Double Tax Convention Terminated
On 13 July 2012, in the Official Gazette was published a mention that the Argentine Republic has chosen to terminate the Convention subscribed between the Kingdom of Spain and the Argentine Republic for the Avoidance of Double Taxation with Respect to Taxes on Income and on Capital. Taxand Argentina and Taxand Spain discuss this development and likely effect on multinationals with interests in Argentina and Spain.
According to the publication in the Official Gazette, the termination was communicated through a note dated 29 June 2012.
The Convention would cease to have effect in both contracting States:
(i) In respect of taxes at source on payments to be made to foreign residents as from 1 January 2013
(ii) In respect of other taxes, as from the tax years beginning as from 1 January 2013
From a Spanish point of view, the termination of the treaty may have a deep impact on Spanish taxpayers, since it will result in the levying of high Argentinean withholding taxes on items of income which previously were exempt or subject to limited rates. Tax payers should take heed of this development and contact their tax expert to make sure they understand the full impact that this will have on their businesses operating between Argentina and Spain.
Daniela C. Rey
Alvaro de la Cueva