Argentina: How to Transfer Dividends and Profits Abroad (DAPE)

Argentina adopts new early declaration for payments  abroad

How to Transfer Dividends and Profits Abroad from Argentina: Declaracion Anticipada de Pagos al Exterior or DAPE.

This system will enter into force on 1 February 2013 and will also apply to transactions previously agreed whenever any amounts are still outstanding as of that date.

This new DAPE system adds to the already existing early declaration system for services (in Spanish, Declaración Jurada Anticipada de Servicios or DJAS) in force since 1 April 2012, and the early declaration system for imports (in Spanish, Declaración Jurada Anticipada de 
Importaciones or DJAI) in force since 1 February 2012.

The Argentine Federal Tax Authorities (AFIP) issued General Resolution 3417/2012 (published in the Official Gazette on 20 December 2012), creating a new “Early Declaration for Payments Abroad” (in Spanish Declaracion Anticipada de Pagos al Exterior or DAPE). As per this resolution,  Argentine tax residents will be required to file the DAPE through authorities’ web site to disclose information related to payments to be made abroad in relation with the following concepts: a) debts for the purchase of goods not imported into the country and sold to third countries, b) interest, c) dividends and profits, and d) imports through courier or certain simplified mechanism.

The information included in the DAPE fillings will be available for governmental organizations involved in the control of such transactions in order to issue their opinions. The governmental organizations will have a specific timeframe to provide their comments for each DAPE, which will be specified in the agreement that each organization will sign with the AFIP to formalize its inclusion in the system.

Each DAPE declaration will be give an identification number assigned by the AFIP website, which will be required in order to be granted access to the foreign exchange market for the purpose of making the payments abroad.

The information to be provided is detailed and includes among others, dates, amounts involved, characteristics of the agreements, type of goods, parties involved, etc.  In addition, the filling shall include “pdf files” of the corresponding supporting documents (invoices, agreements, board resolutions, etc.) which will also be remitted through the tax authorities’ web site.
It is further explained that in relation with the purchase of goods not
imported into the country and sold to third countries, a DAPE must be filed for each sale transaction, while for interest, a DAPE will be required for each loan agreement, or for each amendment or renegotiation of the loan.

In addition to the foreign exchange regulations in force in the country, which are governed by the Argentine Central Bank, Argentine residents that envisage payments abroad for purchase of goods not imported into the country and sold to third countries, and imports through now need to analyze the effect of this new requirement established by the AFIP on these operations.

The proven Buenos Aires – Argentina lawyer professionals at the Kier Joffe law firm have experience doing Transfer Dividends and Profits Abroad  (in Spanish Declaracion Anticipada de Pagos al Exterior or DAPE) with foreign clients involved in all type of cases in Argentina. Buenos Aires Argentina attorney professionals are knowledgeable in almost all the practice areas of law, to service its international cases in Buenos Aires Argentina. International clients will have the confidence of knowing that the case is being handled by an experienced and knowledgeable Buenos Aires  lawyer in Argentina.

If your company needs help in Argentina to Transfer Dividends and Profits Abroad contact us today.

 

Real Estate in Buenos Aires, Argentina: What to buy now

Everyone in the real estate industry in Buenos Aires agrees.  Real estate agents, brokers, developers and construction companies all point out that the best properties to buy right now are small apartments in good locations priced between US$ 50,000 to US$ 150,000.

The current global financial situation creates uncertainty, even in Argentina where the full effects of the crisis have not been felt as strongly as in the United States and Europe.  The financial markets are unstable and the uncertainty of world economies makes it unadvisable to transfer funds abroad.   The best option for investors in Buenos Aires at the moment is real estate investment.  Property always proves to be a secure investment, at least on a medium and long term basis.  In the short term, it can provide rental income which can yield an annual return of six percent.

Mortgage loans in Argentina have virtually disappeared.  The Cámara Inmobiliaria Argentina has requested that the government reinstate mortgage loans for the middle class.  Such loans accounted for seven percent of real estate sales, but in today’s economy they have disappeared.  In addition to producing a slight drop in sales, this lack of financing forces many people, especially singles and young couples, to rent.

Currently the smartest real estate investment is the purchase or construction of smaller units, one room studios to two bedroom apartments.  Smaller units in good locations are always in high demand as rentals.  A studio apartment is now renting for $900 to $1,100 pesos per month.  Smaller units have lower maintenance costs and in many cases these costs are passed on to the renter.  Apartments in Buenos Aires can be rented with a two year lease or on a temporary basis, usually to foreigners and in US dollars.

Industry experts believe that property values will remain stable, though negotiations will be somewhat more difficult.  Those who are selling already constructed property and are not in need of immediate cash, are unlikely to lower their selling price because they know they will need to pay as much or more for another property.  Premium properties are also retaining their value.

