desktop

US Expat Taxes Explained: Filing Taxes as an American Living in Argentina

US Expat Taxes in Argentina

If you are a citizen or permanent resident of the United States, then you are obligated to file US expat taxes with the federal government each year regardless of the country in which you reside.

In addition to the regular income tax return, you could also be required to file an informational return on your assets held in foreign bank accounts with Foreign Bank and Other Account Reporting (FBAR) Form 114, in addition to Form 8938 Statement of Specified Foreign Financial Assets.

While the US is one of the few governments that tax the international income of their citizens and permanent residents who reside overseas, it does have special provisions to help protect them from double taxation including:

  • The foreign earned income exclusion allows you to decrease your taxable income on US expat taxes by the first $108,700 for 2021 ($107,600 for 2020) earned as a result of your labors while a resident of a foreign country.
  • A foreign tax credit that could allow lower your tax bill for US expat taxes by certain amounts paid to a foreign government, and
  • A Foreign Housing Exclusion that allows an additional exclusion from income for certain amounts paid for household expenses that occur as a consequence of living abroad.

With proper planning and quality tax preparation, you should be able to take advantage of these and other strategies to minimize or even eliminate your tax bill. Please do note that even if you do not believe that you owe any US income taxes you will, most likely, still be required to file a return.

Argentina Income Tax Rates

Federal tax rates in Argentina are as follows:

Earnings in Pesos

Applicable Rate for Income

0-10,000

9%

10,001 – 20,000

900 + 14%

20,001 – 30,000

2,300 + 19%

30,001 – 60,000

4,200 + 23%

60,001 – 90,000

11,100 + 27%

90,001 – 120,000

19,200 + 31%

More than 120,000

28,500 + 35%

Note that the plus indicates for the additional pesos of income, i.e. if you earn Argentinean peso (ARS) 20,000, you are taxed at 10,000 * 9% plus 10,000 * 14%.

In Argentina, capital gains that result from the sale of non-income or investment assets (such as your personal residence or vehicle) are not subject to capital gains taxes.

Interest, dividend, rental and royalty income are generally lumped with earned income and subject to the ordinary income rates above.

Argentina Tax Due Date

Here is some good news. If your only source of income is as an employee, then you do not have to file income tax returns! Before you get too happy, your Argentinean employer is expected to deduct the taxes from your wages and remit them to the government based upon the appropriate rate. For all others, individual income tax returns are due April 15. This is easy to remember because it is the first due date for US expat taxes!

The tax regime operates on a calendar year. Again, this is the same as the tax year for your US expat taxes.

Social Security in Argentina

Employees in Argentina pay a 17% tax on their wages for social security. Employers pony up another 23% to 25% based upon the size of the company. Currently, for the employee’s portion, the tax is capped to the first ARS (Argentinean peso) 10,119 of monthly. The cap amount is subject to change biannually. All resident Argentinean nationals and expatriates with more than two years residency in the country are subject to the tax. This is an area where many people see dual taxation on US expat taxes.

Is Foreign Income Taxed Within Argentina?

As in the United States, residents of Argentina are taxed on their global income. Non-residents are only taxed on income earned in Argentina. To some extent, double taxation is alleviated when there is income from a foreign source via a credit for foreign taxes paid. The credit is up to the amount that your Argentinean tax increased due to the foreign income that you declared. This is the same way the Foreign Tax Credit works on your US expat taxes.

Who is a Resident for Tax Purposes?

In addition to all Argentinean nationals (who are considered residents unless they live abroad), foreign nationals who have obtained legal permanent residency or who have resided in the country for 12 consecutive months are considered residents. Once you are a resident, you continue to be so until you lose that status by either gaining permanent residency in another country or by living in another country for a period of 12 months. Upon losing your residency, a final tax return is required to be filed.

US – Argentina Tax Treaty

The IRS has many tax treaties to eliminate dual taxation on US expat taxes. Argentina, however, is not one of the countries that has a tax treaty with the United States.

For the Self-Employed

Incorporated businesses in Argentina are taxed at a flat rate of 35%. For companies domiciled in Argentina, this is assessed on their global income, not just the income that was generated in Argentina. In addition, a certain presumed income is established for goods exported from Argentina as well for certain international services with their origin in Argentina.

Note that the IVA tax (see below) is a true value-added tax and not merely a sales tax. As such, taxes must be paid and collected on most transactions of goods and services. A credit is given for the tax previously paid and the difference is remitted to the government.

Businesses and the self-employed are required to pre-pay their annual income tax by paying estimates of their annual income monthly.

Note also the obligation to file US expat taxes as a self-employed individual. You will be required to file US expat taxes if you earned more than $400.

IVA (Value Added Tax) and Other Taxes in Argentina

IVA is a traditional value-added tax (VAT) that applies to all stages of the production and selling on a good or service, not just to the final consumer. For most goods and services, it is assessed at 21% of the sale. In addition, real estate leases, work performed on real property, and the importation of personal property are all subject to IVA. IVA is not levied upon exports. Finally, tourists can receive a refund of the IVA that they have paid for certain purchases of personal property and services.

A real estate tax is levied on the assets of foreigners not resident in Argentina. The tax is 1.25% of the value of assets of at least ARS 20,460 in value.

For residents of Argentina, there is a net worth tax that is levied on worldwide assets at rates that vary from 0.5% to 1.5%. The overseas assets of foreign residents with less than five years in the country are exempt from the tax, although their Argentinean assets are not exempted.

Financial transactions are subject to a 0.6% tax on each debit and credit. In essence, this means the transaction is actually taxed at 1.2%. There are some exceptions from this and some transactions that are taxed at a different rate.

Categories

Member and Featured Faculty of

Member and Featured Faculty of