Income tax on the indirect assignment of assets located in Argentina: streamlining the definition of Argentine source income for non-residents

by 4 Mar 2018Companies, Corporate, Doing business in Argentina, Individuals

As we have already outlined[1], by Law Number 27,430, Argentina has enacted significant tax reforms, being one of them the streamlining of the definition of Argentine source incomes to include those incomes proceeding from the indirect assignment of assets located in Argentina under certain conditions.

Pursuant to the article without number inserted after the Article Number 13 of the Income Tax Law Number 20,628, as amended by Law Number 27,430, it will be deemed as Argentine source incomes those got by non-residents resulting from assignment of shares, quotas, other participations, convertible securities in shares or social rights, or any other right representative of the capital or assets of a legal entity, fund, trust or equivalent figure, permanent establishment, property of affectation or any other legal entity, that is in corporated, domiciled or located abroad, when the following conditions are met:

a) The market value of the shares, participations, quotas, securities or rights that the assignor has in the legal entity incorporated, domiciled or located abroad, at the time of sale or in any of the 12 months prior to the sale, derives at least in a 30% from the value of one or more of the following assets that said legal entity owns – either directly or through one or more other entities -:

(i) Shares, rights, quotas or other participation in the ownership, control or profits of a company, fund, trust or another legal entity incorporated in Argentina;

(ii) Permanent establishments in Argentina belonging to an individual or legal entity not resident in Argentina; or

(iii) Other assets of any nature located in Argentina or any right over them.

The foregoing assets located in the country must be appraised according to their current local market value.

b) The shares, participations, quotas, securities or rights assigned – either by the assignor alone or jointly with legal entities over which the assignor owns control or has a link through the spouse, the cohabiting partner or other taxpayers linked by ascending, descending or collateral kinship ties, by consanguinity or affinity, up to the third degree inclusive – represent, at the time of sale or in any of the 12 months prior to the sale, at least 10% of the equity of the foreign legal entity that directly or indirectly owns the assets mentioned in a).

The income tax rate will be 15% to be applied on the proportional value that corresponds to the assets located in Argentina. The income tax on the indirect assignment of assets located in Argentina will not be levied when it is reliably demonstrated that the transactions are performed within the same economic group, and the requirements that the future regulation determines for that purpose are met. The income tax will apply on the assignment of those participations acquired on 30 December 2017 and onwards (Law Number 27,430, Article 86, Sub-Article b).

The collection method of this income tax on assets located in Argentina, and other definitions the mentioned legal provision requires, have not been regulated yet.

This new definition of an Argentine source for income tax purposes should be therefore carefully evaluated when devising business structures over assets located in Argentina[2].

For additional information on these or any other issues related to doing business in Argentina, please, sign up for our Legal Blog or contact us at any time.

Mario Eduardo Castro Sammartino

[1] See the relevant article on our Legal Blog .

[2] On the different legal vehicles available to do business in Argentina, see the following post on our Legal Blog:; and

For additional information on these or any other issues related to doing business in Argentina, please, sign up for our Legal Blog or contact us at any time. Our publications exclusively express the author´s opinion and do not purport to be legal counsel on any case. Should you need it, you must consult with your trusted lawyer.​


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