Argentina is a diverse country, home to many proficient English speakers and the fourth-largest population in South America. It's no wonder global companies are taking note that Argentina is a great place to source talent.
But hiring employees in a foreign country can be a complex and time-consuming process. That's why so many global businesses look to independent contractors, skilled workers who can be hired with a more flexible arrangement—even across international borders.
When hiring contractors in Argentina, paying them is a crucial part of the process. Looking to learn how to run payroll for contractors in Argentina—all while staying compliant with Argentine labor laws? Here are the steps.
Step #1: Classify your workers
Argentina takes worker classification seriously. The Ministerio de Trabajo, Empleo y Seguridad Social (MTEySS), or the Administración Federal de Ingresos Públicos (AFIP) are the agencies that investigate claims of misclassification. If they find that a business has misclassified employees as contractors, they can levy fines, back taxes, and other penalties, including:
- All outstanding social security contributions for the duration of the worker's service.
- Salary differences
- Severance pay for employees terminated while misclassified.
- Labor fines
In the chart below, you'll see some of the key differences between contractors and employees according to Argentine labor and employment laws.
High degree of worker control. Contractors should not be given orders, instructions, or disciplinary sanctions. They should also have autonomy over when and how they work.
More employer control. Employers can dictate working hours and instructions and use disciplinary proceedings in the event of employee misconduct.
Payment upon receipt of invoice.
Fixed payments. Salary payments should occur at regular intervals, typically monthly.
No benefits or oversight. Contractors are not entitled to paid leave, but they may still take leave, which their employers cannot approve, deny, or monitor.
Benefits administered by the employer. Employees receive statutory benefits, which are overseen by the employer.
Equipment provided by the contractor. Contractors should not be given company email addresses or business cards that match those used by the company's employees. They should also not wear uniforms or working clothes that match those worn by employees.
Equipment provided by the employer, including uniforms, work clothes, business cards, and a company email address, when applicable.
Training must be specific. Contractors should only receive training on subjects specific to their contract.
General training is allowed.
Step #2: Determine the best way to pay your contractors
Before you can pay contractors in Argentina, you have to determine how you'll pay them. With the rise of global workforces and remote work, employers now have more choices than ever for making international payments to contractors. Here are some options:
- Bank wires. By opening an Argentine bank account, you can deposit funds directly into your contractors' accounts. Or, you can use your bank to send a secure global wire transfer—but keep in mind these can come with steep fees.
- International money orders. This common and long-standing payment method can be slow—especially because the employer needs to physically purchase the money order, and the contractor needs to physically deposit it upon receipt. Money orders can also come with fees and bad exchange rates.
- Digital wallets or payment platforms. Some employers use platforms like PayPal or Wise to transfer money across borders. Remember that not all digital platforms are available in all countries (for example, Venmo is only available in the U.S.) and their exchange rates can change from day to day, making it difficult to predict your outgoings.
- Global payroll services. Typically, contractors aren't included in payroll, since they aren't subject to the same withholdings as employees—instead, they invoice for their services, which goes through accounts payable for many companies.
Step #3: Create a service agreement for Argentine contractors
Once you've decided on a payment method, you'll want to draft a service agreement for your Argentine contractor. In Argentina, it's not strictly required to get contractor work agreements in writing, but it is a best practice to help avoid future disputes and better protect yourself against misclassification claims.
The service agreement should include:
- Pay rates and methods
- The length of the contract
- What services the contractor will provide
- Conditions for terminating the contract
- Any benefits the contractor will receive
Step #4: Use global payroll software to process payments
As you saw in Step #2, there are multiple ways to pay contractors in Argentina. But the fastest and simplest way is paying contractors through global payroll software.
With Rippling, you can pay contractors across the world. Here’s a preview of how Rippling’s global payroll system works:
Step #5: Calculate and file your Argentine tax forms
While employers aren't required to withhold and pay taxes for contractors in Argentina, they may be required to submit several tax forms to the Administración Federal de Ingresos Públicos (AFIP), or the Federal Public Revenue Administration.
Companies that hire contractors in Argentina may need to provide:
- Form 931 "Simplified Declarative Form for Small Taxpayers"
- Form 575/577 "Withholding Tax Payment and Information Statement"
FAQs about paying contractors in Argentina
Do you need to withhold taxes when paying contractors in Argentina?
No, foreign companies don't have to withhold payroll taxes when paying contractors in Argentina. Contractors are required to pay all of their own taxes.
Does Argentinian minimum wage apply to independent contractors in Argentina?
No, minimum wage laws don't apply to independent contractors in Argentina.
Do Argentinian contractors get benefits?
No, independent contractors in Argentina are not entitled to benefits in the same way as employees. Employers are free to offer benefits, such as paid vacation time, to independent contractors. This should be included in the service agreement before the engagement begins.
Can you pay contractors in Argentina in your home currency?
While local labor laws require employees to be paid in Argentine pesos, those laws don't apply to contractors. You can pay them in any currency, but keep in mind that for tax and reporting purposes, it's generally more streamlined to pay foreign workers in their local currency.
Can you manually pay contractors in Argentina?
It is possible for companies to manually pay contractors in Argentina, and many (especially small businesses) opt for this to save costs. But manually running payroll can be time-intensive, especially as your business grows and if you hire more international contractors.
Another important consideration is that manually issuing payments opens you up to certain types of risk:
- Compliance. Running payroll manually means assuming the risk of human error and omission. Protect yourself and your business with Rippling, which automatically enforces compliance with any applicable local laws—no matter where your contractors live.
- Security. Manual payroll processing also poses security risks, especially if you use spreadsheets or paper records. Sensitive employee information can be lost, stolen, or misused.
How do you turn a contractor into an employee in Argentina?
While hiring independent contractors over full-time employees can come with financial benefits, sometimes you do need a full-time employee. The challenge is making sure all the legal requirements are in order: Argentina's labor laws require payroll deductions, benefits, and more for employees that you don't have to worry about for contractors. Plus, to hire employees, you'll need to establish a legal entity or use an Employer of Record (EOR) service.
Effortlessly manage your global contractors
You can pay international contractors directly through Rippling, meaning you need just one system to pay all types of employees—wherever they are.
Rippling and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any related activities or transactions.