Regulation Implements Recent Amendments Made to Personal Assets Tax Law

In our publication of December 23, 2019 (https://www.marval.com/publicacion/nuevas-modificaciones-a-la-ley-del-impuesto-sobre-los-bienes-personales-13490&lang=en), we described the main amendments made to the Personal Assets Tax (“PAT”), established by Law No. 27.541 (the “Law”).

The Law amended various aspects of the PAT, among them: (i) the criteria for linking taxpayers with the PAT is now the “residence”, instead of the domicile; and (ii) the Argentine Executive has been delegated with the faculty of establishing higher rates (up to a 100% of the maximum amount applied to local assets) applicable to assets located abroad. Such rate may be decreased when financial assets located abroad are sold and the sums deriving from the sale are brought to Argentina.

By means of Decree No. 99/2019 (the “Decree”), as amended by Decree No. 116/2020, the Argentine Executive implemented the delegated faculty and established increased rates for assets located abroad, as follows:

Nonetheless, taxpayers who repatriated foreign funds, or gains derived from the disposal of financial assets located abroad, until march, 31, each year, representing at least 5% of the whole value of the assets located abroad, are exempted from the increased rates, provided that:

1. The funds are placed in a personal savings account in an Argentine financial entity until December, 31, each year, or;
2. The funds are exchanged in the Foreign Exchange Market (the “MULC”, after its acronym in Spanish), via the financial entity that received the transfer of such funds from abroad, or;
3. The funds are used to acquire participation certificates and/or debt titles of productive investment trusts established by the Investment and Foreign Commerce Bank (“Banco de Inversión y Comercio Exterior”), as long as the investment is maintained under the taxpayer’s ownership until December 31, each year.
4.  The funds are used to subscribe or acquire quota shares of mutual funds (existing or to be establishe, as long as the investment is maintained until December 31, each year.

According to Communique “A” 6893 of the Argentine Central Bank (the “BCRA”, after its acronym in Spanish), the repatriated funds must be credited to special savings accounts activated by financial entities to such end, named “Caja de ahorros repatriación de fondos – Bienes Personales Ley 27.541” (Savings account for repatriated funds – Personal Assets Law No. 27.541). Such funds must be transferred from a foreign account directly owned by taxpayer, or under the ownership of other entities in which the taxpayer is a shareholder.

Furthermore, the Decree establishes PAT advance payments for the 2019 and 2020 fiscal years, for all those taxpayers who possessed assets located abroad in 2018 and 2019. Such payments are as follows:

The advance payments must be made up to the following dates:

1. 2019 fiscal year: between March 4, 2020 and April 1, 2020.
2. 2020 fiscal year: between February 1, 2021 and April 5, 2021.

Those taxpayers who repatriated their assets or declared not having any assets located abroad on December 31, 2019 or December 31, 2020, are exempted from the advance payments.

However, taxpayers mentioned above must request the exclusion through the “Cuentas Tributarias” (Tax Accounts) system via the Argentine Tax Authority’s website with a Level 3 “Tax Password”, by pressing on the “Eximición pago a cuenta” (Advance payments exemption) button. The request may be filed on the same dates on which the advance payments must be made.