Expanding into Argentina: Tax, Contracts and HR Legal Essentials

Mgr. Vojtěch Sucharda
Mgr. Vojtěch Sucharda
17.4.2026 | ARROWS law firm

Are you planning to expand into the Argentine market, or do you already have business ambitions there? Argentina offers attractive opportunities, but also a range of obstacles that are not obvious at first glance. In this article, you will find practical answers on how to avoid tax pitfalls, properly structure commercial contracts, and ensure the right approach to HR law – all with due regard to the specifics of the local legal system and its links to Czech business.

Quick summary

  • Tax system: The Argentine tax system is highly complex and unstable; an incorrect tax strategy can cost you significant amounts in penalties and late-payment interest, and it is also necessary to take into account the absence of a comprehensive double taxation treaty with the Czech Republic.
  • Legal environment: Although the law in Argentina, like in the Czech Republic, is based on the continental model (civil law), Argentine law places an extreme emphasis on formal requirements and public policy (orden público)—an informal approach or using templates from the internet may deprive you of enforceability.
  • HR and employment: Employee protection in Argentina is very strong; failure to comply with obligations, including payroll-related contributions, leads to potentially ruinous litigation and high severance payments.
  • Need for expert oversight: The combination of these three areas with an international element requires specialised oversight; Czech companies that keep their legal matters under control gain a competitive advantage and minimise risks.

Key features of the Argentine legal system

Argentina, like the Czech Republic, has a continental (civil law) legal system. This does not mean, however, that legal practice is identical. The fundamental differences lie in the degree of formalism, bureaucracy, and the strong influence of so-called public policy (orden público), which in many cases restricts the parties’ contractual freedom more than in the Czech environment.

Lawyers in Argentina and local courts emphasise specific formal requirements for legal acts, such as the need for notarial deeds, signature legalisation, or registration of contracts.

This has practical implications for Czech companies—it is necessary for your legal documents to reflect not only Czech law but, above all, Argentine legislation (e.g., the new Civil and Commercial Code).

ARROWS, a Prague-based law firm, has experience in handling legal relationships in Argentina through its international network and can ensure that your legal strategy complies with local specifics.

FAQ - Questions on the basic legal framework

1. What is the main division of the legal system in Argentina?
Argentina is a federal republic, which means that alongside federal laws (e.g., customs regulations, certain taxes) there are also provincial regulations and procedural rules. Unlike the Czech Republic, where the legal system is unitary, in Argentina you must also take into account the legislation of the specific province where you do business (e.g., Buenos Aires, Córdoba, Mendoza).

2. How does entering into contracts in Argentina differ from the Czech Republic?
While in the Czech Republic the emphasis is on the parties’ intent and informality (a contract can often be concluded even by email), in Argentina, for enforceability, many types of contracts require a written form with officially certified signatures or the form of a public deed. A choice-of-law and jurisdiction clause is also important, and it is subject to statutory limitations.

3. What should a Czech company know about local legal practice?
The Argentine judiciary is significantly slower and more formal than the Czech one. Injunctive relief or debt recovery may take years. Prevention is key—a well-drafted contract in Spanish with clear sanction mechanisms is essential. ARROWS, a Prague-based law firm, will provide you with legal advice with knowledge of both systems.

Tax obligations and tax risks in Argentina

The Argentine tax system is one of the most complex in the world. A Czech company doing business in Argentina faces several key tax obligations at three levels: federal (e.g., income tax, VAT), provincial (gross receipts tax – Ingresos Brutos), and municipal.

A key risk for 2026 remains the absence of a comprehensive double taxation treaty between the Czech Republic and Argentina. This means that income generated in Argentina may be taxed in both countries unless the mechanisms for unilateral relief from double taxation under Act No. 586/1992 Coll., on Income Taxes are used correctly. Many Czech entrepreneurs rely on general advice and subsequently face an effective tax burden exceeding 50–60%.

The key authority is AFIP (Administración Federal de Ingresos Públicos). Failure to register or incorrect classification into a tax category leads to the blocking of the tax identification number (CUIT), which effectively makes any legal economic activity impossible.

Argentina also has very strict transfer pricing rules (transfer pricing), where, when invoicing between a parent and a subsidiary, you must demonstrate arm’s-length pricing. AFIP requires detailed transfer pricing studies and, in the event of errors, assesses additional tax including high penalties.

