Executive summary

On 18 March 2026, the Argentine Senate approved the amending protocol (the Protocol), which had been signed on 6 December 2019, of the international agreement between Argentina and France to avoid double taxation and prevent tax evasion and avoidance (signed in 1979 and amended by a 2001 protocol).

Key Argentine tax aspects

The Protocol broadens the definition of Permanent Establishment (PE), introducing a services-PE rule, under which the provision of services (including consultancy services) through employees or other personnel for more than 183 days within any 12-month period, for the same or connected projects, may create a PE.

Under the amended tax treaty, a maximum withholding tax (WHT) rate of 10% applies for dividend distributions if the beneficial owner is a company holding at least 25% of the capital of the distributing company for at least 365 days. In all other cases, the WHT rate is capped at 15%. The Protocol expressly allows the application of a branch profits tax, capped at 10%, on profits attributable to a PE. In any event, the lower domestic 7% dividend WHT should be applicable.

The new general WHT rate on interest is capped at 12%. An exemption (applying tax only in the State of residence) applies to certain categories of interest, including interest paid to States or central banks, interest on State-guaranteed or subsidized loans, interest on credit sales of industrial, commercial or scientific equipment, and interest on long-term preferential loans granted by financial institutions.

The amending Protocol also reduces royalty WHT rates, depending on the nature of the royalty: (1) 3% for royalties on the use or right for use of international news or information; (2) 5% for copyright royalties on literary, artistic or scientific works (excluding films and TV/radio recordings); (3) 10% for all other royalties. For technology transfer royalties, reduced rates apply only if the relevant agreements are duly registered under domestic law. The Protocol clarifies that standardized services are excluded from the technical services/royalties definition.

Gains derived from the sale of shares or similar interests deriving more than 50% of their value from immovable property located in the other State (at any time during the 365 days preceding the sale) may be taxed at source. In other cases involving the sale of shares, source taxation is capped at 10% if the seller holds at least a 25% interest, and capped at 15% in all other cases.

The Protocol amends the Most-Favored Nation (MFN) clause under which any more-favorable tax treatment or lower withholding rates that Argentina granted under treaties with third States after 6 December 2019 may automatically apply to the Argentina-France treaty, subject to the same conditions.

The treaty must still be discussed and approved in the Chamber of Deputies and promulgated by the Executive Power (i.e., the President of Argentina) before entering into force. Moving this amending protocol forward represents a significant development for Argentina in the field of international taxation.

Implications

Once the amending protocol is approved in the Chamber of Deputies and promulgated by the Executive Power, a case-by-case analysis should be made to identify the potential impact in cross-border transactions involving France and Argentina.