Compliance with Migration Law
In Argentina,tourist visas are granted for a term of up to three months and may be extended for another three months upon their expiration.If a foreigner enters the country under the category of tourist, he or she will not be legally entitled to render services or perform productive work in Argentina.
Argentine migratory regulations establish that if a foreigner intends to work in Argentina for a short period of time, he or she may request a Temporary Work Permit. Such permit application does not require any prior processing prior to arrival in Argentina. The foreigner should enter the country as a tourist and only then request the Temporary Work Permit in the National Migration Bureau in Argentina, provided that he or she will render services to an Argentine entity.Temporary Work Permits are issued for up to a maximum term of 30 days (15-day initial period, renewable for another 15 days) and are granted immediately upon their request. Alternatively,citizens from certain countries specifically included in the applicable regulations,who declare upon their arrival that they are visiting Argentina on business,may enter under a special category and stay in the country for a term of up to three months,that may be extended for an additional three months upon its expiration.This category authorizes a limited number of commercial and/or professional activities in Argentina, including consultations, negotiations, business meetings and conferences. Employment under this latter category is not authorized. There are two alternatives for obtaining a work visa:(i) a foreign company who assigns its employee to work in Argentina due to a service or technical assistance agreement with an Argentine company, or (ii) a local company who hires the foreigner and includes him or her as an employee in its payroll.
Compliance with Employment Law
Pursuant to Section 3 of Employment Contract Law (“ECL”),individuals rendering services in Argentine territory must be subject to Argentine labor legislation.This is a mandatory provision because labor regulations are defined as public policy,which means that parties cannot agree to a different law.
The law requires an Argentine-based employer to hire such individuals, once the individual has the work visa. The lack of an Argentine-based employer and subsequent employment with a non-Argentine entity is a violation of Argentine law,and exposes the non Argentine entity to several penalties, including employment,migration, social security and tax. The only exception to this rule would be the case of foreign employees visiting Argentina for a brief period of time due to occasional services in Argentine territory for their foreign employer. Although there is no provision in the employment law about the extension of this occasional stay,a consistent interpretation with the migration law authorizes a stay of up to 30 days. There is no specific provision for employees sent on commission beyond30 days (e.g., due to a services agreement between the foreign employer and an Argentine entity,to install a machine,to research the market, etc.),and there is a grey area. As explained above,the Migration authority grants a work visa for such cases and does not require an Argentine entity to be the employer. Furthermore,the Retirement and Pension Law sets forth that those Argentine-based employees sent abroad on commission are still subject to the Argentine law, hence a converse construction could be made. In any case,it is advisable to have an Argentine employer when the stay exceeds 90 days.To the best of our knowledge there are no relevant precedents regarding the above mentioned scenario. The assignment scheme (also known as secondment), under which the home company maintains employment status and makes certain payments,while at the same time the host company pays certain expatriate benefits,is contradictory to Argentine law. The Argentine regulations require that all compensation paid to the expatriate be declared in the pay statement in Argentina by the Argentine employer, for purposes of employment related benefits,social security and taxes. Therefore,whenever the foreign employer pays compensation to the expatriate, such payment needs to be declared by the Argentine employer.The only exception to this rule would be the case in which the expatriate performs work for two employers simultaneously, in different jurisdictions, under a dual employment scheme. As regards acknowledgement of services for the group,Argentine labor courts have awarded severance factoring the entire period of services,as opposed to the period worked in Argentina.
Compliance with Social Security Law
Expatriates working in Argentina are subject to the social security system, under which employees and employers are mandated to pay contributions.
There are two exceptions to this rule:
(i) expatriates who are appointed as corporate directors,and (ii) expatriates who stay less than two years. Under the Argentine Retirement and Pension Law,corporate directors are obliged to pay contributions as “independent workers”,as opposed to “dependent workers.”Corporate directors who also work as employees can opt to contribute as employees, but otherwise are exempted. The Argentine Retirement and Pension Law also provides that either the employer of foreign scientists, professionals or technicians (“expatriate”) or the expatriate may request from the social security authority an exemption from social security payments for up to a two year period. The reduction is effective as from the date of filing the request.If the authority does not approve the exception,the employer must pay the outstanding social security contributions plus interest. Additionally,Argentina has signed several social security treaties,which in general terms,allow employees to either factor in the period within which they have worked in Argentina to obtain a retirement or pension-related benefits in their home country, provided that their home country has executed a social security treaty with Argentina, and/or to continue to be affiliated with the social security system of the home country for a limited period of time (i.e., between one and two years).In the latter case,the employees must follow a procedure required by the corresponding authorities of both countries. Because there is no totalization agreement between the United States and Argentina,social security payments will need to be made in Argentina,with the exception of the professionals and technicians who come to work for less than two years.
Compliance with Tax Law
The Argentine employer is required to withhold income tax (and social security contributions,if applicable) on a monthly basis.The tax base for withholding and contributions is the total salary and in-kind benefits the employee receives. The employee will be treated as an expatriate taxpayer,which permits the employee to be taxed only on his or her Argentine source income for the first five years worked in Argentina.After five years in Argentina,the expatriate will be subject to income tax on his or her worldwide income from 9 percent to 35 percent depending on the net taxable income of the employee. Expatriates who reside in Argentina for less than six months are subject to a flat withholding tax of 24.5 percent on their gross Argentine source income, rather than the regular progressive tax rates referred to above.The taxable income for expatriates working in Argentina for more than six months in a calendar year is subject to income tax withholding ranging from 9 percent to 35 percent depending on the net taxable income of each employee Individuals who reside in Argentina for more than six months in a calendar year are entitled to deduct an amount equivalent to AR$9,000 (approximately US$2,330) from their gross income.In addition,a standard annual tax deduction equivalent to AR$34,200 (approximately US$8,860) is available for benefits received for services arising from a labor relationship.
Personal Assets Tax
If the expatriate remains in Argentina for less than five years, he or she will be subject to Personal Assets Tax on assets held in Argentina exclusively.The applicable rate ranges from 0.5 percent to 1.25 percent depending on the valuation of the computable assets. In case the expatriate remains in Argentina for more than five years, he or she will be considered domiciled in Argentina and,consequently,subject to Personal Assets Tax on worldwide assets.The applicable rate ranges from 0.5 percent to 1.25 percent depending on the valuation of the computable assets.
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