Argentina is the second-largest country in South America, with a highly literate population. The country is quite export-oriented and known for its vast industrial base. Argentina has abundant natural resources, so several companies want to set up their subsidiary business in Argentina.
The country has a GDP of $630.7 billion and is ranked 24th among all the nations in terms of GDP. The primary industries operating in Argentina include food processing, automotive, pharmaceuticals, etc. Hence, you can incorporate a foreign subsidiary in Argentina in these industries.
Argentina is situated quite close to countries like Chile, and hence, with a subsidiary business in Argentina, you can also serve the neighboring countries.
Businesses can use all the resources and employ people from the skilled workforce in the country. The best way to enter Argentina is to establish a subsidiary business there. Also, the paperwork involved while incorporating a subsidiary business in Argentina is less.
Continue reading to understand how to set up a subsidiary business in Argentina.
What are the Types of Subsidiaries in Argentina?
Argentina supports different types of subsidiary businesses, which are stated below:
Limited liability company
- Limited liability companies are separate legal entities called Sociedad de Responsabilidad Limitada.
- An LLC can have at least two members and a maximum of 50 members.
- These companies can have a single manager or a group of managers.
- It is essential to appoint a legal representative of the business.
- While appointing an auditor is not mandatory, it becomes mandatory if the capital stock increases the threshold of ARS 50 million.
- At least 25% of the total share capital must be paid during the company’s incorporation, and the remaining can be paid in the next two years.
- Corporations, known as Sociedad Anónima, are pretty standard in Argentina.
- A corporation can have two or more shareholders. A board of directors runs the company with at least one member.
- If the company’s capital stock exceeds ARS 50 million, it is essential to have at least three directors and one alternative director.
- The tenure of the directors varies between a year and three years. However, directors can be re-elected to the board of directors.
- Like a limited liability company, appointing an auditor becomes vital if the capital stock exceeds ARS50 million.
Simplified Shares Company
- A simplified shares company or a single-shareholder corporation is also known as Sociedad Anónima Unipersonal in Argentina.
- The factor distinguishing this company from all other companies is that it can only have a single shareholder.
- If you incorporate this form of subsidiary business in Argentina, you must appoint a president. The board’s president is also a legal representative of the company.
- Having a statutory auditor is mandatory in a simplified shares company.
- You must pay the capital stock once the bylaws are executed.
- A simplified corporation is also called Sociedad por Acciones Simplificada or SAS in Argentina.
- It can have one or more than one shareholders. The entire company is managed by a board of directors appointed by the shareholders.
- The fact that it’s incorporated digitally makes it different from all other kinds of companies.
- A simplified corporation must mandatorily have at least one director who resides in Argentina.
- During the incorporation, 25% of the capital is paid upfront, while the remaining can be paid within the next two years.
How to Set Up a Subsidiary in Argentina?
There are some mandatory steps that you must take to set up a subsidiary business in Argentina. Let’s have a look at these steps:
Step 1: Verification of the company name
- Decide on the company’s name and get it verified by the Office of Corporations.
- The reservation of name form will cost you ARS 210. You should submit the duly filled form on the online portal.
Step 2: Reaching out to the notary public
- Get the signatures of all the founding members and get it certified by a notary public.
- The entire process will take a day, and you must pay ARS 250 for notifying each signature.
Step 3: Deposit the capital at the bank
- Before you incorporate a subsidiary business in Argentina, you must deposit 25% of your subscribed capital in a national bank in Argentina.
- Collect the proof of payment, which will be submitted to the Public Register of Commerce.
- You can withdraw the amount as soon as the company’s bylaws are registered at the Office of Corporations.
Step 4: Publishing the notice of the company in an official paper
- In Argentina, publishing the company noticed in the official paper, i.e., The Boletín Oficial, is mandatory.
- Legalizing and signing the notice by either an attorney or a representative certified by the notary public is also compulsory.
- The process takes around two days, and you must deposit ARS 2,500 for the publication.
Step 5: Fee payment
- Before registering with the Public Register of Commerce, you must pay the incorporation fees.
- Download the invoice via the official portal of the Justice and Human Rights Department and then make the payment to the national bank.
- You must collect and submit the invoice to the Public Register of Commerce.
Step 6: Registration with the Public Register of Commerce
- After submitting the incorporation fee, you must register the company’s bylaws and all other documents with the Public Registry of Commerce.
- The process takes approximately a month, and you must pay ARS 3,360 for the registration.
Step 7: Form from the Public Notaries
- Once registered with the Public Register of Commerce, you must submit the company books to the General Inspection of Justice.
- Collect the books from any commercial bookstore. These books include:
- Book of minutes of partners’ and managers’ meetings
- Buyers VAT book
- Sellers VAT book
- Inventory and Balance book
- The notary public then gets a form from the Notary Public’s College and submits a rubric request to the IGJ.
Step 8: Obtain the fiscal code
- Once the company is registered, obtaining the fiscal code of the subsidiary business in Argentina is essential.
- You must contact the National Tax Office and submit your national identity card.
Step 9: Obtaining the TIN
- Post the incorporation of the company, it is mandatory to register with the National Tax office.
- To register with the relevant tax authorities, all the managers must obtain their CUIT or the Código de Identificación Tributaria.
Step 10: Register with the Administración General de Ingresos Públicos (AGIP)
- Obtain the tax password of the company the General Revenue Directorate issues.
- You need to submit all the CUIT-related documents to obtain the password.
