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Argentina Terminates Double Tax Convention with Switzerland

Argentina

On 31 January 2012, the Official Gazette published a comment that the Argentine Republic had chosen to terminate the Convention concluded between Switzerland and Argentina for the avoidance of double taxation with respect to taxes on income and capital and its respective protocols which was provisionally in force. Taxand Argentina details the move to unilaterally terminate the double tax convention with Switzerland.According to the publication in the Official Gazette, the termination was communicated through a note dated 16 January 2012, sent by the Argentine authorities to the Swiss authorities.

The following provisions are now terminated:

  • The Convention subscribed between Argentina and Switzerland for the Avoidance of Double Taxation with Respect to Taxes on Income and Capital, dated 23 April 1997
  • The Protocol of Amendment also dated 23 April 1997
  • The Additional Protocol dated 23 November 2000
  • The Protocol of Amendment dated 7 August 2008 (this protocol did not enter into force).

With respect to the agreement between both countries to prevent double taxation with respect to benefits arisen from maritime and aerial transport, the publication in the Official Gazette mentions that the understanding of the Argentine Government is that such an agreement would continue to be suspended upon its entry into force.

In the note, dated 16 January 2012 - sent by Argentine authorities to Swiss authorities (not published in the Official Gazette), the understanding of the Argentine Government - taking a very controversial position - is that since the Double Tax Convention was under a "provisional application", and the Convention was terminated as of 16 January 2012. However, from a constitutional and Vienna Convention's perspective, Section 26 of the Double Tax Convention with Switzerland should be applicable; therefore, such a Double Tax Convention would (contrary to the Argentine authorities' position) be in force until 31 December 2012.1


Taxand's Take


Argentina has unilaterally terminated the Double Taxation Treaty executed with Switzerland. Businesses with activities in Argentina and Switzerland should review the situation and consider the options regarding future tax planning.

Your Taxand contact for further queries is:
Ezequiel Lipovetzky
T. +54 11 4021 2300
E. Ezequiel.Lipovetzky@bfmyl.com

Daniela Rey
T. +54 11 4021 2300
E. daniela.rey@bfmyl.com

Santiago Zebel
T. +54 11 4021 2300
E. Santiago.zebel@bfmyl.com

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1 Section 26 of the Double Tax Convention with Switzerland states that "This Convention shall remain in force until terminated by a Contracting State. Either Contracting State may terminate the Convention, through diplomatic channels, by giving written notice of termination at least six months before the end of any calendar year from the date on which the Convention enters into force. In such event, the Convention shall cease to have effect in both Contracting States: (a) in respect of taxes withheld at source, on income derived on or after 1 January in the calendar year next following the year in which the notice is given; (b) in respect of other taxes on income or capital, for taxes chargeable for any tax year beginning on or after 1 January in the calendar year next following the year in which the notice is given."

Taxand's Take Author