Company formation in brief
Argentina does not impose any restrictions on foreign investors for ownership and management of their enterprises registered in Argentina.
Business in Argentina can be conducted through a variety of organizational and legal forms of enterprises, such as:
• Empresa Unipersonales (E.U.) - private entrepreneur
• Sociedad Anonima (S.A.) - corporation
• Sociedad de Responsibilidad Limitada (S.R.L.) - private limited liability company
• Sociedad Colectiva - unlimited partnership
• Sociedad en Comandita - limited liability partnership
• Branch - a branch of a foreign company
• Agrupaciones de Colaboración / Uniones Transitorias - joint venture
Empresa Unipersonales - a private entrepreneur - is a form of ownership that provides for the sole ownership by an individual of all the assets of a business in Argentina. A private entrepreneur is indefinitely liable for the debts and obligations of his enterprise. If a foreigner wishes to establish such form of ownership in Argentina, then he will be obliged to appoint a local representative - a manager.
Sociedad Anonima - a corporation - is a public company with a minimum capital of ARS 12,000 (approximately - US $ 4,000) characterized as follows:
• all capital must be signed by shareholders and at least 25% of the capital must be paid at the time of registration (the rest must be paid within 2 years);
• if the capital is paid in the form of non-monetary assets, then such property should be appraised by an independent expert in Argentina;
• shares can be issued both in registered and to bearer, of different classes, with and without the right to vote at meetings of shareholders;
• shareholders are free to transfer their shares to third parties, subject to the execution of the corresponding entries in the register of shareholders of the company;
• all shareholders are limited in liability;
• there is no limitation in the maximum number of shareholders (minimum - 2);
• the company is obliged to create a reserve fund by means of an annual deduction of 5% of profit until the fund reaches 20% of the company's capital;
• The company is managed by a board of directors, the majority of whom must be Argentine citizens. The number of directors and officers, as well as their powers, is determined by the company's charter;
• the number of directors in a company with an authorized capital exceeding ARS 2,100,000 (approximately - US $ 700,000) must be at least 3;
• a company with a registered capital exceeding ARS 2,100,000 must appoint a local auditor;
• the total annual remuneration of directors cannot exceed 25% of the company's profit in the year when the profit is distributed to shareholders in the form of dividends, but cannot exceed 5% in the year when dividends are not distributed to shareholders due to the lack of profit.
Sociedad de Responsibilidad Limitada, a private limited company with no minimum capital requirement, is characterized as follows:
• all capital must be subscribed and 25% of the capital paid by the shareholders at the time of registration (the rest must be paid within 2 years);
• shares can be issued in different classes, with and without voting rights at shareholders' meetings;
• shareholders are not free to transfer their shares to third parties and for the corresponding entries in the register of shareholders of the company a corresponding decision is required at least 3/4 of the general meeting of shareholders;
• all shareholders are limited in liability;
• the number of shareholders can be from 1 to 50;
• the company can be managed by one or more directors who can be residents and non-residents of Argentina, legal or natural persons in accordance with the provisions enshrined in the memorandum of association;
• the memorandum of association of the company is obliged to re-register every time there is a change of shareholders.
Sociedad Colectiva is a general partnership characterized by the unlimited liability of all partners who manage the business in accordance with the memorandum of association. The Memorandum of Association defines all the nuances of the relationship between partners, and it must be re-registered every time there is a change of partners or the provisions of the agreement. Such a change must be approved by all partners. Only individuals are eligible to be partners in Sociedad Colectiva.
Sociedad en Comandita - a limited partnership is characterized by the presence in the partnership of both partners with unlimited liability and partners with limited liability within the limits of their share in the company. Both individuals and legal entities have the right to be partners in Sociedad en Comandita.
Shares of partners can be determined both by issued shares, and without them, and accordingly, limited partnerships can be registered in the following two forms:
• Sociedad en Comandita por acciones (S.C.A.) - with shares of equal value;
• Sociedad en Comandita Simple (S.C.S.)
All administrative and economic relations of the partners are determined in accordance with the memorandum of association.
Agrupaciones de Colaboración / Uniones Transitorias - a joint venture is not so popular (compared to other forms of venture) for foreigners to set up a business in Argentina. Agrupaciones de colaboración is a so-called temporary partnership. Uniones transitorias de empresas is a so-called temporary association of companies. The fundamental difference between these forms is in the duration of the proposed joint activities of foreign Argentine participants. Argentine law does not treat the joint venture as a separate legal entity. The participants in the joint venture bear unlimited liability for the debts and obligations of the enterprise.
Sucursales - a branch of a foreign company is considered the second most popular form of business organization by foreigners in Argentina after a corporation. The accompanying organizational formalities in Argentina are identical to the rest of the world and require legalized and Spanish-translated documents of the parent company.
Argentina is not an offshore destination and all businesses there are subject to the same income and capital gains tax rate.
If the dividends paid do not exceed the net profit, then they are not taxable in Argentina.
If dividends are paid from some other additional funds, then tax will have to be paid on the amount of the excess of dividends over net profit.
Payment by Argentinean enterprises of royalties and interest related to the direct business is allowed to be included in business expenses, but for payment of trademarks this authorization limits the costs incurred to 80%.
All businesses in Argentina are required to maintain accounting records and submit annual reports in Spanish.
Argentina is not a tax heaven or offshore jurisdiction, and a concept of Argentina tax exempt company (and/or Argentina offshore company, International Business Company, trust, foundation etc. registration) does not exist in Argentina as such. A company formation in Argentina could be arranged with a professional registered agent providing incorporation, virtual office and other corporate services in Argentina. To set up a company in Argentina is possible by correspondence, but to open a bank account in Argentina will, most probably, require a personal visit.
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