Argentina: National Executive Branch enacts Law No. 27,613 that provides tax benefits for real estate projects and the voluntary declaration of national or foreign currency in Argentina and abroad

On 12 March 2021, Law No. 27,613 (“Law“) was published in the Official Gazette, through which an “Incentive Regime for Argentine Federal Construction and Access to Housing” was implemented, aimed at promoting development or investment in real estate projects carried out in Argentina.

The main regulated aspects are the following.

A. Tax benefits for real estate projects

The Law contemplates the following tax benefits for real estate projects that consist of new private construction works beginning as of the entry into force of the Law (e.g., constructions, extensions, and installations) that, according to the building codes or similar provisions, are subject to complain, authorization or approval by the competent authority:

A. 1. Exemption from Personal Assets Tax (PAT)

The value of investments in investment projects carried out in Argentina until 31 December 2022, directly developed or through third parties, is exempt from PAT, from the fiscal year in which the investment is made effective and until the completion, adjudication or alienation of the right and/or participation that originated as a result of the real estate project, whichever occurs first, up to a maximum term of two fiscal years.

A. 1. 1. Covered assets 

The exemption includes those assets whose possession, as of 31 December of each year, represents the investment in the real estate projects, either directly or through third parties and whatever the legal form, contract and/or vehicle adopted to materialize such investment. In addition, the investments must be made with funds in the national currency duly declared and/or from the previous realization — through the temporary application of purchase of national public securities — of foreign currency duly declared, in accordance with the regulations to be issued by the National Executive Branch, and to the extent that the funds do not come from the voluntary declaration of national and/or foreign currency contemplated in the Law.

A. 1. 2. Payments on account of the PAT

The equivalent of 1% of the value of investments in real estate projects may be computed as payments on account of the PAT, as follows:

1. In relation to those investments made from the date of entry into force of the Law and until the expiration date of the presentation of the affidavit of the PAT of the fiscal year 2020, it will be computed on account of the tax determined in fiscal year 2020 not being able to generate a favorable balance. The unused remainder may be transferred to fiscal years 2021 and 2022.
2. In relation to those investments made from the day following the expiration date of the filing of the PAT affidavit for fiscal year 2020 until 31 December 2021, it will be computed on account of the tax determined in fiscal year 2021 not being able to generate a favorable balance. The unused remainder can only be carried over to fiscal year 2022.
3. In relation to those investments made from 1 January 2022 until 31 December 2022, it will be computed on account of the tax determined in fiscal year 2022 not being able to generate a favorable balance. The unused remainder may NOT be carried over to subsequent fiscal years.

A. 2. Deferral of the Tax on the Transfer of Real Estate (TTRE) of individuals and undivided estates or the income tax (IT)

The owners of real estate or rights over real estate will benefit from the deferral of the payment of the TTRE or the IT, when the corresponding taxable event is configured by the transfer and/or alienation to the subjects that develop the real estate projects, that occurred from the date of entry into force of the Law and until 31 December 2022.

The condition stipulated in the previous paragraph will be considered fulfilled when the effective start of the development of such projects occurs within a maximum term of two years from the moment the real estates or the right over them have been transferred and/or disposed of.

The payment of the TTRE or IT will proceed at the time or fiscal year in which the holders:

1. receive a consideration in national or foreign currency
2. assign or transfer in any way the participation, rights or similar that they have received as consideration
3. complete the real estate project
4. are awarded the unit as consideration, whichever happens first

B. Voluntary declaration of national and/or foreign currency in Argentina and abroad

B. 1. Included subjects and funds 

Individuals, undivided estates, legal entities and other subjects established in section 53 of the IT Law and residing in Argentina may voluntarily declare possession of national and/or foreign currency in the country and abroad, from the date of entry into force of the Law and until 120 calendar days from said effective date.

The funds included in the voluntary declaration of foreign currency and/or national currency must be deposited in a “Special Deposit and Cancellation Account for Argentine Construction” (CECON.Ar) in any of the entities included in the regime of Law No. 21,526 and its modifications, in the form and within the terms established by the Federal Tax Authority and the Central Bank of the Argentine Republic.

The declared funds may be temporarily applied to the purchase of national public securities and immediately invested only to the development or investment in real estate projects in Argentina, mentioned in point A.

This includes the currency deposited in banking or financial institutions or others abroad subject to the supervision of central banks of their respective countries and/or securities commissions, or equivalent entities that are assigned bank or stock market supervision that admit balances registered in accounts of institutions under their supervision, or in other entities that consolidate their financial statements with the financial statements of a local bank authorized to operate in Argentina. Likewise, these institutions must be based in countries that comply with internationally recognized standards or recommendations regarding the prevention of money laundering and terrorist financing.

B. 2. Special tax

A special tax has been established that will be determined on the value of the declared possession expressed in national currency, at the time the funds are deposited in the mentioned special bank account, according to the following tax rates:

1. entered from the date of the entry into force of the Law and during the next 60 calendar days from said validity: 5%
2. entered from the day following the term mentioned in a) above and during the next 30 calendar days: 10%
3. entered from the day following the term mentioned in b) above and during the next 30 calendar days: 20%

The buyer exchange rate of the National Bank of Argentina that corresponds to the date when the funds are deposited in the mentioned special account will be considered for the valuation of foreign currency.

Click here to access the Spanish version: Argentina: El Poder Ejecutivo Nacional promulgó la Ley Nro. 27.613 que implementa beneficios impositivos para proyectos inmobiliarios y el blanqueo de moneda extranjera y/o moneda nacional en el país y en el exterior