Through Law 24,850, published in the Official Gazette of 22 June 1997, the Congress of Argentina ratified the double taxation treaty and protocol with Belgium, signed on 12 June 1996. The treaty was concluded in the Spanish, French, Dutch and English languages; the English text prevails in case of divergence. The treaty generally follows the OECD Model and will be applicable, in general, as from 1 January of the year following that in which the treaty enters into force.
Under the treaty, the maximum withholding tax rates are:
- 15% on dividends in general, but 10% if the recipient is a company holding 25% of the paying company;
- 12% on interest, with an exemption for interest on loans for financing machinery or equipment purchases from unrelated companies, on loans for promoting machinery exports, on certain preferential loans paid to a bank and on the usual loans to public bodies; and
- 15% on royalties in general; the rate is (a) 10% on trademark, patent, know-how and software-related royalties and technical assistance fees, (b) 5% on copyright (other than motion picture) royalties, and (c) 3% on news-related royalties.
Under the protocol, to assess the taxable base for technical assistance fees, the related expenses may be deducted, but the effective rate on gross payments may never be lower than 5%.
A permanent establishment includes:
- a building site, construction, assembly or installation project which lasts for more than 6 months;
- the rendering of services in the source country under certain conditions, provided that in all cases they last for more than 6 months; and
- the exploration of natural resources when such activities last for more than 6 months.
Belgium will generally apply the exemption-with-progression method for eliminating double taxation. As to dividends, interest and royalties which are received by a Belgian resident and may be taxed in Argentina, Belgium will grant a tax credit, subject to the ordinary Belgian domestic rules on this type of relief. Argentina will eliminate double taxation using the ordinary credit method.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
For further information contact Manuel G Diskenstien, Deloitte & Touche, Buenos Aires, Argentina - Tel: +54 1 326 4046, Fax: +54 1 326 7340