Modifications to the Registry of Foreign Entities Obtaining Passive Income

Article 90 of Law No. 27260 (as amended) created in June of 2016 the Registry of Foreign Entities Obtaining Passive Income was created. It was determined there that the Argentine Tax Authority (AFIP) would be in charge of its control and regulation.

During the first stage, in April 2020, AFIP issued General Resolution No. 4697. Article 1 of the Resolution established that resident entities and individuals domiciled in Argentina participating or holding any management or executive position in foreign entities and obtaining a passive income higher than 50% of their gross income during the calendar year –except trusts and foundations– were to provide information about the foreign entity and its passive income, retroactively to the year 2016. For more details, see https://www.marval.com/publicacion/nuevo-regimen-de-informacion-fiscal-beneficiario-final-y-registro-de-entidades-pasivas-del-exterior-13651&lang=es.

In this second stage, by means of General Resolution No. 5284, AFIP organized the Registry and incorporated the obligation of trusts, in the case of non-financial trusts incorporated in the country, and trustees, in the case of financial trusts incorporated in the country (section 1, General Resolution No. 3312, paragraphs a) and B), respectively), as well as of residents acting as trustees of trusts incorporated abroad (paragraph c), to inform the Registry of the data and passive income of the trusts and other foreign entities assimilated to them with which they are related, when these foreign entities obtain a passive income higher than 50% of their gross income during the calendar year.

GR 5284 establishes that the reporting obligation of trusts and fiduciaries includes the passive income obtained by the foreign entity in 2018 and subsequent years. For this purpose, it establishes a special schedule of deadlines to comply with the filing of tax returns for the periods 2018, 2019, 2020, and 2021.

Likewise, GR 5284 maintains and makes certain modifications to the current information regime that subjects bound by article 1 of GR 4697 must comply with when they have a participation or connection with companies or any other foreign entities –except trusts and foreign entities assimilable to it– obtaining a passive income higher than 50% of their gross income during the calendar year.

What data is to be reported?

The data to be reported before the Register is in the annexes to RG 5284 and includes:

1. data regarding the trust or foreign company or entity itself (name, type of location, country, of residence, etc.);
2. data regarding the income obtained by such trust or foreign company or entity (gross income, type of passive income obtained, percentage that passive income represents over total income); and
3. data regarding the reporting party (tax ID, name/company name, tax domicile, relation of the informant with the trust or similar foreign entity, relation of the informant or percentage of participation in the case of companies or similar entities).

Who must report the data?

In short, the following entities residing in Argentina are currently subject to the reporting obligation:

1. Local non-financial trusts, trustees of local financial trusts, and trustees residing in Argentina of trusts located abroad (sections a, b, and c of article 1 of RG 3312), regarding the data of the trust or similar foreign entity with which they are linked and the passive income of such foreign entity, retroactively to 2018.
2. Companies and branches, non-profit organizations and foundations residing in the country, and individuals and undivided estates domiciled or established in Argentina (section 1 of RG 4697), regarding the data of the foreign entity with which they are related to or participate in, except for trusts and similar entities, and the passive income of such foreign entity.