SUBSIDIARY ENTITY SET UP IN ARGENTINA

Expanding into Latin America (LATAM) can involve a subsidiary entity set up in Argentina. Companies committed to building their global profile have indeed the option of setting up a subsidiary overseas. However, establishing a company in a foreign country can be costly, both in time and money, and there is no guarantee that the effort and financial outlay will bring any success.

When Argentina is the target for Global Expansion, foreign companies planning to operate payroll for their staff there must establish a legal entity as a subsidiary, in order to deal with the Federal Administration of Public Revenues, the Administración Federal de Ingresos Públicos (AFIP) and the National Administration of Social Security (Nacional de la Seguridad Social, ANSES). The usual choice is a limited liability company, called in Argentina a Sociedad de Responsabilidad Limitada, SRL, which needs two or more members or partners. The subsidiary is regulated by the General Companies Act.

But expanding overseas is a major step. If the move fails, companies face the extra expenditure and stress of closing the business, selling property and paying off employees. It is easy to stumble while chasing two objectives – advancing your company at home while crossing the world into new territory. The sensible alternative is to use a Professional Employer Organisation (PEO) and Employer of Record (EOR) such as Bradford Jacobs to locate the finest local talent and administer your payroll in Argentina. Your company will be up-and-running in days rather than weeks or even months and without running any risks.

How to Set Up an Argentinian Subsidiary?

If you have plans to go for a subsidiary entity set up in Argentina, the first step is to decide the business structure best suited to your vision for expansion. The typical choice is to open a limited liability company as a subsidiary. This is a legal requirement for foreign companies wanting to hire staff and operate their payroll.

In Argentina, the limited company is known as a Sociedad de Responsabilidad Limitada, SRL. This company type needs two or more members or partners, will be regulated by the General Companies Act and comes under the supervision of the Public Register of Commerce, head office in Buenos Aires. Registration procedures and other requirements under the Act include the following:

  • The foreign parent company must register with the Public Registry of the Autonomous City of Buenos Aires or whichever of the 23 provinces it plans to operate.
  • Verify the unique name for the subsidiary with the Office of Corporations (Inspección General de Justicia, IGJ).
  • Prepare the Articles of Association for the subsidiary and notarize identities, passports, where applicable, and signatures of members/partners.
  • If required, deposit initial share capital with the Argentina National Bank (there is no minimum requirement for an SRL).
  • Publish notification of the new company in the Official Gazette and register with the Public Registry in Buenos Aires or a regional office.
  • Register the company with the Federal Administration of Public Revenues, the Administración Federal de Ingresos Públicos (AFIP), for withholding payroll taxes and remitting to the AFIP.
  • Obtain the subsidiary’s 11-digit Unique Tax Identification Code (CUIT) from the AFIP.
  • Register the subsidiary with the National Administration of Social Security (Nacional de la Seguridad Social, ANSES) to access your employees’ social security system and to withhold and remit social security and pension fund payments.
  • Provide proof of payment of all fees.
  • The majority of board members for an SRL must be Argentine residents.

Companies must also undertake further procedures to operate payroll for their staff. Essential requirements include:

  • Registering employees with the AFIP for withholding and remitting payroll taxes.
  • Obtaining the employer’s 11-digit Unique Tax Identification Code (CUIT) – the fiscal code (clave fiscal) – from the AFIP and the Unified Labour Identification Code (CUIL) for employees’ social security transactions.
  • Registering employees with ANSES for inclusion in the social security system.
  • Obtaining their DNI number (Documento Nacional de Identidad) is frequently required when opening bank accounts and registering for the internet and other services.
  • Logging the employment relationship in the Special Payroll Book, which is subject to inspection by the Ministry of Labour.
  • Accounts and bookkeeping must be in the Spanish language.
  • Drawing up written contracts for employees as a safeguard, although there is no mandatory requirement for contracts to be written or oral unless specified under a law or collective agreement.

Benefits of Setting Up an Argentinian Subsidiary

Foreign companies that establish a private limited liability company in Argentina as a subsidiary, operate under the General Companies Act. The subsidiary has a separate legal identity from the parent company and is treated the same as a local company. Generally, the parent company’s liability is restricted to the share capital invested in the subsidiary; neither is it responsible for any subsidiary debts.

The subsidiary provides the parent company with the potential for further expansion throughout Latin America and a stepping stone into other regional economies. Additionally, the subsidiary can ‘test the market’ by following its business ideas and entering into different areas of operation with the parent company. The subsidiary can also draw up its contracts and agreements with clients. Other benefits for a subsidiary:

  • Easier to obtain potential benefits and incentives and enter into contracts with other Argentine or Latin and South American companies.
  • More impact with clients and suppliers, as subsidiaries imply more. Permanency than branches
  • Employees feel there is more stability and job security than from being with a branch.

In the broader commercial sense, opening a subsidiary makes a statement of a company’s commitment to expanding into foreign markets, in this case, the opportunities offered by South American economies. However, there is a more straightforward option to the risks and costs of setting up a subsidiary in Argentina by working with Bradford Jacobs. Using a global PEO such as Bradford Jacobs means staff can be sourced, placed in their roles and be up and running within days rather than months. All the payroll, taxation and compliance difficulties are under control thanks to our EOR services.

Subsidiary Laws in Argentina

The General Companies Act regulates the operation of all companies in Argentina, including subsidiaries established by foreign companies. Initially, the parent company must register with the Public Registry in the Autonomous City of Buenos Aires or whichever of the 23 provinces it plans to operate. The typical choice for foreign companies is to open a subsidiary as a private limited liability company, known as a Sociedad de Responsabilidad Limitada, SRL, which needs two or more members or partners. Required procedures include:

Registration and Documentation

  • Initially, the foreign parent company registers with the Public Registry of whichever of the 23 provinces where it plans to operate or with the Autonomous City of Buenos Aires.
  • The subsidiary must verify a unique company name with the Office of Corporations (Inspección General de Justicia, IGJ)
  • Notarized identities, passports, where applicable, and signatures of members/partners must be prepared along with the Articles of Association.
  • Register company with the Federal Administration of Public Revenues, the Administración Federal de Ingresos Públicos (AFIP) for withholding payroll taxes and remitting to the AFIP
  • Obtain the subsidiary’s 11-digit Unique Tax Identification Code (CUIT) from the AFIP
  • Register a subsidiary with the National Administration of Social Security (Nacional de la Seguridad Social, ANSES) to access the social security system for your employees and to withhold and remit social security and pension fund payments

Accounts and Taxations

  • There is no requirement to deposit the minimum share capital
  • A statutory audit is optional but must be undertaken if capital stock exceeds ARS 50 million (€400,000, US$422,000)
  • Annual tax returns must be filed with the AFIP and the relevant regional authority
  • The auditor must be located in Argentina, and the company’s corporate and accounts books must be in Spanish and kept locally

Management

  • There must be two or more members or partners
  • The majority of board members for an SRL must be Argentine residents
  • Local management can be by a single, several or an entire board of directors, and all have full powers
  • Annual shareholder meetings are required to approve financial statements
  • There is no statutory requirement for board meetings

LOOKING TO EXPAND INTO ARGENTINA?

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