión Nacional de Valores) or the security has been issued in an IPO.