Both the foreign and local entities should enter into a Service Agreement in order to determine the terms and conditions of the assignment.

The main focus of this article is to address the legal and HR issues involved when multi-national companies transfer senior executives to Mexico and Argentina.

In Mexico the key first step is to determine is who will be assuming the employment relationship with the foreign individual. This will depend mainly on who will be paying the corresponding salary and associated benefits.

If the foreign company is fully paying the salary and benefits and the relationship will remain 100 percent with the overseas employer, then the Mexican entity would not have to assume a local employment relationship, on the understanding that no payment, compensation or benefit is paid by the Mexican entity directly to the individual. This has to be clearly set-out in the corresponding assignment letter in order to avoid any undesired complications. In this case, there is no need to enter into a local Employment Agreement or to pay social security dues in Mexico.

However, both the foreign and local entities should enter into a Service Agreement in order to determine the terms and conditions of the assignment, including financial terms between the legal entities.


The process of obtaining an immigration permit to enter Mexico has to be consistent with the employment arrangement. If the individual remains an employee of the foreign entity, then the proper immigration document would be a “Temporary Resident Visa/card with no permission to perform gainful activities”. Applying for a different visa may give rise to the assumption of an employment relationship and the correct implementation of this becomes very relevant in the event of termination.

If the assignment was not structured in such a manner that the relationship remained solely with the foreign employer, but instead the presumption of a Mexican employment relationship was created by either applying for a wrong immigration visa or registering the expatriate in Mexican social security, then in the event of termination the issue would arise of having to pay full Mexican severance, regardless of any employment related action or right that the expatriate may initiate or have abroad.

On the other hand, if the Mexican entity pays any portion of the salary, compensation or benefit through the local payroll, then the local entity would have to assume an employment relationship with the individual and the latter would be entitled to receive minimum mandatory labour and social security related benefits in Mexico, which means that the foreign individual has to receive the same treatment as a local employee in Mexico.

Under this local employee scenario, the appropriate immigration document would be a regular work visa that has to be applied for while the foreign individual is outside of Mexico.

In Argentina, the territoriality principle applies to all individuals employed in Argentina, which means that all employment relationships will be governed by Argentinean employment law regardless of the country where the contract of employment has been signed or the nationalities of the parties.

A written agreement with the local company will be required in order to apply for a working visa and the local company will have to be registered at Immigration National Direction.

The contract of employment requested by the Argentinean immigration authorities has to provide the following information: parties’ personal data, date and place of signature, task to be performed by the employee, position or category, salary, collective labour agreement, place of work and working time.

For immigration purposes, the contract of employment must only cover the information mentioned above; however, it is perfectly possible and advisable to sign another labour agreement with the employee that includes additional benefits, obligations/prohibitions and that clearly states the causes of gross misconduct and termination.

It is important to consider that the local employment agreement in Argentina will have to contemplate the previous seniority acquired by the employee.

The following are certain special conditions should be considered in the immigration process:

  • Nationals from some countries will have to apply for an entry permit.
  • The application must be submitted to the Immigration National Direction in Buenos Aires.
  • When the entry permit is approved, the employee has to finish the visa process at the nearest Argentine Consulate.
  • The timeframe is approximately one and a half months.
  • If the entry permit does not apply, it is possible to apply for a working visa in Argentina directly and the visa process would take three working days.
  • Working visas are granted for one year and renewable for up to three years. After three years the employee has the right to apply for a permanent visa (not mandatory).

In addition, Argentina has signed treaties with different countries in order to avoid double taxation.

It is always wise to verify the type of residence and length of stay in Argentina as it can affect the tax obligation. It is important to consider that taxation on individual´s worldwide income is only for permanent residents and for temporary residents after five years.

Finally, under Argentinean laws the local company will have to contribute with the health and pension system and to cover labour risks as well. It is also common practice that private health insurance is provided.