Call Center Services Considered Foreign-Source Income

On October 22, 2025, in the case “DIRECTV ARGENTINA S.A.,” Chamber B of the Argentine Tax Court overturned the debt determination in which the Argentine Tax Authority had challenged the company’s failure to withhold Income Tax—Withholding on Payments to Foreign Beneficiaries—as a single and definitive tax, regarding the payments made between February and December 2016 to foreign providers rendering call-center services.

The Argentine Tax Authority argued that the income obtained by foreign providers was from an Argentine source and that tax should be withheld. It reasoned that the income was from an Argentine source because each of the providers had staff dedicated exclusively to serving Directv Argentina's customers. The payment foreign providers received was used economically in Argentina. According to the Tax Authority, the Income Tax Law disregards the geographical location where the service is provided, giving precedence to the place where that service is used to contribute to or obtain income.
 

The company appealed the debt determination arguing that:

1. It is a company whose main business activity is the provision of a direct-to-home encrypted satellite broadcasting service. In exchange, it charges a price for the service rendered.
2. Because of the nature of the broadcasting service, the company receives a high volume of customer calls every day. Given this volume, it decided to hire service providers located in Colombia, to ensure faster response times in handling users’ inquiries.
3. The employees through whom the providers rendered the service were in Colombia. The payments to the providers were made for telephone call-handling services provided abroad. The providers did not use assets located in Argentina. Their own assets (telephones, computers, and communication equipment) were located abroad. They used those assets to connect to Directv’s communication systems and infrastructure, which the appellant owned. Therefore, the providers could not have generated taxable income from those assets, since they neither used nor owned assets in Argentina.
4. Directv owned the communication equipment and thus did not require the providers to supply infrastructure.
5. The providers were nonresidents who rendered their services entirely outside Argentina, and the services did not include any form of technical advice or technical assistance.

The Tax Court analyzed the Income Tax Law and rejected the Tax Authority´s argument regarding “economic use” as a criterion for classifying income from services. It noted that the income the providers obtained could not be considered Argentine-source income under article 5 of the Income Tax Law, as the case did not involve assets situated, placed, or economically used in Argentina, nor did it involve the providers performing any acts or activities in Argentina or any events occurring within Argentine territory. The Court further emphasized that the concept of “economic use in Argentina” applies exclusively to assets, not to the rendering of services.

The Tax Court also highlighted that article 12 of the Income Tax Law (currently, article 13) constitutes an exception to article 5. Article 5 requires that the service be provided in Argentina, whereas article 12 classifies services provided abroad as Argentine source only when they involve technical advice or technical assistance of any kind.

The ruling held that the services provided by the foreign companies did not constitute technical advice, but rather the mere handling of telephone calls directed from Directv’s call center and carried out under Directv’s internal policies and procedures.

The Tax Court concluded that the providers’ activities did not fall within the definition of Argentine-source income. The services were rendered abroad and therefore qualify as foreign-source income, not subject to Argentine taxation. Accordingly, the debt determination was revoked.