|Tax implications for Argentinian Taxpayers with Offshore Bank Accounts|
When the time came this April to file tax returns, many Argentinian taxpayers found out the hard way how expensive it is not to have in place an adequate structure to hold financial assets offshore.
If an Argentinian taxpayer has an offshore bank account he will have to pay capital gains tax in Argentina each year – even if he has, in fact, made a loss. By way of example, let’s assume that an Argentinian citizen buys bonds abroad for a value of USD100 and he then sells them later that year for USD90. It would be logical that, given the fact that he has made a loss of USD10 he should not have to pay capital gains tax. That is unfortunately not the case. The taxman contends that the taxpayer bought for ARS650 and sold for ARS760 which means that he must pay 35 percent of ARS110. Furthermore, he will have to pay the personal assets tax which, at its maximum rate (which is the rate that Argentinian taxpayers with offshore assets usually pay) is 1.25 percent.
For those who hold assets offshore, instead of holding them directly, it might be desirable to entrust them to the directors of a foreign company to manage. In other words: let the company administer the assets either directly or via professional financial advisors – if the company is incorporated in a whitelisted jurisdiction only the capital gains tax will be payable in cases where that company has made a dividends payment.
The Supreme Court of Argentina’s judgment of 10 March reinforces this point: “resident shareholders must only calculate the gains obtained by the companies for shares they own when these make available their respective dividends”.
To conclude, having a company administer financial assets will change the way and timing for the payment of capital gains tax in Argentina.
The opinions expressed do not constitute investment advice and specialist advice should be sought about your specific circumstances.
Published on our website on Nov.05, 2015