When a foreign company decides to establish a permanent presence in Argentina, one of the first and most critical decisions is whether to operate through a branch or a subsidiary. This choice is foundational, and it directly impacts market-entry costs, operational flexibility, regulatory compliance, and overall risk tolerance.

The Branch: Simplicity, but with Exposure

Under Argentine law, a branch does not constitute a separate legal entity. Instead, it is treated as the same foreign parent company established and doing business in Argentina, although it maintains independent records for accounting and taxation.

As a result, the parent company remains fully liable – with all its worldwide assets – for any obligations incurred by the branch, including labor, tax, and commercial claims.

Key advantages

• Simpler setup process;
• Easier management, and fewer compliance obligations;

Potential drawbacks

• No liability limitation;
• Limited scalability. They cannot issue shares or easily attract local partners, which restricts long-term growth strategies.

In summary, branches are more suitable for small-scale, low-investment ventures, short-term projects, or representative offices. They may fit exploratory or temporary ventures, but they are not recommended for sustained, long-term operations due to the heightened exposure they impose on the parent entity.

The Subsidiary: Building a Shielded Local Presence

Establishing a subsidiary involves a two-step process: first, registering one or more foreign entities with the local Public Registry; and second, incorporating a domestic company in which those entities serve as partners or shareholders. This structure provides robust liability protection and operational independence.

Preferred Corporate Forms

Sociedad Anónima (SA): Similar to a U.S. corporation, the SA is ideal for larger operations. It requires a minimum share capital of ARS 30,000,000. For multi-shareholder SAs, only 25% of the capital must be paid upfront, with the balance due within two years.

Sociedad de Responsabilidad Limitada (SRL): Akin to a U.S. LLC, the SRL has no statutory minimum capital requirement, though the amount must be “reasonable” relative to the company’s purpose to maintain credibility with banks, regulators, suppliers, clients, and other third parties.

Sociedad Anónima Unipersonal (SAU): A single-shareholder SA requires full capital payment upfront and a mandatory statutory auditor (síndico), who must be an Argentine lawyer or accountant.

No local partner is required, allowing subsidiaries to be 100% foreign-owned.

Key Advantages

• Limited Liability: Shareholders’ exposure is capped at their contributed capital, effectively shielding the parent company’s assets from local risks.
• Scalability: Subsidiaries can raise local capital, issuing shares, and listing them in the capital market.

Potential Drawbacks

• Higher upfront costs and setup time;
• More complex management and compliance obligations

Conclusion: Country Outlook and Strategic Considerations for 2026 and Beyond

As Argentina approaches 2026, the country offers renewed opportunities for international businesses looking to expand into Latin America. Sweeping economic and legal reforms have aimed to deregulate the economy, curb inflation, and attract foreign direct investment. Key initiatives already in place include the Regime for the Incentive of Large Investments (RIGI), which provides reduced corporate income tax rates and other significant tax benefits; labor reforms granting greater flexibility to employers; and the loosening of foreign exchange controls. Additional reforms are anticipated following December 10, 2025, when the new composition of the Federal Congress – shaped by the 2025 mid-term legislative elections – takes effect.

Ultimately, the decision between a branch and a subsidiary should align with the company’s specific goals, risk profile, and long-term strategy for operating in Argentina and the broader Latin American market.

At Castro Sammartino & Pierini, we specialize in guiding international clients through these critical decisions, from initial registration to ongoing compliance and strategic planning. Contact us today to discuss a tailored strategy for your business expansion.

Mario E. Castro Sammartino

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