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Monday, January 30, 2023

Tax settlement with the US: in what cases information on beneficial owners of companies will be shared

Ministry of Economy published a memorandum to specify Scope of the Tax Information Agreement with the United States, confirming that banks will report savings accounts of people living in Argentina. This also IRS to notify Argentine ultimate beneficiaries of companies withholding income tax To profit from American sources.

Although Argentina will no longer be able to hide behind LLCs (similar to Argentina’s SRL) to hide tax evasion, there will still be no information on the beneficial owners of some companies, Such as those opened by software programmers for rent in third countries or who have a property in Miami for rent.

The Agreement does not involve balances in deposit accounts or movement of securities in custody accounts. (brokers), so the AFIP will have more constraints and, depending on the returns, will have to do more work to identify those balances and activities, said Guillermo Perez, CEO of GNP Group.

But even this is not absolute, as there is a previous treaty between the two countries, under which, if any An ongoing inspection on Argentina, AFIP may require specific information on bank accounts, real estate and other investments. Francisco Blanco from Allende & Bray Studios clarified who owns it in the United States.

This AFIP administrative expense only matters to big taxpayers, and the truth is Many high net worth Argentinians are no longer residents of the countryTherefore, they will not appear in the lists that the US Treasury Department will provide every September 30, Blanco assured.

Swap deal: what accounts will the US report on?

With respect to the exchange of information with the United States, Forecasts are divided into two classes of accounts:

  • deposit accountsSavings, in particular, are those where cash is deposited and which pays interest.
  • custody accounts They are where the titles are deposited and they also have a cash account that transfers cash generated from the income from bonds, buying or selling titles: that is, they are similar to principal accounts in Argentina. For example, this type of account should be opened if one wants to buy shares of Apple on Wall Street.

The agreement with the US signed by Massa and Stanley will be massive and will reach across societies.

In the case of Deposit accounts, the exchange of information with the US will apply only to accounts owned by individuals Felix Rolando, a partner in Andersen Argentina, is resident in Argentina and pays interest in excess of US$10 a calendar year.

if it’s about Information will be exchanged for accounts other than savings accounts even if the account holder is a resident of Argentina, whether individuals or companiesBut always from Argentina, he clarified.

What concepts will the Bank of the United States report to the AFIP?

information will always be relevant Income that has its source in the United States of America and that is subject to declaration in that countryAccording to Chapter 3 of the US Internal Revenue Code, Rolando said.

Custody accounts where there are investments in the United States stock market clearly enter here, ie dividend information, he stressed.

On the other hand, Francisco Blanco of the law firm Allende & Brea said, 2017/2018 retrospective information will not be sharedwhich is important to establish whether Mauricio Macri’s financial disclosures declined for those who joined, but did not exclude assets or funds held by him in the United States at the time; and This is more than equal to 1% of honest assets.

why Argentinian bank account balance information will also not be obtained.Therefore, the United States will share data from 2023, when the agreement comes into force, Blanco said:

  • Dividend, interest, royalty and other income/ Investments from US sources but related to the amount received each year
  • identification of account holder (account holder) and the financial institution.
Us Irs Will Report Beneficial Owners Of Companies Paying Income Tax

The IRS will report the beneficial owners of companies that pay income tax.

When will the US report on beneficial ownership of companies?

AFIP will receive every September 30, information on Argentina that is the ultimate beneficiary of corporations, LLCs and other North American companies with custodial accounts in the US, Because the US entity that will notify the AFIP is the State Department, after collecting the bank information and the IRS, that country’s tax collection entity.

The only way to get information for AFIP “Ultimate beneficiaries” are through subjects who act as withholding agents when distributing income from U.S. sources.White explained.

that the withholding agent must comply with the submission Pre-IRS specific forms known as W8sAnd of which there are many variants, to establish a withholding income tax, he said.

Blanco clarified that this applies to stock investment accounts (custody accounts), or in the case in which US companies distribute dividends to their shareholders, some of whom are residents of Argentina.

He remarked that these agents should comply with an annual reporting regime regarding these sanctions in the United States which can then be communicated to AFIP.

The Entity That Would Report With The Data From The Banks And The Irs Would Be The Treasury Department.

The entity that would report data from the banks and the IRS would be the Treasury Department.

However, in the case of Argentina, for example, LLC holders who earn income that is not subject to US income taxThis spontaneous exchange of information would be outside the scope, he insisted, and gave the following examples of uncommunicative societies:

  • American society in general LLC, for example opened by software programmers to pool income from their work outside the United States And that they don’t have to pay income tax in the US.
  • American societies are open to being owner of a Apartments in Miami, in case, to receive rental rentBecause there will be exemption in these cases.

White said The “target subject” of this automatic exchange is someone who receives income and/or invests in the United StatesSpecifically passive income, which is subject to tax in that country.

Details of Exchange Agreement with US

From reading the memorandum, it can be noted that the new agreement with the United States will come into effect by 2023 Exchange information in line with the 2022 fiscal period, as it states that Argentine financial institutions must report directly to the IRS with those deadlines, Rolando noted.

Highlights of the Agreement FATCA has been signed with the US for exchange of financial information on:

  1. In 2021, the United States sent an updated draft of Model 1 of the IGA agreement and is currently the only one that negotiated and signed the memorandum, reports.
  2. Argentina negotiates a reciprocal IGA 1 model agreement,
  3. among possible agreements to celebrate is the widest That both parties have commitments and obligations.
  4. If all the information and protocols are followed, the agreement will come into effect from January 1, 2023,
  5. The agreement covers the 50 North American states, including Delaware and South Dakota,
  6. The United States only excludes American Samoa, Guam, the Northern Mariana Islands, Puerto Rico, and the US Virgin Islands from its definition of territory.
An Llc That Owns An Apartment In Miami For Rent Will Not Be Notified

An LLC that owns an apartment in Miami for rent is exempt.

eventually, The memorandum reports that the United States has signed 113 FATCA agreements, of which 87% follow Model 1 and only 60% are reciprocal, which places Argentina in a privileged position.,

World Nation News Desk
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