Law No. 27,802 on Labor Modernization (the “Law” or the “Reform”) introduced a significant amendment in tax matters by incorporating clarifications to the tax residence regime set forth in Section 116 of the Income Tax Law (the “ITL”).
Through Section 194, the Law adds three final paragraphs to Section 116 of the ITL, with the purpose of clarifying the tax treatment applicable to foreign individuals who acquire Argentine citizenship by naturalization, without this necessarily implying the status of tax residents in the country.
In order to properly delineate the scope of this amendment, it is necessary to refer to Citizenship Law No. 346, which—following the amendments introduced in 2025 by Decree No. 366/2025 (May 2025) and Decree No. 524/2025 (July 2025)—provided for a specific naturalization scenario based on significant investments, allowing access to Argentine citizenship without requiring prior residence in the country. This regulatory background explains the need for the tax clarification introduced by the Law.
The Reform expressly establishes that naturalization obtained through significant investments does not, in and of itself, give rise to tax residence in Argentina, thereby clearly distinguishing between the concepts of citizenship and tax residence. Accordingly, the determination of tax residence remains subject to the traditional criteria set forth in the ITL, such as permanent residence, effective presence in the country, or the location of the individual’s center of vital interests.
Likewise, the Reform introduces a relevant exception: individuals who, at the time of obtaining citizenship by investment, already held permanent resident status in Argentina shall continue to be considered tax residents.
In other words, the amendment does not alter pre-existing tax situations, but rather defines the scope of the change for cases in which no prior residence existed.
Accordingly, individuals who do not qualify as tax residents shall be subject to taxation exclusively on Argentine-source income, with foreign-source income remaining outside the scope of taxation. Consequently, such individuals shall not be subject to Income Tax on a worldwide income basis nor to Personal Assets Tax with respect to assets located abroad.
From a practical standpoint, the purpose of the Reform is to prevent citizenship by investment from operating as an automatic trigger for tax residence—and the corresponding tax burden—which could otherwise discourage foreign investment by individuals.
At the same time, the amendment provides greater clarity and predictability for both investors and the tax authorities, reducing interpretative uncertainty and potential tax contingencies.
The scope of the provision is limited exclusively to foreign individuals who acquire Argentine citizenship by naturalization as a result of making significant investments in the country, in accordance with the provisions of Citizenship Law No. 346.
Notwithstanding the foregoing, the practical implementation and effective scope of the benefit analyzed herein shall be subject to the regulations to be issued in due course by the Executive Branch.