Decree No. 99/2019, published in the Official Gazette last Saturday, December 28, 2019, introduced implementing regulations to Law No. 27,541 (please refer to the following link for comments on the referred law). Therefore, the principal modifications introduced to the Personal Assets Tax (PAT) are the following:

1.- Applicable Rates

Law No. 27,541 has modified the rates to determine the PAT corresponding to the 2019 (and following) tax periods, which now range within a progressive scale between 0.50% and 1.25%, applicable over the total value of the levied assets located in Argentina.

Through Decree No. 99/2019, the Executive Power has exercised the powers delegated by Law No. 27,541 so as to establish, until December 31, 2020, differential rates to levy assets located abroad, which may exceed in up to 100% those that apply over assets located in Argentina. In such sense, the Executive Power established a progressive scale ranging between 0.70% and 2.25% over the total value of the assets located abroad. A sole tax rate applies over the total value of such assets, therefore dismissing the system -that currently applies only to assets located in Argentina- under which different portions of the taxpayer’s levied estate is taxed under increased rates as its value arises.

It is worth noting that the non-taxable minimum threshold continues in the figure of two million Argentine pesos (AR$ 2,000,000), and that such amount should be first deducted against the value of the assets located in Argentina. Under Decree No. 99/2019, the non-taxable minimum threshold amount would be irrelevant for purposes of establishing the applicable rate within those included in the differential rate scale corresponding to assets located abroad. Indeed, the non-taxable minimum threshold would only be relevant for purposes of establishing the taxable base of the differential rate.

Furthermore, the rate applicable to the following assets has been risen from 0.25% to 0.50%:

  • Shares or participations in the equity of Argentine companies, held by individuals or undivided estates domiciled in Argentina or abroad, and/or by foreign companies or by any other foreign entity (the applicable tax should be assessed and paid by the Argentine company whose equity is levied).
  • Levied assets belonging to foreign aliens that are held, custodied, guarded, administrated, possessed, used, enjoyed, disposed of, or co-owned by Argentine individuals, entities or undivided estates.

2.- Benefits on Fund Repatriation

Law No. 27,541 also empowered the Executive Branch, until December 31, 2020, to reduce the differential rates in cases of repatriation of funds arising from the sale of financial assets located abroad.

In such context, the Decree has established that those who, as of March 31 of every year, repatriate financial assets representing at least 5% of the total value of their assets located abroad, will be exempted from the application of the differential rate.

For the purposes foreseen in the preceding paragraph, the following assets will be deemed as financial assets located abroad: The holding of foreign currency deposited in banking and/or financial and/or similar entities located abroad; company participations and/or equivalents (private securities, shares, quotas and other participations) in any type of entities, corporations or companies, with or without legal status, incorporated, domiciled, based or located abroad, including sole proprietorships (“empresas unipersonales”); rights inherent to the status of beneficiary, fideicommissary (or similar) of any kind of trusts (or similar structures) established abroad, or in foreign private interest foundations or in any other type of similar affected-estate (“patrimonio de afectación”) located, based, domiciled or established abroad; any kind of financial instrument or security, such as bonds, private securities, representative securities (“valores representativos”) and share depositary receipts, quotas in common investment funds and other similar structures, independently from their denomination; credits and any type of foreign right with economic value and any other type of asset that may be foreseen in the implementing regulations.

The benefit will be maintained to the extent the repatriated funds stay deposited under the owner’s name in entities comprised within Law No. 21,526, until December 31 (inclusive), of the calendar year in which the repatriation took place.

The Decree establishes that where reimbursement applies, it will be made up to an amount equivalent to the one that exceeds the increase in the obligation that would have to be paid in case the foreign assets were levied under the progressive scale applicable to the assets located in Argentina.

3.- Residence Criteria

Law No. 27,541 has established, with effects as of 2019 tax period, that the levied subject will be ruled by the residence criteria under the terms and conditions foreseen in sections 119 (and following) of the income tax law (text 2019), hence disregarding the previously applicable domicile criteria. In such context, Decree No. 99/2019 establishes that any reference made by legal, implementing or complementary regulations to the “domicile” connecting nexus should be understood as referred to “residence”. However, it is worth pointing out that unlike Law No. 27,541, and in what could imply a regulatory excess, Decree No. 99/2019 does not refer to sections 119 (and following) of the income tax law (text 2019) but to sections 116 (and following) of the income tax law (text 2019).

4.- Matters of Uncertain Interpretation

Due to the defective wording of the regulations commented herein, or to the omission of their treatment, there is uncertainty as to the actual scope of the following matters, which we expect be clarified by the implementing regulations to be issued by the National Tax Authority:

Validity of the benefit on funds repatriation: There is no certainty as to whether the funds repatriation benefit applies to the 2019 tax period, considering that the repatriation period elapses on March 31 and there is an obligation to maintain the repatriated funds deposited in an Argentine financial entity up to December 31.

Under a reasonable interpretation that considers the spirit of the tax reform, the differential rates will not apply to the 2019 tax period to the extent the funds are repatriated before March 31, 2020 -i.e., before the filing date of the 2019 affidavit- and held in Argentine financial entities up to December 31, 2020. The benefit would fall upon breach of this last requirement, and the related consequences would hence apply (liability on tax differences, interests and fines).

Scope of the reimbursement benefit: Neither Law No. 27,541 nor Decree No. 99/2019 clarify what is reimbursed. In principle, and under the current regulatory status of the matter, we understand that this benefit would apply if a taxpayer files the affidavit and pays the differential rate before its due date, and further repatriates the relevant funds before March 31. In such case, the amounts paid under the differential rate would be reimbursed, as well as the difference of the advanced payments corresponding to the following tax period.


For additional information on the matters commented herein, please contact Gastón A. Miani, Ana Do Nizza, or Juan Pablo Baumann Aubone.