New Regulations on Residency for Tax Purposes’ Regime

On May 8, 2018, General Resolutions No. 4236 and 4237 issued by the Argentine Tax Authority ("AFIP", after its Spanish acronym) were published in the Official Gazette, through which certain issues related to double tax residence and loss of tax residence are clarified, and the procedure to request the tax register termination -in cases of tax residence loss- is regulated, respectively.

General Resolution No 4236

General Resolution 4236 regulates the following issues: (i) the accreditation of the loss of resident status for tax purposes and (ii) the guidelines to be considered in cases of double fiscal residence. Furthermore, it revokes General Resolution (AFIP) No. 1621, which regulated this second point.

(i) Accreditation of the loss of tax residence

The loss of resident status for tax purposes, under Section 120 of the Argentine Income Tax Law (Law 20,628 and its amendments, hereinafter, the "ITL") must be evidenced by individuals, through any of the following documents:

• Residence certificate issued by the competent authority of the foreign State.
• Passport or other reliable document that certifies the departure and permanence outside Argentina for the legal period provided.1

Said documentation, translated and legalized -if applicable- will be attached at the time of requesting the cancellation of the registration in the Income Tax. Until such cancellation is obtained, the person must continue fulfilling with both formal and material tax obligations.

(ii) Guidelines to be considered in cases of double fiscal residence

General Resolution 4236 also clarifies certain issues related to the cases of double tax residence, in the following terms:

• If there is a Convention for the Avoidance of Double Taxation ("CDT") signed between Argentina and the other State that considers that person resident in its State, the rules of this Convention will be applicable.
• If there is no CDT signed between the countries involved, section 125 of the ITL, which provides certain guidelines that must be considered to determine whether a person is resident or not in Argentina for tax purposes, will be applicable. These guidelines are: the existence of a permanent housing or center of vital interests in Argentina, longer permanence in Argentina than abroad, and, finally, Argentine nationality.

The Resolution under analysis also defines the concept of "permanent housing" as the accommodation available to a natural person on a continuous basis, being irrelevant the legal title that such individual has on it (may be the owner, tenant, borrower, or holder, among others), and even when that accommodation is part of a property intended for the development of commercial, productive and/or any other nature activities. However, those accommodations used in short-term stays for pleasure, business, studies, etc., or for recreation, holidays or similar purposes, are excluded.

It also defines the concept "center of vital interests" as the place where the human person maintains its closest personal and economic relations, jointly considered. If these relationships were in different states, preeminence will be granted to personal relationships.

Finally, this Resolution establishes that the individual must prove, with the corresponding supporting documentation, the possession of a permanent home abroad. Nevertheless, the AFIP may use other evidence to determine the existence of that housing in Argentina.

General Resolution No 4237

General Resolution 4237 modifies General Resolution (AFIP) No. 2322, which regulates the procedures and requirements to request the termination of tax registration. In particular, by means of this new Resolution, the requirements and procedure to be fulfilled by an individual to request the termination of their registration in Income Tax -for the loss of tax residence in Argentina- and/or the termination of their registration in Personal Assets Tax -for not having domicile in Argentina- are established.

The entire procedure is carried out online, including the submission of documentation, on the Argentine Tax Authority´s website (www.afip.gob.ar), through the "Registry System" (“Sistema Registral”) service.

The IT systems required to submit the documentation in .pdf format are available as from May 2, 2018. In accordance with the Resolution under analysis, if the individual loses the status of fiscal resident prior to that date, documentation that proves that circumstance must be submitted to the corresponding AFIP Agency or, if the person is abroad, to the Argentine Consulate of the country in which said person is located.