Real estate agents and brokers believe that recent government legislation will help maintain or even stimulate their industry.  The legislation encourages Argentine citizens to legally declare assets held within the country or abroad by taxing them only one percent, as long as that capital is invested in purchasing or constructing real estate property in Argentina.   The new law gives realtors a good leverage point to use when dealing with investors that fall within the parameters of the legislation.

The proven Buenos Aires – Argentina lawyer professionals at the Kier Joffe law firm have experience working with foreign clients involved in all kind of cases in Argentina. Buenos Aires Argentina attorney professionals are knowledgeable in almost all the practice areas of law, to service its international cases in Buenos Aires Argentina. International clients will have the confidence of knowing that the case is being handled by an experienced and knowledgeable Buenos Aires  lawyer in Argentina.

www.kierjoffe.com

Real Estate: Why Mortgage Loans are Lacking in Argentina

The availability of credit in Argentina depends on the level of savings deposited in the banking system.

Mortgage lending at present is limited in Argentina because the private sector of the Argentine economy has limited savings.  The situation is further aggravated by the fact that those limited savings often don’t enter the banking system.  Fears of having funds confiscated (as they were in the economic crisis of 2001) and a loss of real buying power drive people to buy US dollars and place them in a safe deposit box or under the mattress. Others simply transfer their funds outside of the country.

When internal savings are lacking, having external savings would be an alternative.  This would mean that foreigners, individuals and companies, from different countries, would deposit funds in the Argentine banking system or purchase national savings bonds.  Since the economic crisis of 2001, however, Argentina has difficulty attracting this type of foreign investment.

This reduction in both internal and external savings greatly reduces the availability of mortgage loans with affordable interest rates.  The limited amount of mortgage lending and the high interest rates most mortgage lenders offer is keeping many middle class families from acquiring their first home or upgrading to a larger home.

The only affordable mortgage loans are subsidized government loans that charge interest rates below market values.  Funding for these subsidized government loans comes from the government’s tax revenues and other revenue sources such as the recent nationalization of private retirement funds.  If government revenues drop, the supply of government loans declines as well.  Currently, the availability of mortgage loans with reduced interest rates is dependent on the government’s limited stock.

Lower income families that might qualify for these lower interest rate loans may still be reluctant to take on the payment responsibility.  An increase in unemployment, a decline in real buying power and an uncertain labor market makes many people put off spending.  They are particularly leary of getting into large debt, as required with the purchase of a home.

To get a sense of the current loan situation, the amount of available mortgage credit has dropped by one third from the year 2000 to the present.  This reduction in mortgage lending means that the vast majority of real estate transactions will most likely continue to be done in cash.

The proven Buenos Aires – Argentina lawyer professionals at the Kier Joffe law firm have experience working with foreign clients involved in all kind of cases in Argentina. Buenos Aires Argentina attorney professionals are knowledgeable in almost all the practice areas of law, to service its international cases in Buenos Aires Argentina. International clients will have the confidence of knowing that the case is being handled by an experienced and knowledgeable Buenos Aires  lawyer in Argentina.

www.kierjoffe.com

 

Real Estate: Why Now is the Time to Buy Property in Argentina

Just over a decade ago Argentina spectacularly unraveled with the biggest default in history—$100 billion. Dollar deposits were converted to pesos. Then, overnight, the peg of one-to-one with the dollar was broken. The unpegged currency immediately devalued. Savings were wiped out. Banks were set alight and locals took to the streets in protest.

That crisis created the biggest buying opportunity of a decade. During the fire sales you could have picked up a historic, high-end property in Buenos Aires or a vineyard in Mendoza for a song.

Today, Argentina is back in a bind. There is a strong possibility of another crack-up within the next year. And then we’ll have the same opportunity we had a decade ago. The signs are all there. The streets of Buenos Aires have recently seen the return of the backstreet currency exchange.

According to the official exchange rate, which is subject to capital controls, 4.4 pesos buys you a dollar. But on the street people are happy to pay up to 6.7. Inflation runs at 25%. The purchasing power of an Argentine’s peso savings is going down by one-quarter each year.

The government claims inflation is 9.9% and has outlawed calculating or quoting any other inflation rate. Forty percent of dollar deposits have been withdrawn from Argentina since last October. Now there are capital controls. You need special permission to move your dollars overseas.

To take a foreign vacation, Argentines have to apply to a bureaucrat for permission and explain where they got the money for the trip. And there are rumors that it will be made illegal to talk about the existence of the shadow market exchange rate for dollars.

But a lot of Argentines’ dollars and pesos don’t reside in bank accounts. Property transactions typically take place in special rooms in lawyers’ offices, and they’re a cash deal. There’s that much distrust of banks. They are fine for day-to-day things like paying your electric bill. Not for your savings, though.

And these transactions more often than not take place in dollars…if you pay in dollars you could get 25% off the price of property. The government has outlawed this, making the buying and selling of real estate in dollars illegal. Just one more rule Argentines will find their way around.

