Non Residents Selling Property in Argentina
Non resident property owners cannot sell property in Argentina without a ‘Certificado de retenciones para residentes del exterior’.
A Certificado de retenciones para residentes del exterior is issued by Administración Federal de Ingresos Públicos (AFIP) and is always necessary for a non resident to sell their property in Argentina.
The aim of the certificate is to ensure that all taxes levied by the state are paid before an investor sells their assets in Argentina.
Taxes most likely payable by non resident property owners are:
- Bienes Personales (Asset Taxes about 1.25% of the purchase price payable each year or in installments)
- Ganancias (Income tax payable on rents received – 21% of rent received or deemed to have been received)
In earlier articles, we explained property ownership and taxation. We have advised that you appoint a fiscal representative and pay taxes on time, that’s our best advice.
The Argentine tax authority may not chase you to appoint a fiscal representative or pay your taxes on time, but they will fine you thousands of pesos and charge you compound interest on money owed when selling property in Argentina.
The cost of not paying taxes in Argentina
We recently paid income tax, asset tax, fines and interest for a client who owned a property worth just $110,000 for just five years – her tax bill was around $79,000 pesos, nearly half of this amount were fines and interest.
Here’s the problem. You can refuse to pay tax, fines and interest if you think the AFIP assessment unfair, but whilst you ‘argue the toss’, you cannot sell your property and the buyer disappears.
To simplify my advice: Pay, but reserve your rights. Particularly, if you intend to reinvest in property in Argentina and remember that you can avoid transfer tax if you intend to reinvest your money.
The requirement for ‘certification’ is quite separate to COTI, but many people and indeed advisors mix the idea of COTI with paying taxes – so even if your property falls below the COTI threshold, non-residents must still have a certificate issued by the AFIP to sell property in Argentina.
If taxes are due and unpaid in Argentina, non-residents cannot sell their property.
The Certificado de retenciones para residentes del exterior must be given to the Escribano handling the sale. The Escribano cannot complete a sale without this certificate. That’s why the transfer of property from foreign investors sometimes come to a complete standstill – no certificate, no transfer of a property – it’s that simple and it’s this process that most property investors in Argentina fail to understand.
Finding a fiscal representative in Argentina
Even if you are in Argentina you will no doubt need to find a resident to act as your fiscal representative. One AFIP office told us recently this was now the law. Another told us non-residents can deal direct and pay via their CDI.
We think foreign investors do better in Argentina with the right advice
Your fiscal representative will need to be a ‘resident taxpayer’ with a CUIT or a CUIL number to assume full responsibility for your tax affairs in Argentina. That means, until your taxes are paid in full, your fiscal representative is liable for money owed – this is a significant responsibility.
Any self-respecting agent or consultant handling your tax affairs will require complete control over the property sale and your money to meet these expenses, or a significant indemnity.
In addition, dealing with estate agents, buyer’s advisors and the AFIP can be very slow – the representative will no doubt ‘clock up’ at least fifty-hours and probably more like eighty-hours acting for you.
When your representative is paid by a buyer they will either receive cash or better still a bank transfer – it’s safer.
Make sure that your representative has a bank account and is prepared to receive and send the proceeds of sale via their bank account – expect fees of around three percent for this operation. If your money is transferred in the ‘grey’ market expect costs of 5-7% and expect that to go higher if dollar restrictions are not eased for property transactions.
In addition, choose a representative that’s operating in ‘white’ and paying their own taxes – this is very important.
When thinking about instructing someone to help you, remember that being your representative is a big responsibility and time consuming, so if someone is offering their services on the cheap, be careful, they may neither have current experience nor understand how tough their role might be.
Property owners must sign a declaration for the AFIP and register at the address of their representative for tax purposes.
Property owners must to also swear a power of attorney for their representative with a public notary.
If you are not in Argentina, all signatures must be verified by apostille subject to the Haig Convention.
Choose a fiscal representative that’s not a friend and knows what they are doing or you may lose a sale and your costs will increase – selling a property in Argentina is not cheap.
You will also need an accountant, as much of the work is completed online and one needs to be familiar with the AFIP software to complete forms and ensure the AFIP has all the documentation necessary to make a tax assessment.
