argentina-contractor-equity-compensation

Comprehensive guide for contractors in Argentina receiving stock options, RSUs, or other equity compensation from US companies.

Table of Contents

• Quick Answer
• No Tax Treaty Between US and Argentina
• Types of Equity Compensation
  • NSOs (Non-Qualified Stock Options)
  • ISOs (Incentive Stock Options)
  • RSUs (Restricted Stock Units)
• US Tax Treatment for Argentine Contractors
  • The Critical Question: Where Were Services Performed?
  • Scenario 1: 100% Remote from Argentina
  • Scenario 2: Mixed Location (Some Work in US)
• Argentine Tax Obligations
  • Income Tax (Impuesto a las Ganancias)
  • When Stock Options Are Taxed in Argentina
  • Capital Gains on Share Sales
• Practical Examples
  • Example 1: NSO Grant - 100% Argentina Work
  • Example 2: NSO Grant - Mixed Location
  • Example 3: RSU Vesting
• Double Taxation Risk
• US Company Obligations
• Argentine Contractor Obligations
• Documentation Requirements
• Common Mistakes to Avoid
• Summary Checklist
• Resources

Quick Answer

For Argentine Contractors Receiving Stock Options:

Key Principle

If you work 100% from Argentina, your stock option income is not US-sourced, meaning:

• ❌ No US income tax
• ❌ No US withholding
• ✅ Only Argentina taxes apply

If you work partially in the US, the US-sourced portion is taxable by the US, plus Argentina taxes the full amount (with potential for double taxation).

No Tax Treaty Between US and Argentina

Critical Fact: The United States and Argentina do NOT have an income tax treaty.

What This Means

Practical Implication

For most contractors working 100% remotely from Argentina:

• The lack of treaty doesn’t matter
• US doesn’t tax foreign-source income regardless of treaty status
• Only becomes an issue if you work physically in the US

Types of Equity Compensation

NSOs (Non-Qualified Stock Options)

Most common for contractors.

Example:

Grant: 1,000 options at $10 strike price
Exercise: When stock is $50/share
Spread: $50 - $10 = $40/share
Taxable income: $40 × 1,000 = $40,000

ISOs (Incentive Stock Options)

NOT available to contractors.

If a US company offers you ISOs as a contractor, they’re making an error.

RSUs (Restricted Stock Units)

Can be granted to contractors.

Example:

Grant: 100 RSUs vesting over 4 years (25/year)
Year 1 vesting: 25 shares when FMV = $100
Taxable income Year 1: 25 × $100 = $2,500

US Tax Treatment for Argentine Contractors

The Critical Question: Where Were Services Performed?

The US taxes non-resident aliens on a territorial basis for compensation income. The key factor is:

Where were you physically located when performing the services that earned the equity?

Scenario 1: 100% Remote from Argentina

The typical case for Argentine contractors.

Facts:

• You’re hired as a contractor by a US company
• You work 100% remotely from Argentina
• You never travel to the US for work
• You receive NSO grants that vest over 4 years

US Tax Result:

• ✅ No US income tax on exercise
• ✅ No US withholding required
• ✅ No Form 1042-S required (likely)
• ✅ Full spread is foreign-source income
• ✅ Only Argentina taxes apply

Why? The source of compensation income is where services are performed, not where the company is located. Since you worked in Argentina, the income is Argentina-sourced.

Scenario 2: Mixed Location (Some Work in US)

When you travel to the US for work.

Facts:

• You work as a contractor from Argentina
• You travel to the US for meetings/onsite work
• During 4-year vesting: 350 days in US, 950 days in Argentina (total 1,300 work days)
• You exercise NSOs with $100,000 spread

Allocation Calculation:

US days: 350 / 1,300 = 26.9%
Argentina days: 950 / 1,300 = 73.1%

US-source income: $100,000 × 26.9% = $26,900
Foreign-source income: $100,000 × 73.1% = $73,100

US Tax Result:

• ⚠️ $26,900 is US-source income
• ⚠️ Subject to 30% US withholding = $8,070
• ⚠️ Form 1042-S required to report
• ⚠️ Must file US tax return to claim any refund

Argentina Tax Result:

• ⚠️ Full $100,000 taxed in Argentina
• ⚠️ No foreign tax credit for US tax (no treaty)
• ⚠️ Potential double taxation on US-source portion

Argentine Tax Obligations

Income Tax (Impuesto a las Ganancias)

Argentina taxes residents on worldwide income, including equity compensation from foreign companies.