Another specific feature is VAT (IVA – Impuesto al Valor Agregado). The standard rate is 21%, but reduced and increased rates also exist. The VAT refund system, especially for exporters, is administratively demanding and time-consuming, which in a high-inflation environment leads to the depreciation of tied-up cash.

FAQ - Tax matters

1. Does a Czech company have to register with the Argentine tax authority?
Yes, if it carries out ongoing business activity in Argentina (through a permanent establishment or a subsidiary). Obtaining a tax number (CDI or CUIT) is the first step. Without it, it is not possible to open a bank account or issue invoices.

2. How does corporate income tax (Impuesto a las Ganancias) work for companies?
Corporate income tax in Argentina is progressive (usually in three brackets, e.g., 25%, 30% and 35% depending on the amount of net profit), to which a dividend tax (e.g., 7%) is added if dividends are paid to shareholders. The system also includes an inflation adjustment mechanism, which is essential for the correct calculation of tax in the Argentine environment.

3. What are the risks associated with transfer pricing?
If transactions between related parties (CZ–AR) are not supported by a transfer pricing study, AFIP may reprice the transactions. This leads to additional tax assessments, the imposition of a penalty (calculated as a percentage of the assessed amount), and late-payment interest. ARROWS attorneys in Prague ensure that the documentation meets the requirements of Argentine legislation.

Risk table – Tax and legal risks in Argentina

Risks and sanctions

How ARROWS helps (office@arws.cz)

Failure to register with AFIP: Inability to invoice legally, freezing of bank accounts, high administrative fines, and inability to import/export goods.

Ensuring registration and compliance: ARROWS will handle the process of obtaining a CUIT, registration for the relevant taxes, and setting up communication with the tax authority in line with current regulations.

Double taxation (absence of a treaty): Risk of profit being taxed in Argentina (withholding tax, corporate income tax) and subsequently in the Czech Republic without the possibility of an effective tax credit, resulting in the loss of a significant part of the margin.

Tax optimisation and structuring: We will propose a business structure to minimise the impact of the absence of a double taxation treaty and make use of instruments under Czech law.

Errors in VAT (IVA) and Ingresos Brutos: Accumulation of tax credits that cannot be recovered; penalties for tax underpayment amounting to multiples of the outstanding amount.

Management of tax obligations: We will ensure oversight of correct rate calculations, filing of returns, and the VAT refund process, including handling provincial taxes.

Transfer pricing: Additional tax assessments by AFIP, high penalties, and the risk of foreign exchange restrictions on payments abroad.

Preparation of documentation: In cooperation with local experts, we will prepare transfer pricing documentation to defend the pricing set before the Argentine authorities.

Foreign exchange regulations (CEPO): Inability to repatriate profits from Argentina to the Czech Republic or pay for imported goods due to central bank (BCRA) regulations.

Foreign exchange advisory: We will propose lawful channels for international payments in line with current foreign exchange regulations.

Contracts: Misunderstandings and legal uncertainty

Simply translating a Czech contract into Spanish and sending it to an Argentine partner is one of the biggest risks. Argentine law has a different approach to liability for defects, contractual penalties, and force majeure.

For example, the term “contractual penalty” ( cláusula penal ) is subject to limits in Argentina based on case law – courts may reduce an unreasonably high penalty, even in commercial relationships.

Furthermore, concepts such as “hardship” (material change of circumstances) are applied more often in economically unstable Argentina than in the Czech Republic. If the contract does not include specific clauses on price adjustment depending on inflation or exchange-rate changes (if permitted by law at the relevant time), the transaction may become loss-making for a Czech company within a few months.

If the contract does not include a clause stating that “time is of the essence” and does not precisely define the consequences of delay, termination of the contract may be complicated.

Language barriers and cultural differences also play a role, because in Argentina the concept of time is more flexible. ARROWS, a Prague-based law firm, prepares contracts so that they are enforceable directly in Argentina, which includes choosing the appropriate governing law and jurisdiction clause.

FAQ - Contract requirements and resolving complications

1. Is it necessary to have the contract in Spanish?
Yes. For submission to Argentine authorities or courts, any document must be in Spanish. If the contract is drafted in another language, it must be translated for court proceedings by a local sworn translator ( traductor público ), which is costly and time-consuming. Ideally, a bilingual version should be executed at the time of signing.