Step 11: Register with Sistema Unicon de Seguridad Social
- To register with the SUSS, you can submit the affidavits online. You must submit affidavit No.885 to the AFIP to register to the social security system.
- Once registered, all the social security contributions are made to the National Regime of Social Security.
Step 12: Registering with the Ministry of Labor
- The Dirección General de Empleo or the Labor Agency then rubricates all the books submitted by the company.
- The cost of the entire process depends on the number of pages that must be rubricated—one page of rubrication costs around ARS 5.
Benefits of Setting Up an Argentina Subsidiary
Listed below are some benefits of a subsidiary company in Argentina:
- The corporate tax rate applicable in Argentina is 25%. The tax rate is comparatively lower than in most other countries. Hence, you will not have to shell out much of your business income as taxes.
- Most steps are completed online when registering a subsidiary in Argentina, making the entire process hassle-free.
- Prominent countries like Uruguay, Paraguay, and Brazil are close to Argentina. Hence, you can also expand the operations of your subsidiary business in Argentina to these countries.
- Argentina is ranked 126th in the ease of doing business index. Hence, setting up a subsidiary business in Argentina is relatively easy.
Documents to Prepare When Opening a Subsidiary in Argentina
Before establishing a subsidiary business in Argentina, you must have the following documents:
- Articles of Association
- Proof of reservation of the name of the company
- The company bylaws
- Evidence of complying with the manager’s guarantee regime
- Proof of publication in the official gazette
- Pay slip supporting the payment of the capital to the National bank
- Proof of manager’s acceptance of the position
- Photocopies of the national identity cards of the managers
- Passports of the founders and shareholders if they are not from Argentina
- Residency certificates in case of foreign nationals
To register with the Administración General de Ingresos Públicos (AGIP), companies will also have to submit the following documents additionally:
- A notarized copy of the bylaws of the company
- Notarized copy of the designation of the authorities that were registered with the General Inspection of Corporations
- Evidence of the CUIT of the company
- Document showcasing the address of the legal representative of the company
- CUIT of the legal representative
What Business Forms can Argentina Subsidiaries Take?
Argentina supports different kinds of business entities. Hence, you can establish any kind of subsidiary business in Argentina. You can incorporate both partially and wholly owned subsidiary business in Argentina depending upon your company’s needs.
Most companies either incorporate a corporation or a limited liability company in Argentina. This is because the structure of these companies is easy to understand, and they are also relatively easy to incorporate. The members of these companies have limited responsibilities, and their assets are not used to pay off the company’s debts and liabilities.
Argentina Subsidiary Laws
You must abide by all regional and local labor laws and government-imposed requirements for your subsidiary firm to be lawful and run successfully in Argentina. Integrating these laws creates a framework for operating the subsidiary business in Argentina. These ancillary laws also seek to safeguard employees’ rights within your business.
You must have the certificate of incorporation and the registration certificate for the parent company while incorporating a subsidiary business in Argentina. You must also open a bank account in Argentina to ensure all business activities go correctly.
Once you establish a company, you must follow a few post-incorporation compliances for a foreign subsidiary in Argentina.
- All the subsidiary businesses in Argentina must hold an annual meeting of shareholders.
- The company’s financial statements must be verified during the annual meeting before publication.
- In the case of a corporation, the board of directors must meet at least once every three months.
- All subsidiary businesses in Argentina must file their annual tax returns with the national and state authorities.
- You must register all your employees with the social security system and the tax authorities.
Taxes on Subsidiaries in Argentina
A subsidiary business in Argentina is any regular business operating in the country. Hence, the corporate tax rate remains the same for all kinds of companies in Argentina. The corporate tax rate in Argentina is 25%, which also applies to the subsidiary’s global income.
If the taxable income of the subsidiary business in Argentina goes above ARS 7,604,948.57, companies must pay ARS 1,901,237.14 + 30% tax on the excess income.
Tax Incentives for Businesses Setting up a Subsidiary in Argentina
Taxpayers in Argentina can get a tax credit for the taxes they have paid in countries where they have earned income. However, a cap applies to these tax credits based on the income source and the country. Any surplus not offset in a particular fiscal year may be carried over to the next five fiscal years.
The Government of Argentina has launched several tax incentives for companies that are into knowledge-based activities. These come under the promoted activities. Some industries include software, computing, digital services, etc.
Other Important Considerations
Establishing a subsidiary business in Argentina is a time-taking process. Therefore, it would be ideal for you to schedule regular business activities and concentrate on incorporating a foreign subsidiary in Argentina.
You can delegate the task to another business executive or work together if your parent company keeps you occupied.
You must also stick to a budget to complete each phase of establishing a subsidiary business in Argentina. Before beginning a foreign subsidiary in Argentina, creating a budget is crucial because it will help you maintain control.
How Can Multiplier’s Employer of Record Help You Hire and Expand in Argentina?
If you plan to set up a subsidiary business in Argentina, you will need help understanding the local laws and ordinances. You can use a service partner like Multiplier to navigate the entire process. They will also help you overcome the growth obstacle by helping you manage all the challenges of the process.
Multiplier will handle all the formalities in entering a new market, so you don’t need to worry. Our knowledgeable staff will assist you in establishing a subsidiary company in Argentina and are conversant with local and international rules. We see that Argentina abides fully by its labor laws and treaties. With a PEO like Multiplier, you can quickly establish teams internationally and take advantage of new market prospects.