Foreign corporations interested in setting up subsidiaries in Argentina can get in touch with our company formation advisors in Argentina who can provide detailed assistance. Below is information on this topic and the ways in which such legal entities can be registered in this country.
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Forms of subsidiaries in Argentina
Foreign companies who intend to establish a subsidiary in Argentina in 2023 usually choose to set up either a corporation (sociedad anonima with only one or more shareholders) or a limited liability company (sociedad de responsabilidad limitata with two or more partners). If you are interested in setting up any of these structures, consult with our Argentinian company formation specialists.
The main benefits of a subsidiary in Argentina in 2023 are:
- The partners’ liability is limited to the capital they contributed;
- A corporation can offer its shares publicly in order to attract financing.
Even though there are certain differences between a corporation and a limited liability company in Argentina, they do have certain traits in common, such as:
- There are no nationality or residence requirements for the partners. Except for certain regulated activities, foreign entrepreneurs and non-residents can entirely own any company opened in the country;
- Most of the administrators of the companies have to reside in Argentina;
- Both legal entities should have a capital allocation.
If you want to open a subsidiary in Argentina on your own, you will need a thorough understanding of the country’s subsidiary legislation. If you fail to comply, you might risk steep penalties or perhaps the closure of your business. You are welcome to get help from our local company incorporation specialists if you want to open a company in Argentina.
Registration of a subsidiary in Argentina
To open a subsidiary in Argentina, you must first register the company under Article 123 of the Commercial Companies Law. This way, regardless of whether the company is a public limited company or a limited liability company, the essential conditions that assure the legal involvement of all shareholders will be established. Here are other details to consider:
- Foreign owners who are participating in the Argentine subsidiary’s registry must also register with the Public Mercantile Registry (RPC).
- To register a subsidiary in Argentina, you also need to submit various documents. Our company incorporation specialists in Argentina can provide you with detailed guidance regarding the list of required documents.
- Instead of setting up a subsidiary in Argentina, there is another possibility. Rather than registering a subsidiary, a frequent strategy to join the market is to purchase an existing company.
The majority of subsidiaries are run as limited liability partnerships with either people or businesses as partners. The procedure of forming a limited liability partnership (LLP) in Argentina might take months. There are several steps involved, which are provided below:
- Checking the name of the corporation with the Office of Corporations;
- Obtaining the notary public’s certification of all founding partners’ signatures;
- Initial capital is deposited to the National Bank, and a new partnership notification is published in the official newspaper;
- The incorporation cost must be paid.
Besides these steps, Argentina subsidiary registration also includes obtaining business books, a fiscal code, and a tax identification number, as well as registering with the Public Register of Commerce. Each stage adds extra time and money under different circumstances. So, it is advisable to seek professional help in this regard. Because any inconsistency will add extra time to the incorporation of the company. Our company formation agents can provide you with comprehensive assistance to help you open a subsidiary in Argentina.
If you have any further questions regarding the company formation in Argentina, our agents are at your disposal. You can clear all the ambiguities you have regarding the incorporation procedure after interacting with our experts.
Here is a video presentation about subsidiaries in Argentina:
The income taxation for subsidiaries in Argentina in 2023
The basic taxation for subsidiaries in Argentina is set at 35%, according to the Income Tax Law for 2023. The remittance of profits to the parent company and the dividends paid to foreign shareholders are not subject to taxation.
The taxable income of a subsidiary here is established by deducting all allowable expenses from the legal entity’s gross income. Our Argentina company formation agents can provide further details on this matter. Also note that in 2023 the withholding tax on payments made by an Argentine resident corporation to a non-resident is 35%, which is reduced to 15.05% in certain circumstances. For example, this is the case when the transaction involves a seller financing the movable property (cars are excluded in this case). The expenses registered abroad can also be deducted if the taxpayer can prove that they were incurred for the goal of generating taxable income in the country.
Payroll for subsidiaries in Argentina
Subsidiaries registered in Argentina should comply with other procedures too, right after incorporation. These refer to payroll:
- Employee registration with the AFIP (Administración Federal de Ingresos Públicos).
- Issuance of CUIT of the employer (Unique Tax Identification Code) and CUIL for employees (Unified Labor Identification Code) for social security matters.
- DNI (Documento Nacional de Identidad) is requested for opening bank accounts for employees.
- Logging the employment relationship in the Special Payroll Book. An inspection is made by the Ministry of Labor.
- Creating written work contracts for the subsidiary’s employees in Argentina and registration with the relevant authorities.
Legislation regarding subsidiaries in Argentina
The establishment of a subsidiary in Argentina is subject to the provisions of the General Companies Act. This set of laws is valid for any business structure available in this country. We remind you that the registration of this entity is done at the Public Registry in the City of Buenos Aires or any other preferred city for the development of such a business. There are other important institutions that you should contact when you want to open a subsidiary in Argentina:
- Office of Corporations (Inspeccion General de Justicia) for name verification.
- Registration of the subsidiary with the National Administration of Social Security in Argentina.
- Registration of the subsidiary with the Federal Administration of Public Revenues, and the Administracion Federal de Ingresos Públicos.
We suggest discussing all the important aspects with one of our company formation agents in Argentina for a better understanding of the formalities imposed in this process. You can save time and money if you have a well-prepared team by your side.
What are the advantages of registering a subsidiary in Argentina?
As is known, a subsidiary in Argentina has a separate legal entity from the parent company. On the other hand, the subsidiary is treated just like any other local business. Here are other benefits linked to a subsidiary in Argentina:
- The liability of the foreign company is restricted to the share capital invested in the subsidiary in Argentina.
- The foreign company is not responsible for any subsidiary debts in Argentina.
- A subsidiary can test the Argentinian market and implement varied business ideas. Thus, it is possible to access various areas of operation, different from those initially established.
- With a subsidiary in Argentina, it is easy to contract the services and/or products of other companies registered in this country.
- It can be said that there is more stability for the employees of a subsidiary, compared to those of a branch.
- International expansion is one of the most important advantages of opening a subsidiary in Argentina.
Economy facts about Argentina
Argentina is a solid business destination and is highly appreciated by foreign entrepreneurs looking for new opportunities. The following dates underline the economic direction of the country so that you can get an idea of the advantages of starting a business in Argentina:
- Around USD 10,050 is the gross national income per capita in Argentina.
- Recent data show that the trade balance of goods sums up around USD 6.92 billion.
- Around USD 4.02 billion was the value of FDI in Argentina in 2021.
- The services sector in Argentina registers about 78% of total employment.
In case you have more questions about opening a subsidiary in Argentina, you are welcome to contact our company formation consultants. They can perform a detailed analysis and help you establish the desired entity as per your requirements.