Actualidad Argentina

Support for venture capital

Decree 711/2017

On 8th September, the Argentinian government passed Decree 711/2017, containing the regulations for Heading I of Law 27.349 to support Venture Capital.

The purpose of the decree is to make it possible to enforce the law; as such, it clarifies some of the concepts outlined therein, sets out the percentages that can be deducted when calculating tax payable on earnings, regulates the procedure for granting these deductions and covers other matters relating to the Trust Fund for Venture Capital Development.

Clarification of definitions

  • Resources that may be offered by a “venture capital institution”: they may be either monetary or non-monetary, provided that they are liquid financial assets that can be realized in local currency; i.e. that can be realized in under 24 hours without losing their value.
  • Fund: this should be construed as it has been in Law 24.083, in other words; a fund that consists of publicly traded transferable securities, precious metals, FX, rights and obligations deriving from futures and options, among others, that do not constitute companies and have no legal personality.
  • Management company: a legal person that represents the Venture Capital institution and manages the investments made by it.
  • Disbursed investment: one that is made directly or indirectly through a Venture Capital Institution in an undertaking.
  • Under-developed areas and those with less access to financing: those provinces listed in Article 2 of Decree 435 from March 2016.

Tax treatment

  • Necessary requirements for those investments made through the controlling company. To be eligible for the special tax treatment in the case of investment made in venture capital, the Decree stipulates that certain conditions should be met:

- The investment should be used, finally and irrevocably, to capitalize the undertaking, in the first 12 months after it is disbursed.

- The controlling company should own at least 90% of the shares in the undertaking.

  • Percentages deductible when determining tax on earnings:

- 75% of investment sums made, as a rule.

- 85% of investment sums in undertakings in or for under-developed areas and with less access to financing.

  • Limits. The regulation sets a 10% limit on the deduction, calculated on the net taxable earning of natural or legal persons. Nevertheless, the regulation provides for the deduction of the surplus in the 5 tax periods immediately after the investments have been made.
  • Other considerations. There is a yearly tax quota that will be allocated in the order in which admissible applications are received. The quota will be distributed for each tax period in line with the characteristics of the enterprises, strategic sectors and subsequent conditions that the Department for Entrepreneurs & MSME (SEPyME) may set.


To be eligible for the special tax treatment provided for in the regulations, institutions should make a filing in the Venture Capital Institutions Registry (RICE) created under Law 27.349. The investor will have to present the corresponding application, to be considered by the SEPyME, who will decide whether the favorable tax treatment is justified. The Federal Administration for Public Revenues (AFIP) will be informed if the tax treatment is granted and will be responsible for monitoring that enterprises’ revenues do not exceed the upper threshold of the percentage stipulated in the law.

This tax break will apply when determining the tax on earnings payable in the period in which the investment sum was actually disbursed and may be granted partially.

Trust Fund for Venture Capital Development (FONDCE)

This may be organized using a series of trusts and the following, among others, will be classified as included in the FONDCE’s equity resources: those rights, interest payments, shares, installment payments, loans or assets of other kinds the purpose of which is to apply resources to any of the ends provided for in the Fund. In addition, the decree regulates the composition of the Fund’s Board of Directors and recognizes that the latter is empowered to appoint the Advisory Council as required for each program, among other functions.