Due to the growing political and economic uncertainty of recent years, especially since the 2018/19 crisis and the advent of the pandemic and the previous government, there was a wave of emigration motivated by tax and property incentives. Hence, many Argentine families decided to change residence to other countries, such as the neighboring shore of Uruguay. In this regard, from the Institute of Economics (INECO) of the UADE they tried to evaluate To what extent was the change of residence from Argentina to Uruguay a good decision.
For INECO researchers, this migratory sentiment began with the application of the economic policies of the last 20 years, which systematically hindered the normal functioning of national and foreign capital within the country. “This situation worsened even more after 2010, with new measures such as tax increases, exchange restrictions, limits on the transfer of profits, among other; which subsequently encouraged fear of a possible radicalization of these measures.”
“It is important to remember the moment when the implementation of a wealth tax aimed at individuals with the highest assets. This measure has caused a notable decrease in the inflow of capital into the country, while at the same time it has encouraged many Argentines to choose to transfer their assets abroad,” the study states.
They maintain that the accumulation of this type of measures, together with the fear they generated, made Uruguay a tempting option, “because it has economic policies that do not repress capital“But, on the contrary, it seeks to attract them to settle within its territory and in this way finance its growth and create new business opportunities.”
In this regard, they point out that in recent years they formulated an economic policy that made the situation of these capitals more flexible, eliminating barriers to their entry and implementing significant tax exemptions that encourage their settlement for a long time within the country. But, To what extent was the change of residence from Argentina to Uruguay a good decision?they ask at INECO.
Pros and cons of changing residence
First of all, they warn that this tax framework is attractive for those who have considerable assets in Argentina and abroadsince it generates significant savings in relation to what the taxpayer would have to pay in their country of origin.
Thus, according to INECO estimates, based on witness cases that occurred in the period 2020-2022, This tax savings was between 88% and 97%depending on the size of the taxpayer’s assets.
“As a counterpart in the period considered, for those who decided to maintain their tax residence in Argentina, the gap between the official exchange rate quote on December 31 and the blue market price or CCL dollar at the time of actually having to pay the certain tax largely liquefied the payment, creating an incentive to stay. In the cases that were taken as witnesses, The reduction in the tax cost derived from this gap was up to 60%”.
In any case, they recognize that the decision to move is not easy and the reasons linked to emotional and sentimental costs, such as uprooting and loss of frequent visits to friends and family, are a factor not measurable in economic terms but in many cases they end up being more important than the tax savings that the change of tax residence to Uruguay can generate.
“In the past, the fear of a loss of assets due to political decisions was one of the main reasons that influenced the decision of many Argentines who went to Uruguay. A possible change in the policy of the new administration in Argentina may cause those who are thinking of leaving the country for these reasons to rethink their situation, and even cause some of those who have already left to reconsider their return,” says INECO.
Source: Ambito
