A new protocol amending the comprehensive treaty and protocol between Argentina and Germany of 13 July 1978 was signed in Buenos Aires on 16 September 1996. The 1996 protocol will enter into force 1 month after the instruments of ratification are exchanged and will apply as from the tax year 1996.

The new protocol contains provisions that will replace Arts. 4(1) and 23(4) of the treaty in view of the changes made to the Argentinean income tax system, i.e. introduction of worldwide taxation as from 1992.

With respect to Art. 23(4), dealing with the method used by Argentina for avoiding double taxation of income or capital, the 1996 protocol will replace the current exemption-with-progression method by the ordinary credit method. For items of income or capital which, under the treaty, may be taxed in Germany, Argentina will grant to their residents a foreign-tax credit, against Argentinean liability, equal to the tax actually paid in Germany. The credit, however, will be limited to the amount of tax attributable to the income or capital before the foreign tax credit.

This information was correct as of 1 April 1997.

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 on Tel: +54 1 326 4046, Fax: +54 1 326 7340