Argentina and Austria: What Changes Under the New Double Taxation Treaty
The agreement restores the bilateral tax framework, limits taxation on certain cross-border income and strengthens measures against tax evasion and avoidance. Its tax provisions will generally apply from 1 January 2027.
By Gabriela Pietragalli
Certified Public Accountant and Partner at P&P Consulting.
After almost two decades without a treaty in effect, the entry into force of the new Double Taxation Treaty (DTT) on 12 June 2026 restores the bilateral tax framework between Argentina and Austria.
An agreement to avoid double taxation between the two countries represents a fiscal policy decision with concrete implications for international tax planning, investment opportunities and the structuring of cross-border business.
International Double Taxation
International double taxation occurs when the same income or capital is subject to taxation in two countries. It often arises because each state applies different criteria when exercising its taxing rights. The main principles are:
Residence principle: a country taxes its residents’ income, regardless of where in the world it was earned.
Source principle: a country taxes income generated within its territory, regardless of where its owner resides.
Double taxation treaties address this problem in three ways:
They allocate taxing rights between the two states.
They set limits on withholding taxes at source.
They establish relief mechanisms, such as a credit for tax paid abroad or an exemption.
Modern treaties also include measures against tax evasion and treaty abuse.
Historical Background
Argentina and Austria signed their first treaty in 1979. Argentina terminated it in 2008, questioning the restrictions it placed on its taxing rights. Its provisions ceased to apply to fiscal years beginning on or after 1 January 2009.
One of the main points of contention was Argentina’s Personal Assets Tax (Bienes Personales). The previous treaty reserved taxing rights over certain shareholdings to the country of residence. As a result, shares in Argentine companies held by companies resident in Austria fell outside the scope of the Argentine tax. Austrian structures became a vehicle for tax planning, and Argentina considered that it was losing revenue.
The new treaty, approved by Law 27,803, will generally apply from 1 January 2027, in accordance with its timing provisions. It sets limits on the taxation of various categories of cross-border income.
The DTT broadly follows the OECD Model Tax Convention, but, as is customary in Argentina’s treaties, includes provisions more favourable to the country where the income originates. It covers Argentina’s Income Tax and Personal Assets Tax, and its title expressly includes the prevention of tax evasion and avoidance. These provisions address shortcomings identified in the previous agreement.
Main Provisions
Among its main provisions, the treaty sets a general 12% ceiling on interest and maximum rates of 3%, 5%, 10% or 15% on royalties, depending on the category of income and the conditions set out in the agreement.
For dividends, it establishes limits of 10% or 15%, subject to the treaty’s conditions. It also provides mechanisms for crediting tax paid in Austria against Argentine tax, within the prescribed limits.
The agreement includes non-discrimination provisions and an anti-abuse clause allowing benefits to be denied where one of the principal purposes of an arrangement is to obtain a tax advantage inconsistent with the treaty’s object and purpose.
To apply treaty benefits to payments of Argentine-source income to foreign beneficiaries, ARCA General Resolution 5855/2026 establishes documentation requirements. These include evidence of the beneficiary’s tax residence through a valid certificate issued by the competent authority.
Practical application requires an assessment of each transaction, its tax classification and the conditions established by both the treaty and Argentine domestic law.
Competitive Advantages
Lower tax costs for investment. Limits on the taxation of interest, royalties and, in certain circumstances, gains from the sale of shares.
An additional benefit in Austria. Dividends received by an Austrian company from an Argentine company may be exempt in Austria, subject to domestic legislation and the applicable conditions.
Legal certainty. Clear rules on permanent establishments.
Safeguards for Argentina’s tax system. Anti-abuse clauses and information exchange.
An institutional signal. Greater predictability for transactions involving Austria.
Conclusion
The new treaty closes a chapter lasting almost two decades. Argentina terminated an agreement it considered unfavourable and negotiated another that seeks to balance investment attraction with the protection of its tax base.
The result offers withholding tax limits and predictable rules for businesses, alongside stronger anti-avoidance tools for tax authorities. Its practical impact will begin to emerge from 2027.
