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National Supreme Court rules on foreign commissions
On 17 September 2013, the Argentine National Supreme Court ruled in the case “Hidroeléctrica El Chocón S.A." regarding commissions from abroad. Taxand Argentina discovers how this ruling affects non-resident taxpayers.
Through this ruling the National Supreme Court stated its position in the treatment of commissions paid to non-residents for intermediation services performed abroad. This is in relation to foreign loans granted to Argentine residents which funds are to be invested in Argentina.
The National Supreme Court ruled that said commissions are subject to income tax in Argentina through the corresponding withholding on the source as a sole and definite payment.
It is ruled that income tax is applied due to the fact that the commissions arise from investment in the Argentine market where loans are granted by a foreign third party.
Considering the stance taken by the Argentine National Supreme Court, payments to non-residents of commissions - related to foreign loans granted to Argentine residents whose funds were invested in Argentina - could be subject to the new doctrine that arises from the Court’s ruling.