Tax Basics for US Expats in Argentina

In terms of geographic size, Argentina is one of the largest countries in the world. Its capital, Buenos Aires is considered the Paris of Latin America. Patagonia to the south is a land of wonders. Argentina is also the birth place of tango. It’s no wonder there are so many expats living in Argentina.

If you are planning to become a U.S. expat in Argentina, or have been one for a while, it’s important to know the tax laws of the country and the potential impact on your U.S. tax return. Expat taxes can get complicated. Fortunately, we have outlined the key points below.

Photo by: McKay Savage

Taxation in Argentina

Let’s start by understanding who is required to pay taxes in Argentina. Residents are subject to taxes on worldwide income. Foreigners who have been in the country for 12 consecutive months are considered residents for tax purposes. Non-residents are only accountable for Argentina-source income.

Income tax rates in Argentina are progressive:

• Employment Income: Between 9% and 35%
• Taxation on Interests: Between 9% to 35%
• Taxation on Dividends: Generally none if from an Argentine company
• Taxation on Capital Gains: Generally none

Note that Argentina and the U.S. do not have a social security tax agreement in-place. This means that certain U.S. expats will be required to pay into both social security programs.

How Living in Argentina Impacts US Taxes

As a U.S. citizen or permanent resident (Greencard), you are required to file U.S. taxes even if you live in Argentina. Plus, if you have assets in foreign financial accounts (e.g., foreign banks), there are informational reports you may be required to file. For example, U.S. Expats living in  Argentina with $10,000 or more in foreign banks must file the FBAR (now known as FinCen 114).

Fortunately, the U.S. government provides various forms of tax relief that can lower or eliminate U.S. tax obligations

• The Foreign Earned Income Exclusion – It allows you to exclude a certain amount of income earned outside the U.S.
• The Foreign Housing Exclusion/Deduction – This one relates to additional income that can be excluded for household-related expenses tied to living abroad.
• he Foreign Tax Credit – It allows you to offset foreign taxes paid against U.S. tax obligations.

In most cases, the foreign earned income exclusion is preferable to the foreign tax credit if you live in a country with a lower tax rate than the U.S. (assuming your income is not above the applicable threshold). However, it’s a good idea to speak with an expat tax specialist to discuss the best application of these tax reliefs.

FATCA and Argentina

The U.S. government is increasingly interested in knowing about the foreign assets held by its citizens and residents. As a result, it has been busy inking deals with other countries whereby foreign financial institutions (FFIs) will be required to:

• Identify accounts of U.S. persons;
• Report certain information to the IRS regarding those accounts;
• Withhold a 30% tax on certain payments to non-participating FFIs and account holders unwilling to provide the required information

As of the publication of this article, roughly 80 countries have either signed intergovernmental agreements with the United States or are in discussions. It is important to know that Argentina is in active discussions with the U.S. to establish a FATCA agreement.

If you have any questions regarding your U.S. expat taxes, contact us today. We are here to help.