2. What are typical issues when entering into contracts with an Argentine partner?
The most common issues include: missing clauses on inflation-based price adjustments, invalid choice of governing law (Argentine courts do not allow foreign law in certain matters), insufficient payment security (letters of credit, insurance), and the absence of an arbitration clause that would allow the parties to avoid slow state courts.

3. What happens if an Argentine partner breaches the contract?
Judicial enforcement in Argentina is a lengthy process (typically 4–7 years for complex commercial disputes). The costs of legal representation and court fees are high. Therefore, we recommend implementing an international arbitration clause in contracts or securing the obligation with another instrument (e.g., a promissory note) that enables faster enforcement proceedings.

HR legislation in Argentina: Strong employee protection

Argentine labour law (LCT – Ley de Contrato de Trabajo ) is strongly protective. The employee is considered the weaker party and, in case of doubt, the law is interpreted in their favour ( in dubio pro operario ).

If you work with someone on an invoice basis (monotributista) but the relationship shows signs of dependency, courts almost always reclassify the relationship as employment and order payment of all contributions.

Social security and health contributions are high. In addition to the gross salary, the employer pays approximately 24–27% for social security, health insurance, and other funds. Total labour costs (including the mandatory 13th salary – aguinaldo, paid leave, and occupational risk insurance ART) are significantly higher than in the Czech Republic.

Termination of employment is a critical moment; dismissal without cause requires payment of severance, calculated as one month’s salary for each year worked.

In periods of economic crisis, so-called “double compensation” is also often activated by legislation, doubling the severance pay. Summary dismissal for breach of duties ( justa causa ) must be extremely well documented; otherwise, the court will invalidate it.

FAQ - Employment law advisor

1. What are the employer’s main obligations?
Registering the employee with AFIP before they start work, keeping payroll records ( libros de sueldos ) in accordance with the law, paying contributions and ART insurance (accident insurance), and complying with collective bargaining agreements ( convenios colectivos ), which are very strong in Argentina and set minimum wages for individual sectors.

2. How much does it cost to dismiss an employee?
Basic severance is 1 month of the highest regular salary for each year of service. In addition, compensation for unused leave, a pro-rata portion of the 13th salary, and, where applicable, compensation for missing notice period ( preaviso ) must be added. If the employee was not properly registered, penalties may multiply this amount many times over.

3. Can fixed-term employment be agreed?
Yes, but only in cases defined by law (e.g., replacement, seasonal work, a specific project) and for a maximum of 5 years. If the reason ceases to exist or is not properly specified in the contract, the employment automatically becomes indefinite.

Risk table – HR and employment-law risks

Risks and sanctions

How ARROWS can help (office@arws.cz)

Švarcsystem (disguised employment relationship): Reclassification as employment by a court, additional social security and tax assessments with interest, and the imposition of special fines under the Employment Act.

Audit of contractual relationships: We will assess how your cooperation with contractors is set up and recommend a safer model (e.g., a genuine B2B relationship or proper employment).

Invalid termination of employment: Losing a court dispute means an obligation to pay severance, interest, legal costs, and fines for a “harassing” termination.

Employment termination strategy: We will prepare termination documentation and negotiate exit terms (“mutuo acuerdo”) before a notary, which minimizes the risk of future claims.

Workplace accidents and illnesses (ART): If the employer does not have ART insurance in place or fails to comply with occupational health and safety rules, it bears full liability for personal injury damages in civil proceedings.

Compliance and insurance: We will advise on selecting an occupational risk insurer (ART) and setting internal OHS policies in line with Argentine standards.

Collective bargaining agreements (Unions): Failure to comply with the sector’s wage scales (e.g., retail, IT, industry) leads to back pay and conflicts with unions.

Payroll audit: We will verify whether your remuneration complies with the applicable collective bargaining agreement for your industry in the relevant region.

How to navigate Argentina as a Czech company: Practical tips

If you are planning to enter the market, the first step is a legal and tax analysis. Contact experts with knowledge of the Czech-Argentine environment. The differences in law are so fundamental that a Czech entrepreneur’s intuition does not work here.

The second step is partner due diligence, which ARROWS, a Prague-based law firm, can provide by verifying the creditworthiness and legal existence of your business partners.

