Post Number: 4
|Posted on Tuesday, September 04, 2007 - 7:46 pm: |
Can a foreign corporation buy property in Buenos Aires? What are the advantages of doing this vs as an individual?
What is the paperwork necessary to enter funds to Argentina, is it easier or cheaper as a corporation or as individual? I understand the charges involved to go through the central bank.
What about when the property is sold, taxes as a corporation vs individual?
thanks for the help in advance
Post Number: 41
|Posted on Wednesday, September 05, 2007 - 4:49 am: |
Are you talking about residential property or commercial property? If you are buying a business that includes a premises then the arguments may be different.
A foreign corporation can buy property in BA. Before doing so, it must register as a foreign company at the Public Register of Commerce (IGJ). There are two kinds of registered foreign company: i). A foreign company which is going to set up a local company/buy an existing local company and develop commercial activities through that company, and ii) A company that is going to undertake commercial activity directly in Argentina (e.g. as a branch).
The registration of both kinds of foregin company is relatively straightforward, although bureaucratic, but both require different paperwork/documentation. Once regsitered, a foreign company can buy property.
Firms have an obligation to keep proper records and file annual returns etc. which obviously has a cost implication.
There is no capital gains tax in Argentina (currently!). When a company comes to sell property, the gain is treated as company profit and corporate income tax is charged at 35% (which gives a similar net effect to CGT). Individuals, on the other hand (unless they are deemed to be running a business) pay no GCT on sale of property.
Unless due to your personal circumstances there are very good reasons to do otherwise, I strongly suggest therefore that you buy property as a private individual.
I hope this helps.
Author, The Complete Guide To Real Estate Investment in Argentina, ISBN 1430303980, http://www.amazon.com/exec/obidos/ASIN/1430303980
Post Number: 182
|Posted on Wednesday, September 05, 2007 - 8:12 am: |
The "registration might be straightforward" but it's almost impossible to sell these days for these foreign corporations that are buying real estate without setting up a local company. Trust me on this. I work with many of the top Escribanos in Argentina and they ALL recommend against this. Here in South America you shouldn't concentrate on just buying. You should be more concerned with your exit strategy when you want to sell the real estate.
In many cases, especially commercial property it's necessary to set up a local corporation. I've done it before several times. Make sure you get it set up right so you have no issues or problems when you go to sell the property.
Buying individually is still the easiest way with the least amount of taxes but it doesn't make sense in many instances including a hedge fund or investment fund buying here. In that case it's necessary to set up a local company if you want to be able to easily sell the real estate when you are ready to sell.
I've bought and more importantly successfully sold many properties including many for myself. You won't run into issues if you are structuring everything properly and you have a good Escribano. Also, make sure you are paying your property/asset tax each and every year and if you are renting out your property you are paying rental taxes to AFIP. If not, you will run into problems when you go to sell it.