Personal Property Taxes in Argentina: A rush of accountant inquiries due to the fear of increased taxes
Accounting studios are increasingly receiving “emotional” inquiries from their most wealthy clients due to a change of government which has a reputation for hurting the upper middle classes. One option for savers or property owners is to obtain residency in Uruguay and renounce Argentina residency or form an irrevocable long-term trust and lose direct control over the money altogether.
“The vast majority of consultations are for achieving an Uruguayan residency and losing their Argentine one. For the first five years, financial investments in the neighboring country are exempt, which has a more investor-friendly regime for investors,” says Santiago Sáenz Valiente, from the santiago Sáenz Valiente & Asociados studio.
The procedure is not simple. Uruguay, first of all, asks that, in order to obtain residency, people live there at least 183 days (although it allows transitional departures in the middle). Then, explains Sáenz Valiente, if a person who performs this procedure also has investments in Argentina – as a property – must designate another person who pays taxes for those goods which are usually real estate.
Caesar Litvin, of Lisicki Litvin & Associates, details that, in addition to Uruguay, the most attractive countries to apply for a change of residence are Panama, Spain, and Italy. The latter has a regime that greatly benefits new tax residents, which was crucial in Cristiano Ronaldo’s pass to Juventus, the tributaries clarify.
The second alternative by which customers with greater purchasing power consult are irrevocable trusts: it is a trust that no longer returns assets to the original owner. It requires a trustee (administrator) independent and a the protector that controls that they cannot have ascending, descending and lateral kinship “until the third level”, Litvin clarifies.
In short, you lose direct control of that money. In addition, they are appointed beneficiaries (who are usually children or grandchildren) and sets out when you want the estate to be handed over to those people. Also, there’s a financial adviser who decides how to manage those assets so that they are profitable.
Generally, the trust includes all sorts of from holdings in companies to real estate. “When those assets are already out of control of the person who establishes it and until the estate reaches the beneficiaries, they do not tax Earnings or Personal Property”. Usually, this asset management tool is seen in the United States, New Zealand or the Virgin Islands.
Less radical options
Finally, there are consultations for alternatives that are less radical. Miguel La Vista, from the La Vista Casal studio, details that, tax treaties between countries, Bolivia’s public securities do not pay personal property, a difference from other assets abroad, which so far they are taxed with the same maturities and aliquots as those are in Argentina.
“People are re-accommodating their investments for fear of the tax levels going up. It should be borne in mind that, in the case of assets abroad, they are taxed at market value, i.e. the cost of that goods at the exchange rate in force at the end of the financial year,” says La Vista.
Personal property in Argentina, on the other hand, takes into account the value in pesos at the time of purchase, which makes with devaluations of the currency the tax effect is softened somewhat over time.
“In the case, you actually raise the taxes of “Goods Personal” for assets held abroad, it would be a deadly axe because that would take all the profit out of the investment. This tribute Represents less than 1 of the proceeds,so raising it would imply an ideological theme,” says La Vista.
Among the taxation professionals when asked for their opinion of possible changes of tax-rate changes to assets is a reversion to the previous rate of 1.25% (currently up to 0.75%.
During the election campaign and after the elections, on different occasions, Alberto Fernández ( new President-elect ) talked about the tax and clarified that it will not apply for the lower middle class, but apply to the upper middle class.
Source: La Nacion