By some reports, if an Argentine company complied with all the taxes and tariffs it faces, they would eat up more than the company’s pretax profits. So the shadow economy thrives. By necessity, it seems, rather than greed to pay less tax. Middle-class day-trippers take the ferry to Uruguay to put their savings in deposit boxes. The rich spend millions on condos in Punta del Este, Uruguay (see sidebar below).

For Argentines, real estate is their bank. They understand inflation and expropriation from bank and pension accounts. If they have some spare cash, they’ll buy an apartment. Or a beach home across the Río de la Plata in Uruguay. Or a condo in Miami.

Now fewer Argentines are using local real estate as a hedge against inflation. New construction and permit applications have fallen off a cliff. They just want their cash out.

The government claims that the rate of outflow has slowed. But with every passing week, companies and individuals figure out new ways to get their cash out. For instance, companies buy financial instruments locally in pesos that they immediately resell in New York for dollars.

Argentines have seen it all before. When a government and a banking system take your life’s work with the stroke of a pen, you don’t forget. If you’re lucky enough to rebuild your savings, the next time you will be ready. And the harder the Argentine president, Cristina Kirchner, tries to keep assets in the country, the more they’ll be siphoned out.

Meantime, Argentina is all but frozen out of international debt markets. The government hasn’t reached a settlement with the group of creditors (known as the Paris Club) since its last default. So the country and the banking system desperately need these deposits to stay afloat.

But they continue to do incredibly dumb things. Two years ago President Kirchner seized private pension accounts. Now she is going to lend $4.4 billion of this money, at a rate of one-tenth the inflation rate, to new home buyers. A lottery will decide who gets the loans—not capacity to repay.

Argentina has major competitive advantages in beef production. But land under beef farming is contracting. Beef producers face large and complicated export tariffs and are forced to sell cheaply to the domestic market. Many have moved operations to Uruguay or switched to soya.

It’s one crackpot idea after another. And the cycle repeats. Expropriating your citizens’ savings or international companies like YPF (a subsidiary of Spanish oil company Repsol), which President Kirchner nationalized last April might buy you some time. But not much. The writing is on the wall.

In the last crisis, the trigger event was Argentina’s massive default on its sovereign debt. This time around Argentina doesn’t face that scenario. Government spending has to be funded from printing presses, taxes, and expropriation of personal or company assets. It’s hard to see how the government can collect more taxes. The printing presses are already causing the inflation and the rush to backstreet currency-exchange brokers. There’s a limit to what you can expropriate.

This time around the trigger event for a full-scale crisis will be the country’s running out of hard currency. There will be no money to pay for imports. Argentina can make do without more Porsches and Gucci handbags, but the country will grind to a halt if industry and energy-producers can’t get their hands on crucial imports. The factories will shut. Things will have to get really bad before we’re in a “buy” situation. Pay attention if you turn on your TV and see news flashes of burning banks and of factories that don’t have hard currency to buy raw materials, locking out their workers. If you turn on your TV a second day and see similar reports, then book your flight. Your dollars will go a long way.

Comparisons between the high-end neighborhoods of Paris and Buenos Aires are correct. It’s a world-class capital with a wealth of cultural activities, fine dining, and shopping. Buy when the Argentine capital is in turmoil and you’ll be sitting on prime real estate in one of the world’s finest cities.

If you’ve ever dreamed of owning your own vineyard, I can think of no better place than Mendoza, Argentina’s most famous wine-producing region. Mendoza sits at the foot of the Andes, 600 miles west of Buenos Aires. Soil and climate are perfect here for wine production.

Argentina long held promise. In 1900 it was the world’s sixth-richest country—richer than the U.S. Immigrants flooded from Europe. The British came to build the railways. They brought along Irish and Italians. The Spanish came. What followed is text-book mismanagement. When it comes to a head again, we’ll have a full-blown crisis. And an opportunity to pounce once more.

How the Crisis in Argentina will Affect Real Estate in Uruguay

Real estate prices in Uruguay have raced ahead over the past three years, and Argentines are driving this market. Some have been looking for a beach home…but most just wanted a safe place to store their wealth. Multi-million dollar condo sales in Punta del Este were common.

Argentines are banking on another crack-up. They have seen it all before. Now the Argentine government has bullied Uruguay into agreeing to pass on information about Argentines who bank in Uruguay.

But Uruguay is still the closest haven to store savings and wealth. Geographically and psychologically, it’s close. Many Argentines will figure out a way to get around this. I expect to see a major jump in Panamanian corporations buying real estate there. My legal contacts are already reporting a six-fold increase in inquiries from Argentine clients interested in setting up Panamanian corporations that would circumvent the reporting requirements.

Even so, sales volumes in Uruguay are falling. In Punta I hear they are off by more than half. Transactions and volume were at record levels in the lead-up to Argentina’s latest crisis in anticipation of what’s now happening. Now demand will soften. Few sellers are desperate. They bought here to store wealth. But because buyers will be thin on the ground, if you can find a desperate seller, you’ll get a good deal.