Argentina: Abolition of withholding tax on dividend distributions and decrease of Personal Asset Tax rate

27.07.2016

Clearstream Banking1 would like to inform customers that on 22 July 2016, the Argentine Government published Law Nr. 27260, which has the following impacts on our customers:

  • As of 22 July 2016, the 10% withholding tax on dividend distributions (whether in cash or in kind) will be eliminated for both Argentine individuals and non-Argentine resident shareholders. The 10% withholding tax will however remain applicable to Argentine legal entities.
    It is important to note that the exemption does not apply to fully paid shares (acciones liberadas) which will remain taxable at the rate of 10%. 
  • As of 22 July 2016, the Personal Asset Tax rate applicable to the holding of capital stock of Argentine companies will be reduced from 0.5% to 0.25% for both Argentine and non-Argentine beneficial owners.

Background

As explained under Disclosure Requirements - Argentina, under Argentine law, the disclosure obligation falls on the account holder. In this case Clearstream, unless otherwise specifically provided, is considered in this market to be the final beneficial owner of securities held by Clearstream customers on their accounts opened with Clearstream. As a result, the tax rate applicable to Clearstream Banking customers will be the one applicable to Clearstream Banking Luxembourg.

According to the new Law and Clearstream Banking’s residency, Clearstream will receive future Argentine dividends payments without any tax withheld at source.

Impact on customers

As of 22 July 2016, customers of Clearstream Banking will receive upcoming Argentine dividends payments gross, regardless of their tax residency. This tax exemption will apply to any future Argentine dividend payments, should the initial payment date be before 22 July 2016 or not.

Additionally, the Personal Asset Tax rate applicable to the holding of capital stock of Argentine companies will be 0.25% for both Argentine and non-Argentine beneficial owners.

Further information

For further information, please contact the Clearstream Banking Tax Help Desk, Clearstream Banking Client Services or your Relationship Officer.

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1. Clearstream Banking refers collectively to Clearstream Banking AG, registered office at 61, Mergenthalerallee, 65760 Eschborn, Germany and registered in Register B of the Amtsgericht Frankfurt am Main, Germany under number HRB 7500, and Clearstream Banking S.A., registered office at 42, avenue John F. Kennedy, L-1855 Luxembourg, and registered with the Luxembourg Trade and Companies Register under number B-9248.