⚠️ The tax information below is an extremely brief summary for standard situations of the referred relationship, and each situation may of course be different from the norm and have its own specificities. ⚠️
A more comprehensive set of information for this country and work relationship is available on Easop.
If you’re looking for more detailed information in this country (or if you are just curious about our global compliance offering and pricing), get in touch with us and we’ll tell you more about it! 💡
Employee via EoR
You can grant non-qualified stock options (NSOs) to local residents employed as contractors in Argentina.
Note that granting stock options to contractors could increase the misclassification risk (i.e. the contractor relationship being requalified as an employer-employee relationship, with all tax consequences that can go with it). This will never be the only factor though, what counts primarily for determining the degree of misclassification risk are factors relating to the modalities of the services performed (control over the contractor’s work, exclusivity, term of the services, etc.).
There are foreign exchange (FX) regulations which may make it a bit difficult to wire the funds out of Argentina when the grantee will have to pay the exercise price.
If that is the case, the company could, after consulting with their legal counsel, allow the grantee to have the possibility to exercise their stock options by way of “cashless exercise” or “net exercise” (or to offer other types of incentives that don’t require payment of an exercise price, such as Stock Appreciation Rights (SARs)).
- Some aspects of taxation of stock options granted by foreign companies are still undefined in Argentina.
- One thing is sure: there’s nothing to declare to the local authorities before the grantee exercises their stock options.
- The spread (i.e. the difference between the fair market value of the shares at the time of exercise and the exercise price paid by the grantee) at the time of exercise will be taxed as regular professional income (i.e. subject to progressive income tax rates). Social security contributions would also apply, and possibly wealth tax and tax on bank debit and bank credit transactions.
- The tax treatment of the gain made upon sale of the shares is not entirely clear. It should in principle be taxed as capital gains.
The company won’t have to report anything to the Argentinian (tax) authorities. It will be the grantee’s sole responsibility to report gains and pay taxes at the time of exercise and sale.