As one of the largest economies in South America, Argentina is home to a skilled workforce proficient in English, Spanish, and Portuguese. That’s why many US tech companies are supplementing their workforce with talent from this region. Due to the high quality of education in Argentina and its tech-savvy populace, you’ll also find 11 of the 34 tech unicorns in this country. Furthermore, Argentina’s time zone is closely aligned with that of the US, ensuring smooth business relations between both regions.
While hiring Argentinian independent contractors may seem like a cost-effective solution to ensure you have the best minds working on your projects, prepare to face unique challenges. You must meet Argentina’s labor requirements, especially those affecting independent contractors, while navigating tax compliance and payroll.
What is The Appeal of Hiring Independent Contractors in Argentina?
In recent times, there’s been a global shift towards the use of independent contractors as many companies are trying to save costs while maintaining a high quality of talent. While these contractors were previously considered peripheral workers, they now constitute a significant part of many modern teams. It’s exciting to note that independent contractors are a welcome idea by most startups who wish to save money by hiring people to work with them on a project basis.
Argentina is undoubtedly filled with skilled talent that can benefit your workforce, but why should you hire an independent contractor? Here’s a list of reasons to consider:
- Argentina’s independent contractors are just as skilled as full-time workers and are proficient in Spanish, English, and Portuguese. Therefore, you won’t have to spend extra training them to communicate with the rest of your workforce.
- Argentina’s independent contractors have the expertise to handle various short-term and long-term projects.
- Argentina has a vibrant startup culture and is home to many remote tech workers. As a result, abroad tech companies can efficiently work with the talent here without leaving the shores of their country.
- Argentina’s independent contractors are a lesser administrative and tax burden for your organization
- Hiring Argentina’s independent contractors is a cheaper alternative to hiring full-time time employees.
- It’s possible to increase or reduce the number of independent contractors you need in your workforce without any significant long-term commitments.
Legal Framework for Contractors in Argentina
Before working with independent contractors in Argentina, the first thing to do is find out what the law says about this type of employment relationship. The first thing to note is that independent contractors in this region are not obliged to make any statutory contributions from their earnings. As a result, they are not eligible for statutory benefits. However, there are instances where contractors may make voluntary, statutory contributions in exchange for benefits, such as unemployment insurance.
Next, Argentine contractors are expected to issue invoices for services provided. These invoices are to be presented when filing taxes as evidence of payment received. It’s also crucial to note that payments made to independent contractors are subject to exchange rate fluctuations and currency restrictions. So, you may need to decide on an appropriate payment method.
Employers must also accurately distinguish between independent contractors and employees to avoid non-compliance penalties and fines. Additionally, you should establish intellectual property rights before onboarding your contractors to prevent legal disputes that may threaten your business.
Effective Strategies for Hiring Argentinian Contractors
Without any doubt, hiring independent contractors in Argentina is a complex process, especially if you’re a startup without a large HR team. However, you can simplify it for yourself by learning practical strategies to add these experts to your workforce quickly. Here’s a list of strategies worth considering:
- Create a detailed job description that clearly outlines the skills, qualifications, and responsibilities of the contractor you wish to hire.
- Prepare a legally binding contract that contains information about the scope of work, terms of engagement, preferred payment details, etc. It’s a good idea to prepare this contract under legal supervision to avoid infringing on local laws.
- Advertise the job opening online to get many interested applicants quickly. You can advertise open positions on Indeed Argentina, Xpat Jobs, Craigslist, Career Jet, etc.
- Review all the applications you’ve received and create a shortlist of reliable candidates before interviewing each of them. This interview should focus on the expectations for both parties regarding the open job role.
Globy can assist you in hiring skilled independent contractors and navigating the complexities of the process in Argentina.
Tax and Compliance Considerations
If you wish to hire independent contractors, it’s crucial to pay attention to any tax compliance laws and practices that may affect you. Here’s a list of tax laws to pay attention to when hiring Argentina independent contractors:
- Income Tax: All Argentine independent contractors must pay income tax, which is charged at 5 – 35% depending on income level. To do this, they must register as taxpayers with the Administración Federal de Ingresos Públicos (AFIP).
- Value Added Tax (VAT): Depending on the nature of their service, independent contractors may also be required to pay VAT. The VAT rate in Argentina is fixed at 21%. All employers are expected to monitor whether their contractors file VAT payments correctly.
- Invoicing: Any contractors in your workforce must issue you invoices for services rendered, which must contain their valid tax ID. It’s crucial to ensure proper invoicing to simplify tax reporting.
- Reporting Requirements: All payments made by the employer to independent contractors must be reported to tax authorities. This report must be monthly or quarterly, depending on the frequency of payments.
If you are hiring Argentine independent contractors from the United States, these are other tax laws to consider:
- Form W-8 BEN: Your Argentine contractors should submit a completed Form W-8 BEN to determine the appropriate withholding rate for each.
- Form 1099-NEC: US-based companies are expected to report any payments made to US citizens, even those in Argentina, through Form 1099-NEC.
- Form 1096: Employers contractors may also submit form 1096, which contains information about their contractors.
- FATCA Compliance: US-based employers must also comply with the Foreign Account Tax Compliance Act, which may require gathering additional information about contractor’s tax residency and foreign financial accounts.
