Legal Framework for Investments in Argentina

En In the Argentine Republic, foreign investors and investments are amply protected by the law, supported by a package of national and international measures which place this country in pole position as an attractive destination for foreign investors and investment:

The legal framework for foreign investment in Argentina: equality of treatment with domestic investors

Law on Foreign Investment
The Foreign Investment Law defines the legal framework regulating foreign investment.
This law covers the different ways in which foreign investors may invest capital in Argentina for the purposes of carrying out established activities-in the industrial, mining, agricultural, trade, and financial sectors of the economy, whether directly in the area of services or in other areas related to the production and exchange of goods and services-without prior approval. The Law states that such investors shall enjoy the same rights and be subject to the same obligations as defined for domestic investors by the Argentine Constitution and Laws.

Rights of foreign investors
• Foreign investors may remit abroad liquid profits arising as a return on their investment as well as repatriate their investment.
• They may avail themselves of any of the legal forms of incorporation foreseen by Argentine legislation.
• They may make use of domestic credits and loans with the same rights and under the same conditions as domestic companies of domestic capital. Download our Legal Framework Report for more information.

Legal structures that companies may adopt

The main legal forms of business that foreign investors may establish when installing themselves in Argentina with any degree of permanence include setting up an overseas Branch, the acquisition of stock in an existing company or the creation of a new one.

A) Overseas branches
A Branch is effectively the same company which opens an office in the country. It is not necessary to create a new legal entity. It should be noted that the Branch answers in terms of assets to the total value of the capital owned by company’s Head Office (HO) and not to the value of the branch in Argentina as assigned by HO. The branches of foreign companies are required to register their presence. They may undertake all the activities pursued by HO, in the name of HO and through the person designated as its representative.

B) Registering Branches
The Law of Commercial Companies (LCC) contemplates a broad variety of corporate forms, amongst which the most widely used by foreign investors in Argentina are the incorporated business company (Sociedad Anónima – SA) and the limited liability company (Sociedad de Responsabilidad Limitada – SRL). In these cases, unlike Branch offices, these kinds of companies are only answerable in principle for the capital of the company incorporated or in which stock is acquired. Download our Legal Framework Report for more information.

Legal framework for the hire of personnel

Employment contracts may take different forms.

Forms of hire:
Employment contracts are non-fixed term, unless there is a specific provision to the contrary. The Law establishes a trial period of three months which may be extended to six under a collective agreement.
During this period the employee may be fired without receiving any form of indemnity. Domestic legislation foresees the possibility of part-time employment contracts. Working hours may not exceed 2/3 of a normal working day and the duration of the contract must be fixed by a collective work agreement. A part-time regime does not allow for over-time.

Annual Bonus salary:
The Law provides that full-time workers and employees may take home an extra salary as a bonus (“aguinaldo”) paid in two six-monthly quotas in June and December. Each quota is equal to 50% of the highest monthly salary paid during the previous six-monthly period.

The duration of the vacations depends on the length of the working relationship to-date; if this exceeds six months and is less than five years’ service it is 14 days; 21 days if the period served is five to ten years; 28 days if this is 10 to 20 years, and 35 days if the employee’s period of service is 20 years or more. If the employee has been in service for less than six months, he/she may be given one day off for each twenty days worked.
If the contract expires without the employee having taken his/her vacation, he/she must receive financial compensation proportionate to the period worked, as and when this is at least three months.

Employment contracts must be terminated with prior notice. Prior notice shall be given by the employee 15 days prior to the termination of the contract, while the employer must give 15 days warning when the employee is in the trial period, one month when the employee has been employed for a period not exceeding five years and two months when the period exceeds this.
Redundancy indemnity is equivalent to a twelfth part of the highest basic monthly salary paid to the employee during the last year o during the time worked if this period is less, for each month of work or fraction greater than 10 days.
The highest remuneration which is taken as the baseline may not be greater than three times the monthly average contemplated in the collective agreement applicable to the employee in question.
The minimum indemnity may not be less than two twelfths of the highest basic monthly remuneration paid the employee during the last year of service.
When the employer fires the employee because the latter has committed a work-related offense (of sufficient gravity) which hinders the continuity of the relationship, the latter is not entitled to receive the indemnity provided for by labor legislation.

Minimum Living wage:
In Argentina, the Minimum Living Wage is set by the National Board for Employment, Productivity and Wages, made up of representatives from the trade unions, employers’ associations and the Executive Power. The resolutions passed by this body require a majority vote of two-thirds of its members. Currently, the minimum living monthly wage stands at AR$ 1,400 (USD 364).
The main laws and regulations in force which regulate labor and welfare issues in Argentina are the following:
• Employment Contract Law Nº 20.744;
• Law of Union Associations Nº 23.551 and Decree # 467/88;
• Collective Working Agreements Nº 14.250 and 25.250;
• National Employment Law Nº 24.013;
• Labor Reform Regime Laws Nº 25.013 and 25.877;
• Occupational Hazard Law Nº 24.557;
• Integrated Retirement and Pension Systems Law Nº 24.241;
• Family Allowance Regime Law Nº 24.714; and
• National Health Insurance and Coverage System Nº 23.660 and 23.661.

Working hours :
Normal working hours are 8 hours a day, or 48 hours a week. The working day may be extended to include hours worked over-time which should be paid at an additional 50% of the normal hourly rate.
The hourly rate on Saturdays after 1 pm, Sundays and national holidays is double the normal rate. Night work is permitted but may not exceed the daily period of 7 hours between 9 pm and 7 am.
There are twelve national holidays in the year
* Variable date.
** If this holiday falls on a Tuesday or a Wednesday it is passed to the preceding Monday, and if it coincides with a Thursday or Friday, it is passed to the following Monday.
*** The holiday is celebrated on the third Monday of the month.
Argentina’s National Investment Development Agency -LegaL Framework For Investments In argentIna 1

Social security contributions:
Companies make employer contributions to cover the social security services of their employees. These contributions cover family allowances, medical services, pension plans and unemployment funds. The rates are 27% of the gross salary paid for employers whose main activity is the provision and lease of services, and 23% for other employers.
In order to foster new job creation in Small and Medium-Sized Enterprises, those employers who increase the number of persons in their full-time non-fixed term employment are eligible for a reduction in the social security contribution rates. This discount applies to one-third of the contributions made. At the same time, all the companies based outside the metropolitan area whatever their size may offset against VAT a percentage of the amounts paid as employer contributions.

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