How Argentina Tax Treaties Prevent Double Taxation

International business creates tax situations where income is subject to taxation in two different countries. To prevent this, nations use bilateral agreements known as double taxation treaties (DTTs) to establish rules that allocate taxing rights. By defining which country can tax specific income, these agreements provide certainty for taxpayers and mitigate the financial burden of being taxed twice. These treaties also help combat fiscal evasion through information exchange between national tax authorities.

Argentina’s Tax Treaty Network

Argentina has developed a network of double taxation treaties to facilitate international trade and investment. The country has agreements with numerous nations, including Australia, Belgium, Brazil, Canada, China, France, Germany, Italy, Japan, Mexico, Spain, Sweden, Switzerland, the United Kingdom, and the United Arab Emirates.

Argentina is also a signatory to the Multilateral Instrument (MLI). This international agreement allows for the swift modification of existing bilateral tax treaties to implement measures developed by the Organisation for Economic Co-operation and Development (OECD). The MLI helps update many of Argentina’s DTTs simultaneously, aligning them with modern standards for preventing tax avoidance.

The network of agreements is constantly evolving, with some treaties pending ratification and others under negotiation. For instance, the treaty with China entered into force in late 2024 and became applicable at the start of 2025, introducing updated provisions and reduced tax rates.

Core Concepts of Argentine Tax Treaties

Tax Residence

A foundational concept in Argentina’s DTTs is tax residence, which entitles an individual or company to claim treaty benefits. An individual is considered a tax resident if they are liable to tax in a country due to their domicile, residence, or a similar criterion under that country’s domestic laws.

When an individual is considered a resident of both Argentina and a treaty partner, a series of “tie-breaker” rules are applied sequentially to assign residence to a single country. The first test is the “permanent home” test. If a permanent home is available in both countries, the “center of vital interests” test examines where the person’s personal and economic ties are closer.

If the center of vital interests is unclear, the next rule is “habitual abode,” which looks at where the individual spends more time. If this is also indeterminate, the final tie-breaker is nationality. For entities, residence is determined by the “place of effective management.”

Permanent Establishment

A permanent establishment (PE) is a fixed place of business through which an enterprise’s operations are carried on. The existence of a PE in Argentina gives the country the right to tax the profits attributable to that PE. If a foreign enterprise does not have a PE in Argentina, its business profits are taxable only in its country of residence.

Examples of a PE include a place of management, a branch, an office, a factory, or a mine. A construction or installation project also creates a PE, but only if it lasts for more than six months, which is the standard period in most of Argentina’s treaties.

Conversely, treaties list activities that are preparatory or auxiliary and do not create a PE. These exceptions include using facilities for storage, display, or delivery of goods. They also include maintaining a stock of goods for processing by another enterprise or maintaining a fixed place for purchasing goods or collecting information.

Tax Treatment of Specific Income Types

Business Profits

Under Argentina’s tax treaties, the profits of a foreign enterprise are taxable in Argentina only if the enterprise operates through a permanent establishment (PE) located there. If a PE exists, Argentina may tax only the portion of profits attributable to that PE. These profits are calculated as if the PE were a separate enterprise dealing independently with its head office.

Dividends, Interest, and Royalties

For income like dividends, interest, and royalties, treaties allow taxation in both the source and residence countries but cap the withholding tax rate the source country can apply. For dividends, Argentina’s domestic withholding rate is 7%, while treaties often set maximum rates of 10% for corporate shareholders with a significant holding and 15% for others.

Interest and royalty payments receive similar treatment. Argentina’s domestic withholding tax on interest can be up to 35%, but a treaty can reduce this to around 12% or 15%. Royalties for patents, trademarks, or technical know-how face domestic rates up to 31.5%, while treaties commonly cap this at 10% or 15%, encouraging cross-border financing and technology transfer.

Capital Gains

The taxation of capital gains under Argentine treaties depends on the asset type. For gains from the sale of immovable property, like land or buildings, the taxing right is granted to the country where the property is located. Gains from selling real estate in Argentina are therefore taxable by Argentina, regardless of the seller’s residence.

For gains from selling movable property, such as company shares, the taxing right rests with the country where the seller is a resident. An exception applies to the sale of shares in a company whose assets consist mainly of immovable property. In these cases, the treaty may allow the country where the property is located to tax the gain.

Income from Employment

For employment income, salaries and wages are taxed in the country where the work is performed. An exception is the “183-day rule,” common in Argentina’s treaties, which keeps the income taxable only in the employee’s country of residence if three conditions are met.

The employee must be present in the source country for no more than 183 days in any twelve-month period. The second condition is that the employer paying the remuneration is not a resident of the source country. Finally, the remuneration must not be borne by a permanent establishment that the employer has in the source country.

Claiming Treaty Benefits

Required Documentation and Information

To claim treaty benefits in Argentina, the primary document required is a Certificate of Tax Residence, issued by the tax authority of the income recipient’s home country. This certificate proves residence status and must be valid for the fiscal period in which the income is paid. It should contain the taxpayer’s name, address, and tax identification number.

Before a foreign entity can benefit from a treaty, it must also register with the Argentine tax authority, the Administración Federal de Ingresos Públicos (AFIP). This involves obtaining a tax identification number (Clave de Identificación, or CDI), which formally establishes the foreign party within the Argentine tax system.

The Application Process

To claim treaty benefits, the foreign income recipient must submit their valid Certificate of Tax Residence to the Argentine entity making the payment, known as the withholding agent. The withholding agent is legally required to withhold tax at the domestic rate unless it receives this documentation before payment.

Upon receiving a valid certificate, the withholding agent can apply the reduced tax rate stipulated in the treaty. The agent is responsible for calculating the tax correctly and remitting it to the AFIP, while also retaining a copy of the certificate for audit purposes.

If the documentation is not provided on time, the withholding agent must apply the full domestic tax rate. The foreign recipient would then need to file for a refund from the AFIP to reclaim the excess tax withheld.

Information Exchange and Administrative Assistance

Exchange of Information

A standard component of Argentina’s DTTs is a provision for the exchange of information (EOI) between tax authorities to help enforce domestic tax laws. The information exchanged can be any data relevant to the administration of taxes covered by the treaty, and this cooperation is not limited by domestic bank secrecy laws.

There are three primary forms of this exchange. The first is exchange on request, where one country’s tax authority asks the other for specific information. The second is spontaneous exchange, which occurs when one country discovers information it believes may be of interest to its treaty partner. The third is automatic exchange, where countries agree to transmit large volumes of taxpayer information annually, such as details on financial accounts.

Mutual Agreement Procedure

The Mutual Agreement Procedure (MAP) is a dispute resolution mechanism included in tax treaties. A taxpayer can initiate the MAP process if they believe the actions of one or both countries will result in taxation that does not align with the treaty’s provisions.

The taxpayer presents their case to the competent authority of their country of residence. If the authority finds the objection justified but cannot resolve it alone, it will work to resolve the case by mutual agreement with the other country’s authority. This negotiation aims to find a consistent interpretation of the treaty and relieve the taxpayer from incorrect taxation.