The third step is localization. For most operations you will need a local representative or agent. Establishing a subsidiary (e.g., S.A. or S.R.L.) requires at least two shareholders and often also a director resident in Argentina.

The fourth step is patience and flexibility, because bureaucracy when opening an account or completing registrations takes longer than in Europe. This must be factored into your business plan.

Contact our specialists: 

International element: Connecting Czech-Argentine business

Connecting a Czech company with the Argentine market requires sophisticated structuring. Whether it is direct export, establishing a branch ( Sucursal ) or a subsidiary ( Filial ), each option has different tax and legal implications.

ARROWS, a Prague-based law firm, can structure international holdings to ensure investment protection and efficient capital flows, even despite complex Argentine foreign exchange regulations.

ARROWS, a Prague-based law firm, provides services to more than 150 joint-stock companies, 750 limited liability companies (s.r.o.), and 50 municipalities and regions. If you are looking for a route into Latin America, contact us at office@arws.cz.

Conclusion

Doing business in Argentina offers high profit potential, but it comes at the cost of a high level of risk and administrative burden. The legal and tax environment is unstable and requires continuous monitoring. An error in transfer pricing settings, failure to register with AFIP, or a poorly drafted employment contract can have fatal consequences.

The attorneys at ARROWS, a Prague-based law firm, have long focused on cross-border business matters and, thanks to professional liability insurance and international partners, can provide you with the necessary certainty.

For a non-binding consultation, contact us at office@arws.cz.

FAQ – Most common legal questions about doing business in Argentina

1. Do I have to establish a new company in Argentina, or can I do business as a Czech company?
For permanent and more extensive activities, it is usually necessary to establish a local entity. The most common forms are Sociedad de Responsabilidad Limitada (S.R.L.) – equivalent to an s.r.o., or Sociedad Anónima (S.A.). A foreign (Czech) company must register with the local commercial register (IGJ in Buenos Aires or the relevant provincial register) in order to be a shareholder in an Argentine company.

2. How long does it take to set up a company and register?
The incorporation process, including obtaining a tax ID number (CUIT) and registration in the commercial register (Registro Público / IGJ), takes 4–8 weeks in the best-case scenario, but it may extend to several months depending on current bureaucracy and the speed of legalizing documents from the Czech Republic (apostilles, translations). Opening a bank account is a separate, often lengthy process.

3. Is it possible to manage a company in Argentina solely from the Czech Republic?
You can own the company from the Czech Republic, but for day-to-day operations (dealing with authorities, banks, signatures) you must appoint a responsible representative in Argentina (a director or manager) with permanent residence in the country. ARROWS can help arrange nominee services or legal representation.

4. What are the most common mistakes made by Czech companies?
(a) Underestimating inflation and FX risk in contracts; (b) lack of a high-quality written contract and reliance on a “gentleman’s agreement”; (c) ignoring foreign exchange restrictions (inability to freely send dollars/euros abroad); (d) failing to address the tax implications of the absence of a double tax treaty in advance.

5. What is the main tax difference compared to the Czech Republic?
In addition to the absence of a double tax treaty, it is primarily the existence of a gross receipts tax ( Ingresos Brutos ), which is paid on turnover at the provincial level and has no equivalent in the Czech Republic. There is also the financial transactions tax (the so-called impuesto al cheque ) and the obligation to apply inflation adjustments in accounting for tax purposes.

6. What happens if obligations are breached?
Sanctions in Argentina are strict. Tax evasion may lead to criminal prosecution under the Ley Penal Tributaria . In employment law, high financial compensation is at stake. Prevention is always cheaper than dealing with the consequences. Contact us at office@arws.cz.

Notice: The information contained in this article is of a general informational nature only and is intended to provide basic guidance based on the legal status as of 2026. Although we take the utmost care to ensure accuracy, legal regulations and their interpretation evolve over time. We are ARROWS advokátní kancelář, an entity registered with the Czech Bar Association (our supervisory authority), and for maximum client protection we maintain professional liability insurance with a limit of CZK 400,000,000. To verify the current wording of regulations and their application to your specific situation, it is necessary to contact ARROWS advokátní kancelář directly (office@arws.cz). We accept no liability for any damages arising from the independent use of the information in this article without prior individual legal consultation.

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