When Do Residents Lose Tax Residency?

The Income Tax Law (ITL) establishes in its Chapter I of Title VIII (articles 116 to 123) the rules regarding tax residency. Pursuant to article 117, individuals who have the status of residents in Argentina will lose if they:

1.    Obtain permanent residence in a foreign state, which occurs when the person acquires the status of permanent resident in a foreign state according to the provisions that rule in the foreign state regarding migration matters.
2.    Remain abroad for 12 months if, not having said status, a person remains continuously abroad for 12 months. Pursuant to article 117 of the ITL and Article 283 of Decree 862/2019, which regulates the ITL, temporary presences in Argentina, which in a continuous or alternated manner do not exceed 90 days during each 12-month period, do not interrupt the continuous stay abroad. The duration of the temporary presence in Argentina is established by computing the days elapsed from the day immediately following the day on which the entry into the country took place up to and including the day on which the departure from the country takes place.

The last paragraph of article 117 ITL states that “the loss of resident status will take effect as of the first day of the month immediately following the month in which permanent residence in a foreign state was acquired or the period that determines the loss of resident status in the country was completed, as the case may be.”

Article 119 of the ITL establishes the way to prove the loss of the Argentine resident status, depending on the case:

1.    When the cause of the loss occurs before leaving Argentina: the accreditation must be made before the Tax Authority.
2.    When the cause of the loss occurs after leaving Argentina: the accreditation must be made before the Argentine consulate of the country where the persons are at the time of such loss, the accreditation of which must be communicated by the consulate to the Tax Authority.

On April 8, 2025, in the case “Yege, Juan Martin Amado c/ EN-AFIP-DGI-RESOL 13/22 s/proceso de conocimiento,” Chamber III of the Court of Appeals in Federal Administrative Matters in the City of Buenos Aires overturned the first instance ruling. As a result of a request for a retroactive tax cancellation, the Court analyzed when does the loss of tax residency occurs.

The taxpayer had filed an appeal under the scope of article 74 of Decree 1379/79 against the Argentine Tax Authority’s (ARCA) act that rejected the request for retroactive cancellation of the Personal Assets Tax and Income Tax as of January 11, 2019, arguing that it was inadmissible under the provisions of articles 3 and 4 of General Resolution 2322/2007. After the confirmation of the act (Resolution 13/2022), the taxpayer filed a case against ARCA.

General Resolution 2322/2007 regulates the requirements that must be observed to request the cancellation of the registration of taxes. Article 3 establishes that the request for cancellation of registration must be filed before the ARCA up to the last business day of the month after the month in which the declared activity is definitively ceased and/or the extinction of the causes generating the obligation to register occurs. And article 4 provides that, once the term has expired, "the obligation to comply with all formal obligations with respect to tax obligations and social security resources subsists until the last day of the month in which the cancellation of the registration is effectively requested, as well as with respect to the overdue payments on account. The legal consequences deriving from the omission to request the respective cancellation of registration shall be attributed to the taxpayer and/or responsible party."

The taxpayer had been residing in Paraguay since January 11, 2019. On March 23, 2020, he requested, by means of a digital filing in ARCA’s webpage, the cancellation of the of registration in the Income Tax since his situation fell within the scope provided for in the first part of the current article 117 ITL (acquiring the status of resident in Paraguay following the provisions of Paraguay’s migration law). He also requested the cancellation of the registration in the Personal Assets Tax. Among other documentation, the taxpayer attached the permanent admission card issued by the General Migration Directorate of Paraguay on January 14, 2020, and a copy of the Paraguayan Identity Card. On March 26, 2020, he also filed a request for his tax deregistration to be retroactive to January 11, 2019.

On March 26, 2020, the Tax Authority processed the request for deregistration of the taxes and was registered as of February 2020. But the request for retroactive deregistration as of January 11, 2019 was rejected. 

The Tax Authority argued that: 

1.    the 12-month term of stay abroad was completed on January 11, 2020, 
2.    the taxpayer continued filing tax returns for such taxes, without clarifying he was living abroad, 
3.    the taxpayer failed to timely request the cancellation of the registration in the mentioned taxes.
Chamber 5 of the Federal Court on Administrative Matters, in its ruling of March 11, 2024, stated that article 117 ITL refers only to residence, without considering the potential tax obligations the non-resident may have, and that the law establishes the requirements for the change of residence to be considered by the Tax Authority. Consequently, the Chamber rejected the claim the taxpayer filed. The taxpayer filed an appeal before the Court of Appeals in Federal Administrative Matters of the City of Buenos Aires.

The Chamber made a thorough analysis of tax residency and considered it reasonable that if an individual loses the status of resident, the connection and the power of Argentina to tax its foreign income ceases. The ruling also pointed out that the loss of residence operates as a matter of law and its effects start the moment indicated in article 117, last paragraph of the ITL. In other words, from the first day of the immediately subsequent month.

The Court held that “there is no contradiction between the moment in which, according to the law, the effects of the loss of residence status begin to take place (article 117 in fine) and the time in which this situation is reported or accredited since, although consequences have been foreseen for the case in which this is done after the established term, in no way these modify the taxpayer's relationship with the Government in relation to the taxes under discussion.” Therefore, the Court considered that the loss of resident status is not conditioned to the obligation of information or proof before the Tax Authority, since such requirements exist to enable the Tax Authority’s control, but not to constitute the legal situation.

The Court overturned the first instance ruling and annulled the Resolution of the Tax Authority. Court fees were imposed on both parties due to the novel nature of the matter.

This ruling is, however, not final: ARCA filed a Federal Extraordinary Appeal before the Argentine Supreme Court of Justice, which has not been resolved.