Argentina

Employment expenses

Social security taxes withheld by the employer are deductible from employment compensation for income tax purposes.

All personal deductions are also deductible from employment compensation. Employees are required to provide employers the information on personal deductions via an electronic Form 572 in order to be considered for income tax withholding calculations.

The annual electronic Form 572 may be filed during the year to update tax deductions when required, but final filing must be done prior to 31 March of the following fiscal year.

For fiscal year (FY) 2024, the government established by Law a new “cedular regime” that was applied on the “highest incomes”, understood as those salaries that exceed the equivalent of 180 times the SMVM (minimum, vital, and mobile salary) as a non-taxable minimum. Under this scenario, employees, retirees, and pensioners (not applicable to directors) should pay income tax only when their gross monthly salary was greater than 15 times the SMVM at the time of tax determination. In addition, a progressive scale was incorporated, whose rates will be established between 27% and 35%. This new regime was applicable since January to June 2024.

From July onwards, the “Cedular regime” was repealed by the Government and the income tax withholding mechanism that was in force up to September 2023 was reimplemented and updated (annual taxable income 35% tax rate over AR$ 41.316.075 after available deductions was reinstated).

Personal deductions

Education expenses

Expenses on educational services and the purchase of tools intended for education are deductible. The deduction applies to educational expenses for children, stepchildren, or minors under 18 years of age who are dependents of the taxpayer. It also extends to those over 18 and up to 24 years old who are pursuing regular or professional studies and do not have income exceeding the non-taxable minimum income.

The maximum amount to be deducted is 40% of the non-taxable minimum income for the corresponding fiscal period.

Charitable contributions

Donations to tax-exempt charitable institutions are deductible up to a maximum of 5% of net income.

Pension and other social security contributions

Pension and other social security contributions withheld by the employer or paid by the individual as self-employed worker are deductible from PIT.

Life insurance and funeral expenses

Life insurance purchased from local authorised insurance companies and funeral expenses are deductible up to a maximum established annually by the tax authorities.

Mortgage deduction

Mortgage and all other interest is not deductible, unless it relates to taxable income. However, mortgage interest paid on loans received for the purchase of personal dwelling property is deductible up to a cap of ARS 20,000 per year.

Rental expenses

Individuals and undivided estates are allowed to deduct from their taxable income up to 40% of their rental expenses to the extent they correspond to their dwelling and do not have ownership of any real property, at a maximum of ARS 3.503.688,17 for FY 2024. 

Medical care contributions and expenses

Contributions to third-party medical schemes are deductible up to a maximum of 5% of net income. Other medical expenses may be deducted up to a maximum of 40% of all corresponding invoices of the fiscal year, provided the deduction does not exceed 5% of net income.

Domestic staff compensation

Expenses related to personal domestic services could be deducted up to a cap of ARS 3,503,688.17 for FY 2024, provided the domestic personnel is duly registered with the social security regime and the applicable social security contributions were paid on a monthly basis.

The deductible amount for domestic personal expenses is changed annually.

Personal tax allowances

Residents and non-residents are allowed to deduct the following annual personal allowances regarding FY 2024:

Except for the earned-income allowance, personal and family allowances are applicable only when the taxpayers and their families, if eligible, have been living in Argentina for over six months during the tax year under consideration, and did not obtain income in excess of ARS 3,503,688.17 (FY 2024) during the same period.

Business deductions

All losses and expenses incurred in obtaining and preserving taxable income are deductible, but living, personal and family expenses are not deductible, except for Pension Fund and other social security contributions. In cases where fringe benefits include lump-sum allowances for relocation expenses, household goods transportation, house hunting trip, and so on, only actual expenses incurred, supported by third-party vouchers, can be treated as a ‘business expense’ and accordingly be borne by the company as corporate expenses.

Losses

Capital losses can only be deducted from taxable capital gains.

In order for the deduction to be allowed, capital losses must have been suffered in a transaction that, if profitable, would have resulted in taxable income.

Carryback of losses is not permitted.

Tax losses will not be offset with profits that must be taxed under the cedular regime.