Guide to not getting lost with taxes between Argentina and Spain
Posted on April 11, 2024
Spain and Argentina have different tax systems. It’s best to be clear about when and how much tax you have to pay if you live in one country, but have income in the other. We explain the most common cases of tax situations that you may encounter in your relationship with Spain.
The Double Taxation Agreement is the framework for tax matters between Argentina and Spain. As the name suggests, the same tax will not be charged twice. But a tax will be levied that does not exist in one country and does exist in the other. In addition, one of the objectives of the agreement is to prevent money laundering.
Case 1: Bringing money from Argentina
The most common tax query is from Argentines who live in Spain and have money in Argentina that they want to bring. But they don’t know if they have to pay taxes in Spain.
If the money you want to bring to Spain has been declared in Argentina and paid taxes, you will not have to pay taxes in Spain. That is why the Convention was made, to avoid double taxation. But if there is a tax in Spain that does not exist in Argentina, it is possible that you will have to pay when you bring it to Spain. And this will depend on where the funds came from.
Case 2: Emigrating to Spain with money
For Argentines who emigrate to Spain, taxation is different. As they are not yet residents they do not pay taxes in Spain, therefore the money they bring with them is not taxed.
But the money can be withheld when it is transferred to a Spanish bank from abroad. It is a preventive measure of the Spanish State to prevent money laundering. When it is proven that it is not black money, that it was declared in Argentina and paid taxes, it can be disposed of.
You can enter Spain with up to €10,000 in cash without having to declare it. If this amount is exceeded, the S-1 Form declaration must be made and presented at the airport of origin, before traveling. At that time, the origin of the funds will have to be accredited.
If you send your money to Spain by transfer, the origin and destination account must belong to the same account holder. It is important that the movement of the money is made before being a resident in Spain, otherwise it will have to be taxed.
Case 3: Living in Spain with assets in Argentina
Tax residents in Spain must declare to the Spanish tax authorities any assets abroad that exceed 50,000 euros. The declaration – Form 720 – is made between 1 January and 31 March, based on your financial situation as of the previous 31 December.
This is an informative return and does not in itself imply the payment of taxes. Then it will be seen whether or not it is appropriate to pay according to the origin of those goods. But failure to file Form 720 can result in fines of up to 50% of the undeclared value, if the Tax Agency considers that it is an unjustified capital gain. The statute of limitations expires after four years.
Case 4: Living in Spain, getting paid in Argentina
This is the case for tax residents in Spain with income from Argentina. Being a tax resident entails the obligation to declare income earned abroad and pay taxes on it if applicable. That includes property rentals in Argentina, income from sporadic remote or in-person work, stock dividends. And also any other type of one-off income such as inheritances. The amount to be taxed on this income will depend on each case and must be carefully studied.
If, in any case, you decide not to declare it and bring it to Spain, you have to be aware that it is money that cannot be justified.
If the Tax Office considers that a person resides more than half of the year in Spain, even if they do not have a residence permit, it will apply the tax rules as if they were a tax resident. Tax residency is an empirical fact, it does not depend on what the DNI says.
Case 5: Living in Argentina, getting paid in Spain
For example, Argentines who lived in Spain and bought a property, but then returned to Argentina and rented it out. In this case, you must pay the same or even more than if you lived in Spain. The Tax Agency controls those who live abroad more, because the risk of them not paying taxes is greater. For example, if a person lives in Argentina and sells a property in Spain, the Spanish notary will withhold 3% of the amount as a precaution for the taxes that must be paid.
Case 6: Paying taxes for leaving Spain
If you live in Spain and plan to return to Argentina, you should find out about the “exit tax”. Yes, sometimes you have to pay a tax before you leave Spain. But it only affects entrepreneurs or investors with 10 years or more of tax residence in Spain.
The Spanish tax system is complex and non-compliance with tax obligations is a serious matter. We advise you to seek advice from specialists in Spanish tax law. When it comes to significant amounts, it’s better to be well informed than to make decisions that can’t be reversed. At MBT Abogados the fees for a one-hour consultation on very specific issues, without going into exact calculations, have fees are €150.
