Income Tax For Capital Gains And Foreign Beneficiaries

Author:Canosa Abogados
Profession:Canosa Abogados

On the 7th of April of 2018, Decree N° 279/2018 was published in the Official Gazette through which the Executive Power regulated the way Income Tax is introduced related to stocks sells made by foreign beneficiaries.

Gain of stocks operation made by foreign beneficiaries.

Law No 26,893 introduced amendments to the Income Tax Law. This law taxes the eventual profits generated by the sale of the shares with income tax ("IIGG") in Argentina.

This tax works as a "capital gain tax" on the profit obtained from the product of share sales.

5% on the sale price for the transfer of the participation or 15% on the difference between the value of the transfer less the cost of the equity interest (capital contributions and / or original acquisition of the Argentine company); of the two situations which is more convenient. In the absence of real market value for the purposes of the valuation of the transfer, the sales price could be determined as the proportional equity value of the financial statements (PPV or book value) or some other formula that we can defend before the Tax Authorities.

If the buyer is also a subject from abroad, the regulations establish that the buyer is responsible for the payment of the IIGG. generated in the transaction.

If the seller and the buyer are non-resident persons the responsible for the income tax is the buyer of the shares, quotas, social participation and other values. However, the Tax Authorities did not regulate the tax payment mechanism applicable to this case.

The tax reform introduced by Law No. 27,430 did not modify the tax treatment of the operation but changed the person responsible for the tax. When the seller and the buyer are non-resident subjects, the seller must pay the tax through his legal representatives.

General Resolution 4227/2018 established the tax revenue mechanism for operations comprised between:


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