2025 Tax Rates (Progressive):

Note: Thresholds are updated periodically due to inflation. The 35% top rate applies to roughly USD $50,000+ of taxable income (depending on exchange rate).

When Stock Options Are Taxed in Argentina

Tax Event: At exercise (when you buy the shares)

Taxable Amount:

Fair Market Value at exercise - Strike Price = Taxable Income

Classification: Ordinary income (employment/service income category)

Reporting:

• Report through annual income tax return (Ganancias)
• Due dates typically in June following the tax year
• May require estimated payments during the year

Capital Gains on Share Sales

After you exercise options and hold shares:

Example:

Exercise: Buy shares at $50 FMV (already taxed as income)
Sell later: Shares at $75
Capital gain: $75 - $50 = $25/share
Argentine tax: $25 × 15% = $3.75/share

US Shares (not traded on BYMA):

• No exemption applies
• 15% capital gains tax on the gain
• Report via annual tax return

Practical Examples

Example 1: NSO Grant - 100% Argentina Work

Situation:

• Argentine contractor working 100% remote from Buenos Aires
• Granted 5,000 NSOs at $10 strike price over 4-year vest
• Year 4: Exercises all options when FMV = $60/share
• Exchange rate: 1 USD = 1,000 ARS

Calculations:

Spread per share: $60 - $10 = $50
Total spread: $50 × 5,000 = $250,000 USD

US Tax:
- Income source: 100% Argentina (foreign)
- US tax: $0
- US withholding: $0
- Form 1042-S: Not required

Argentine Tax (Ganancias):
- Taxable income: $250,000 USD × 1,000 = 250,000,000 ARS
- Tax rate: 35% (high income)
- Approximate tax: 87,500,000 ARS (~$87,500 USD)

Net Proceeds:

Gross value: $300,000 (5,000 × $60)
Cost: $50,000 (5,000 × $10)
Argentine tax: ~$87,500
Net: ~$162,500

Example 2: NSO Grant - Mixed Location

Situation:

• Argentine contractor who traveled to US for some work
• Same grant as Example 1
• During vesting: 200 days in US, 800 days in Argentina

Calculations:

US portion: 200/1,000 = 20%
Argentina portion: 800/1,000 = 80%

Total spread: $250,000

US-Source Income: $250,000 × 20% = $50,000
Foreign-Source Income: $250,000 × 80% = $200,000

US Tax:
- US-source income: $50,000
- 30% withholding: $15,000
- Form 1042-S: Required

Argentine Tax:
- Taxable income: Full $250,000
- Tax: ~$87,500 (no credit for US tax - no treaty)

Total Tax Burden:
- US: $15,000
- Argentina: $87,500
- Total: $102,500 (vs. $87,500 if 100% Argentina)
- Double taxation: $15,000 on US-source portion

Example 3: RSU Vesting

Situation:

• Granted 1,000 RSUs vesting 25% per year
• Year 1: 250 shares vest when FMV = $40
• 100% work from Argentina

Calculations:

Vesting value: 250 × $40 = $10,000 USD

US Tax:
- 100% foreign source
- US tax: $0

Argentine Tax:
- Taxable income: $10,000 × 1,000 ARS = 10,000,000 ARS
- Progressive rate applies based on total income

Double Taxation Risk

The Problem

Since there’s no US-Argentina tax treaty:

Mitigation Strategies

1. Minimize US Work Days

• Work remotely as much as possible
• Limit travel to the US during vesting periods
• Document all work locations carefully

2. Time Your Exercise

• If you must work in US, consider timing of exercises
• Exercise in years with fewer US work days
• Understand the allocation formula

3. Consult Tax Professionals

• Argentine CPA familiar with US equity
• US tax professional for NRA issues
• Consider cost vs. benefit for complex situations

US Company Obligations

For Argentine Contractors Working 100% Remote

For Mixed-Location Contractors

Best Practices for US Companies

1. Get W-8BEN before grant

   • Establishes foreign status
   • Keep on file for 3 years

2. Include location clause in agreements

   • “Contractor will perform services from Argentina”
   • “Contractor will notify Company of any US work days”

3. Track work locations

   • Require reporting of US travel
   • Document for withholding determination

4. Consult equity compensation specialist

   • Complex area with significant penalties
   • Worth professional guidance for large grants

