In depth

The facts related to the situation of the Taxpayer were as follows:

1. The Taxpayer was an Argentine and Italian national (with double nationality).
2. On 27 June 2003, he obtained permanent residency for immigration purposes in Canada, where he worked as an expatriate until 24 September 2007.
3. On 24 September 2007, he moved to Cameroon, Africa to continue working as an expatriate for the same multinational company until 14 November 2009.
4. On 15 November 2009, he returned to Argentina remained there until 14 June 2010, when he left to go to London to start working as an expatriate for another multinational company.

The key question was whether during 2010, the Taxpayer was an Argentine tax resident for income tax purposes.

The FTC arrived at the conclusion that, according to the Argentine income tax law, the Taxpayer lost his Argentine tax residency in June 2003, when he obtained permanent residency in Canada for immigration purposes.

When he returned to Argentina in November 2009, he again became an Argentine tax resident for income tax purposes because he owned various real estate in Argentina and his "center of vital interests" was also in Argentina.

Income tax rules for tax residency purposes

The decision of the FTC was based on the following:

1. Argentine residence principles

Argentine tax residents are subject to income tax on their global source income.

Non-Argentine tax residents are subject to income tax on their local source income.

Non-Argentine tax residents are individuals without a tax residence in Argentina.

The following taxpayers, among others, are considered Argentine tax residents and are thus subject to income tax on their global source income:

1. Argentine nationals.
2. Foreign nationals who reside in Argentina under a permanent residence permit.
3. Foreign nationals that have been present in Argentina for a period of 12 months under temporary permits (temporary absences that do not exceed 90 days, continuous or not, do not interrupt the 12-month term).

Foreign nationals who live in Argentina for labor purposes during a period not exceeding five years (including family members) will not be considered residents for income tax purposes. These individuals will be subject to income tax on their Argentine source income, as if they were Argentine tax residents. However, income obtained from assets or activities, located or performed outside of Argentina, will not be subject to income tax.

2. Loss of Argentine tax residence

Argentine tax-resident individuals may lose their tax residence condition if any of the following takes place:

1. Acquisition of permanent residency in a foreign country for immigration purposes.
2. Presence in a foreign country for a continuous period of 12 months (re-entries that do not exceed 90 days, continuous or not, do not interrupt the 12-month term).

3. Double residence

Argentine tax resident individuals who (a) having obtained permanent residency in a foreign country for immigration purposes; or (b) having lost their residency in Argentina, continue residing in Argentina or return to Argentina with the intention of remaining, will be considered Argentine tax residents for income tax and wealth tax purposes if any of the following are applicable:

1. They have their permanent home in Argentina.¹
2. Having a permanent home available in both countries, their "center of vital interests" is located in Argentina.²
3. If the location of their "center of vital interests" cannot be determined, if they lived in Argentina for more time than the time they lived in the foreign country during a period of 12 months.
4. If they remain in both countries for an equal period of time, they are Argentine tax residents if they are Argentine nationals.

1 General Resolution 4236 states the following:
a) If there is an agreement to avoid international double taxation signed between the Argentine Republic and the other intervening state, the rules established in the agreement will be applicable.
b) Otherwise, the following considerations will be taken into account:
1. Permanent home refers to accommodation at the disposal of a human person on a continuous basis, the legal title that he or she has over it is irrelevant, and he or she may be the owner, usufructuary, superficial, tenant, borrower or holder, among others.
The aforementioned characterization is comprehensive of any place that meets the above-mentioned requirements even when it is part of a property intended indistinctly — mainly or incidentally — for the development of commercial, productive and / or any other activities of a different nature.
Excluded from the concept of permanent home are those accommodations used for short stays for pleasure trips, business, studies, etc., or for recreation, summer or similar purposes.
2. The subject who invokes the possession of a permanent home in a foreign state, in accordance with the provisions of the preceding point, must prove it with the corresponding supporting documentation.

2 In accordance with General Resolution 4236, "center of vital interests" is the jurisdiction where an individual holds their personal and economic closest relationships, considering these relationships in a joint manner. If these relationships were held in different states, personal relationships will predominate.