Does anyone know how does Argentina wealth tax for assets held abroad really work?

[scooterguy]

Apparently the wealth tax is 2.5% for assets held abroad, when the value of them is over ~90K USD (Argentina - Individual - Other taxes).

This means that if you have 1M USD abroad, you'd be paying 25K in wealth taxes. This doesn't make much sense though, since that kind of wealth tax would cancel out any income earned from the assets themselves, such as dividend or rental income.

Surely I am misunderstanding something? Or is it really that high?

 

[backpacker]

scooterguy said:
This doesn't make much sense though, since that kind of wealth tax would cancel out any income earned from the assets themselves, such as dividend or rental income.
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Why would it "cancel out any income earned from the assets themselves"?

 

[scooterguy]

backpacker said:
Why would it "cancel out any income earned from the assets themselves"?
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A standard, healthy dividend rate is around 2-3%. You have 1M invested, you usually make around 20K-30K in dividends.

If you have to pay wealth tax of 25K, that cancels out your dividend income.

 

[backpacker]

scooterguy said:
A standard, healthy dividend rate is around 2-3%. You have 1M invested, you usually make around 20K-30K in dividends.

If you have to pay wealth tax of 25K, that cancels out your dividend income.
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Thanks for the reply. Now I understand what you mean.
If you have a bad year with declining stock markets it can easily be that you pay taxes even though your overall net worth declined.

However, in the case of Argentina it makes absolute sense: The government wants you to invest your money within Argentina, not abroad. So they make it prohibitively expensive if you do not keep your money in the country.
AR has crisis after crisis and needs your money to solve its next crisis 😉

And it's getting worse -> Argentina's wealth tax: a way forward? | Argentina | Americas
Note that a one-off can easily become a two-off or three-off, so nothing is really safe in AR.
Better look for a different country.

 

[JackAlabama]

scooterguy said:
A standard, healthy dividend rate is around 2-3%. You have 1M invested, you usually make around 20K-30K in dividends.

If you have to pay wealth tax of 25K, that cancels out your dividend income.
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Not really. You pay income tax of these received 25k plus what you quoted: 25k wealth tax. So in total 25k wealth tax plus tax on that income.