Argentina will exclude CBI citizens from automatic tax-residency status: what the new law changes

As part of a labor-law modernization package approved by Congress on February 27 and awaiting the president’s signature, Argentina is introducing a significant tax amendment for participants in the citizenship by investment (CBI) program. The new rule removes automatic recognition of tax residency from the first day of naturalization for foreign nationals who obtain citizenship through investment.

The Senate approved the bill definitively with 42 votes in favor, 28 against, and two abstentions. President Javier Milei has 10 business days to sign the document.

What problem is being addressed

Argentine tax law draws a strict line between tax residents and non-residents. Residents pay income tax on worldwide income, while non-residents are taxed only on income from Argentine sources.

Previously, Article 116 of the Income Tax Law (Ley de Impuesto a las Ganancias) treated all Argentine citizens—both by birth and by naturalization—as tax residents. However, the law did not distinguish between someone who has actually lived in Argentina for years and someone who obtained citizenship through investment without long-term physical presence.

Martín Hecht, founder of MH Legal Hub, stresses that the risk was not theoretical. In his view, under the former wording, “as soon as a foreign individual receives Argentine citizenship through naturalization—regardless of the reason—they fall under clause (a) and become a tax resident of Argentina from the very first day. That means a duty to file and pay tax on worldwide income.”

Without reform, CBI investors could face an illogical outcome: the legal presumption would make them tax residents without the corresponding factual criterion of residency. To remove that status, investors would have to initiate a tax-residency loss procedure under Article 117, prove permanent residency in another country, and meet additional conditions required by ARCA (Argentina’s tax authority, previously AFIP).

Hecht also pointed to practical consequences: ARCA could require annual filings reporting worldwide income; there was a risk of double taxation if the investor’s tax-residency country also treated them as a resident. At the level of banks and compliance processes, this created legal uncertainty about the client’s tax status.

How the new rule works

The amendment moves CBI citizens who obtained nationality through naturalization out of subsection (a)—which lists all Argentine citizens—into subsection (b), which applies to foreign nationals. In subsection (b), the key factor becomes physical presence: the requirement to be in the country for 12 months.

According to Hecht, the reform simultaneously clarifies and changes the outcome. In essence, it ensures that simply holding an Argentine passport should not automatically place the investor into a tax-resident regime taxing worldwide income. At the same time, it is important to note: this is not a tax exemption in the full sense. Regardless of tax-residency status, income tax continues to be levied on income from Argentine sources.

The new rule removes the worldwide component of taxation for those CBI holders who do not meet the physical presence criterion.

Two possible interpretations of the “12 months” provision

The provision’s ambiguity allows for two scenarios. What interpretation will be applied in practice determines whether the reform becomes a full barrier against worldwide-income taxation for CBI investors—or only a postponement.

The first reading (which Hecht believes is closer to the legislator’s intent) assumes that CBI status is fully decoupled from automatic tax-residency status. Under this approach, an investor may hold an Argentine passport and actually be in the country, but be taxed only on income from Argentine sources. Worldwide taxation would apply only to those who had permanent residency before naturalization.

The second—more “strict” from a technical standpoint—interpretation is different: once the investor reaches the 12 months of physical presence threshold, they become a full tax resident and fall under worldwide-income taxation regardless of how citizenship was obtained. “Until ARCA issues a binding clarification or case law emerges, I would consider this uncertainty a real risk,” Hecht warns.

How the presence period is counted in practice

The “mechanics” of the physical presence criterion for practitioners are just as important as the policy itself. Hecht explains that CBI-naturalized individuals fall under subsection (b), where they are treated as foreigners for tax purposes.

The naturalization date does not matter: the clock starts only when days are spent on Argentine territory, not on the day the passport is issued.

There is an additional nuance considering Regulatory Decree 862/2019: temporary departures do not interrupt the 12-month count if a single trip does not exceed 90 consecutive days. Otherwise, the count may be reset. Short trips abroad typically do not stop the “clock.”

Hecht expects affluent CBI clients to more often adopt a common strategy: spend about eight months per year in Argentina, while ensuring there is at least one absence lasting more than 90 days, thereby avoiding the conditions for tax residency.

At the same time, it remains unclear whether splitting the 90-day absence across multiple shorter trips would produce the intended effect; the law’s text hints that it should, but real-world application may differ.

The only exception

The reform includes one carve-out. If a person had already established permanent residency in Argentina before obtaining CBI, they retain their tax-residency status.

As Hecht puts it, “this rule does not offer relief to someone who already established physical presence in Argentina prior to naturalization.” Therefore, the benefit would apply to investors who arrive as foreigners, make the investment, and naturalize without having permanent-residency status at the outset.

When the amendment will take effect

Even after the president signs the bill, the tax component may not become effective immediately. Article 212 states that all tax changes — and the related mechanisms (including the Fondo de Asistencia Laboral and the Regimen de Incentivo para Medianas Inversiones) — enter into force only “when the Ministry of Economy so determines”, for the purpose of meeting fiscal-balance targets.

In other words, the actual start date depends on the discretion of Economy Minister Luis Caputo. The law has been approved, but investors and their advisers should treat the provision as adopted at the legislative level yet not in force until a separate decision by the Ministry of Economy.

Specialists’ reaction

Argentine tax experts view the amendment as ambiguous.

Noelia Girardi, a manager at Buenos Aires firm Lisicki, Litvin and Abelovich, told Infobae that the reform increases predictability and prevents a situation where investment-based naturalization automatically expands the tax burden. Meanwhile Martín Caranta, a tax partner at the same firm, called the rule “strange” in its logic and noted that in practice it is likely to shift the point at which CBI investors become subject to worldwide-income taxation.

This asymmetry is indeed felt. Citizens born in Argentina, under a similar factual schedule (for example, eight months in the country and the rest abroad), remain tax residents. But CBI-naturalized citizens under the same pattern may reach a different outcome—depending on how the “12 months” rule is interpreted and applied.

After official publication and the Ministry of Economy’s activation, the tax carve-out will likely remove what practitioners describe as the main fiscal obstacle to the CBI program.

If you’re considering citizenship by investment, it’s crucial to assess the tax implications of naturalization in advance. For Argentina, the new rule may change how you are automatically classified for tax purposes from the first day after obtaining citizenship. To evaluate the risks and plan the right next steps, rely on Digital Nomad: we’ll help you understand what to prepare when pursuing an investment-based status.

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