Risks of Misclassification and How to Avoid Them
When hiring someone from Argentina, it’s crucial to classify them correctly. There’s a legal distinction between different types of workers, and each affects you in various ways.
According to Argentine labor law, an employee is an individual who operates for an organization or employer in exchange for wages. In this type of work relationship, the employer is responsible for controlling working hours, the location of the work, and the criteria for good performance. Employers will also give employees the equipment they need to complete their tasks.
On the other hand, an independent contractor is a person who renders services to a client or employer based on a contractual relationship. Unlike employment relationships, this contractual requirement allows individuals to choose their schedule, preferred working location and provide their tools.
Argentine labor laws protect employees, and they must be registered in the country’s social security system. However, independent contractors are not protected by Argentine labor laws. Hence, they are not entitled to statutory benefits when added to your workforce.
If you misclassify independent contractors as employees, it could be costly for your business. Why? You’d be forced to pay all outstanding statutory benefits to these employees for the duration of their service. If you fail to comply and pay employees statutory benefits, you’ll be subject to additional fines due to non-compliance.
It’s also crucial to note that misclassifying employees and independent contractors may lead to problems with your organization’s intellectual property rights. There may be instances when your company does not own the intellectual property for a good or product, which could result in legal problems for your business if you choose to go ahead. If you can correctly classify all members of your workforce (employees and independent contractors), it’ll help you avoid employee disputes and legal penalties. Furthermore, correct classification will help you maintain a healthy work environment.
Payment Solutions for Argentinian Contractors
Argentina is renowned for its strict currency regulations and high inflation rate. As a result, cross-border payments can be somewhat challenging. Here’s a list of effective payment methods to adopt when hiring independent contractors:
Bank Transfer
One of the most effective ways to pay Argentine independent contractors is through a bank transfer. To complete a bank transfer, you’ll need the contractor’s (recipient) banking information, such as their bank name, account number, and branch code. However, keep in mind that international transfers require costly transfer fees. You’ll also have to account for any currency conversion costs.
Online Payment Platforms
Several online payment platforms allow you to send money to different parts of the world. These platforms require that you register an account and connect them to your bank account or deposit money directly into them. However, the unique selling point of these platforms is that they charge considerably less for cross-border payments and can process transactions in a few minutes. Famous examples of online payment platforms are PayPal, Wise, and Payoneer.
Global Hiring Partners
Global hiring partners are a great alternative to paying independent contractors. These platforms are designed to help you manage different aspects of the employee hiring process, including candidate shortlisting and onboarding. A reliable global hiring partner can also guide you navigate the cross-cultural differences between US companies and Argentine contractors, and it’s their job to simplify the hiring process for both parties.
Globy is a global hiring platform designed to help US companies avoid the pitfalls of hiring professionals from Argentina and Latin America. By recommending the best EOR to handle the crucial aspects of employee recruitment, such as payroll and taxes, you can focus on more crucial aspects of business. We’ll also connect you with the best talent to handle different aspects of your business.
Read more: Employer of Record in Argentina
Leveraging Recruitment Agencies for Streamlined Contractor Hiring
While there are several benefits of working with experts from this region, it can be pretty challenging, especially if it’s your first time. As clearly shown in this piece, there are several things to consider when hiring an Argentine independent contractor. A good idea to simplify this process is to work with a recruitment agency to discover and leverage new talent. These are the benefits of working with a recruitment agency to onboard contractors:
- Organize the entire recruitment process cost-effectively
- Onboard new workers quickly with custom-made contracts
- Recommends finance and accounting professionals to process payroll automatically for local and foreign employees and independent contractors
- Recommends experts who can handle your tax payments and ensure reporting compliance
- Recommends professionals who help you maintain tax compliance with Argentine labor laws from their talent pool
Let Globy guide you through the process of hiring and retaining top talent in Argentina.
Further reading: Hiring Remote Employees in Argentina and Software Developers in Argentina
FAQs
Yes, a foreigner can work in Argentina, but they must obtain the appropriate work visa or permit. Working in this region typically involves securing a job offer from an Argentine employer who will sponsor the visa application. Freelancers and remote workers may also be eligible for specific visa categories, such as the digital nomad visa, designed to attract foreign talent.
Paying contractors in Argentina can be managed through various methods, including bank transfers, international payment platforms like PayPal, Payoneer, and Wise, or cryptocurrency transactions. It’s essential to understand the local tax regulations and contractual obligations. Utilizing platforms that handle currency conversion and offer competitive exchange rates can also simplify the payment process and ensure timely compensation.
In Argentina, jobs in technology, healthcare, and engineering are among the most in demand. The IT sector, particularly roles such as software developers, data analysts, and cybersecurity experts, is multiplying. Additionally, healthcare professionals, including doctors and nurses, are highly sought after, as are engineers specializing in various fields like civil, mechanical, and electrical engineering.
Yes, foreigners working in Argentina are subject to local tax laws. Resident foreigners are taxed on their worldwide income, while non-residents are taxed only on Argentine-sourced income. Argentina has progressive tax rates, and foreigners need to understand their tax obligations, including social security contributions, and seek professional advice to ensure compliance.