You are given deadlines by the AFIP to make submissions and pay your taxes when selling property, fail and the process starts all over again.
You cannot apply for the certificate until you have a formal offer from a buyer.
Once you have a formal offer, your accountant must first go online and complete a form, and then attend the AFIP’s local office to supply supporting documentation.
There is no consistency between one AFIP branch/office to the next and sometimes one meeting to the next, it’s really that bad and the AFIP’s staff are prone to giving misinformation and before you think, ‘well there must be published rules’, information online and even the fact sheets handed out in branches/offices are either incomplete or out-of-date.
Your impression might be that the AFIP is currently making it difficult for sellers in the hope they lose their buyers.
At this moment in time, the AFIP is much more difficult than in the past, unfairly so with foreigners in our opinion, but we do not believe their aim is to stop dollar outflows. Argentina needs your tax money more urgently than you might think – in addition, with both import and currency restrictions being managed by the AFIP, the system is ‘run ragged’.
We often find the staff at the AFIP poorly trained and the systems employed rather archaic. There must be better information and uniformity for foreigners investing in Argentina, ‘the goal posts must stop moving’ and the correct and current requirements must be published with more care. That’s just not the case – hence it’s most unfair.
In general you will need to provide the following:
- Contract of sale, this need not be full boleto but must be signed before an escribano.
- Power of Attorney for representative
- Proof of sellers residency in another country
- Original escritura (deeds) to the property
- Copy of all ABL paid bills paid
- Copy of all electricity, telephone, water and gas bills
- Copy of all rental contracts which may exist on the property
- Proof of all tax payments made on the property
- Proof of address in Argentina of representative
- Copy of Identification of seller and representative
All of these should be originals and take photocopies for the AFIP to retain, also retain one or two copies, they often ‘misplace’ stuff.
The AFIP will check electricity bills to determine when the apartment was occupied, and you may need to prove that you were the person using the apartment. If you cannot, it might be deemed that you were renting out the property and a tax will be assessed – even if that’s not true. Again, you pay and claim. You will need to show/photocopy of your passport as proof of entry and departure.
Even if you have a DNI, the AFIP will still ask to see the passports of foreign residents in Argentina, remember your DNI is slightly different and your passport WILL be requested.
The AFIP state that they will process your request within 20 days
It is unlikely that the AFIP will be satisfied with the documentation that you gave them the first time around, so after about two weeks they may write for supplementary information.
When the AFIP request further and better information they give you 10 days to respond and if you fail in your task, they will close your file and you will need to start the process all over again. They often write to the wrong people or letters fail to arrive. Try to visit or call the AFIP office weekly when selling property so that you can ask what’s current on your on file.
It is likely the AFIP will ask for something you have already provided, but they won’t explain why they want ‘that something’ a second time, it often becomes farcical.
It is worth pointing out that front-desk AFIP employees seem like box tickers; bureaucrats with no authority to make actual decisions and no latitude to use common sense. If they can’t tick a box they just shrug their shoulders and pass the problem back to the seller. Do not get annoyed, take a chill pill, smile and work with them.
I suggest that you meet with a suitably qualified advisor well before you are due to sell a property in Argentina, to ensure that as far as possible all taxes have been correctly assessed and paid.
If you instruct an accountant, please ensure relevant experience working with non resident clients, as the tax arrangements for foreigners are more complicated and involve them paying a higher rate of tax.
If the accountant does not have relevant experience, expect a learning curve and lots of wasted time. Often we get calls from accountants who are acting for clients and we have to go along and help them.
It is likely that you won’t have paid the correct taxes and in that case there will be fines and interest. Interest is charged at a compound rate of 3% each month.
Dealing with the AFIP can be a frustrating process. You may be employing an accountant who will need to attend AFIP offices several times or more pushing up fees. We offer fiscal representative, guide and accountant for a one off fee. The fee depends on the number of years you have not paid tax and what information you cannot furnish. All cases are different – sorry!
Eventually, usually after a lot of time and effort, you will be given your certificate – it will happen if you follow our instructions carefully and patiently.
Got your Certificado de retenciones para residentes del exterior?
You can now sell your property in Argentina!
The certificate is valid for 60 days from issue, if you lose a buyer work fast to find another.
Non Residents Selling Property in Argentina