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.
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:
Companies must also undertake further procedures to operate payroll for their staff. Essential requirements include:
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:
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.
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
Accounts and Taxations
For more information, download our free guide or get in touch with our consultants here