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3.2. Practical Aspects of Tax Residence

Guatemala taxes income on a territorial basis. That being so, in practice residence status does not affect the tax burden of taxpayers. Nonetheless, there are some foreign-source income items subject to Guatemalan tax only when obtained by residents. Some of those income items are the following:

(i) Interests or any other financial return arising from foreign debts, bonds, or any other security.

(ii) Royalties paid by non-residents to Guatemalan residents.

(iii) Profits obtained by Guatemalan residents arising from real estate located abroad.

(iv) Capital gains obtained by Guatemalan residents arising from shares or other securities emitted by a foreign entity or person.

(v) Capital gains derived from the transfer of foreign shares or securities.

(vi) Capital gains derived from the transfer of real estate located abroad.

Thus, only tax residents will be taxed on these foreign-source income categories.