Argentine Contractor Obligations

Before Receiving Equity

1. Understand the grant terms

   • Type of equity (NSO, RSU, other)
   • Vesting schedule
   • Exercise price and process

2. Provide Form W-8BEN

   • Certify foreign status
   • Update if circumstances change

3. Document work location

   • Track days worked in each country
   • Keep records of remote work

At Exercise/Vesting

1. Calculate taxable income

   • Track FMV on exercise/vesting date
   • Convert to ARS using proper exchange rate

2. Plan for Argentine tax

   • Set aside funds for Ganancias
   • Consider estimated payments

3. Report on annual return

   • Include in income tax declaration
   • Proper categorization as employment income

When Selling Shares

1. Calculate capital gain

   • Sale price minus FMV at exercise
   • Convert to ARS

2. Apply 15% tax

   • Report on annual return
   • Pay with return or estimated

3. Keep records

   • Broker statements
   • Exercise confirmations
   • Exchange rate documentation

Documentation Requirements

For Argentine Contractors

For US Companies

Common Mistakes to Avoid

❌ Mistake 1: Assuming US Always Taxes

Wrong: “US company = US tax”

Correct: US only taxes income sourced in the US. Remote work from Argentina = foreign source = no US tax.

❌ Mistake 2: Not Reporting in Argentina

Wrong: “US company paid me, Argentina doesn’t know”

Correct: Argentina taxes worldwide income. US equity compensation must be reported.

❌ Mistake 3: Ignoring Work Location Tracking

Wrong: Not documenting where work was performed

Correct: Keep detailed records of work days by country, especially if any US travel.

❌ Mistake 4: Confusing Exercise with Sale

Wrong: Waiting until share sale to report income

Correct:

• Exercise/vesting = ordinary income tax event
• Sale = capital gains tax event (if gain)

❌ Mistake 5: Using Wrong Exchange Rate

Wrong: Using any convenient exchange rate

Correct: Use official rates (AFIP/ARCA published rates) on transaction dates.

❌ Mistake 6: Not Planning for Taxes

Wrong: Exercising without funds for tax

Correct: Set aside 35%+ of spread for Argentine taxes before spending proceeds.

❌ Mistake 7: Expecting Treaty Benefits

Wrong: Claiming tax treaty benefits

Correct: No US-Argentina tax treaty exists. No reduced rates or credits available.

Summary Checklist

✅ As Argentine Contractor Receiving Equity

Before Grant:

• Understand grant type (NSO, RSU, etc.)
• Provide Form W-8BEN to US company
• Confirm you’ll work 100% from Argentina
• Consult Argentine tax advisor on implications

During Vesting:

• Track all work days by location
• Document any US travel for work
• Update W-8BEN if circumstances change
• Plan for tax payments at exercise

At Exercise/Vesting:

• Record FMV on exercise/vesting date
• Calculate spread (FMV - strike price)
• Convert to ARS using official rate
• Set aside funds for taxes (35%+)

For Argentine Taxes:

• Report on annual Ganancias return
• Categorize as employment/service income
• Pay tax by due date
• Keep all records 7 years

When Selling Shares:

• Calculate capital gain (sale price - exercise FMV)
• Apply 15% capital gains tax
• Report on annual return
• Keep broker statements

Resources

IRS (US Tax Authority)

• Publication 515 - Withholding on Nonresident Aliens
• Form W-8BEN Instructions
• Form 1042-S Instructions
• US Taxation of Stock-Based Compensation for NRAs (IRS)

Argentina Tax Authority (ARCA/AFIP)

• Argentina Tax System Official Guide

Professional Resources

• PWC Argentina Tax Summary
• Deel Guide to Stock Options for Foreign Employees
• US Taxation of Stock Options for Foreign Nationals

Related Research in This Repository

• Form W-8BEN Requirements: All Countries - Covers contractor payments (services), W-8BEN procedures
• South Korea Contractor Tax Deductions - Detailed example for another country

Last Updated: 2025-12-04 Based on: IRS regulations, Argentine tax law (Impuesto a las Ganancias), PWC tax summaries

Disclaimer: This document is for informational purposes only and does not constitute legal or tax advice. Tax laws are complex and change frequently. The lack of a US-Argentina tax treaty creates additional complexity. Always consult with qualified tax professionals in both the US and Argentina for advice specific to your situation. Large equity grants warrant professional guidance.