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PEO Service and permanent establishments in Argentina

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Employing personnel through the PEO modality is highly beneficial in many aspects, but it is important to carefully assess case by case to avoid the risk of not managing the permanent establishment correctly.

 

Whenever a foreign company hires employees in Argentina through the PEO arrangement and its activity consists of exporting products from their headquarters to our country and the employees only perform activities related to commercial support, then there is no risk linked to having a de facto PE, since the in-country provision of services is going to be used abroad.

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What is Employee Leasing?

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Employee Leasing

The employee leasing method is another new contractual arrangement that has come up in recent years, together with the co-employment arrangement we have previously covered.

In this article we will deal with the definition of employee leasing, the differences between this model and the co-employment model, and the reasons why employee leasing can be a good option to start the internationalization process in a new country.

Origin and definition

The term “Employee Leasing” originated in the United States in the 60’s by three businessmen, but it became popular years later with Marvin R. Selter.

This contractual arrangement started to be used because, during these years, companies with workers under this model were not subject to certain taxes according to the   Employee Retirement Income Security Act of 1974 (ERISA), which increased the benefits for the companies. This Act was amended in 1986: if the temporal worker constituted the 20% of the company’s workforce, he/she must be contracted as an employee.

We can then define “Employee Leasing” as the employment arrangement between two companies where one company transfers workers to another. These workers will be active in the new company for a definite period of time stated in the agreement or they will be able to perform services for an indefinite period.

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PEO Services: The Key Ingredient in business expansion

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The business model that a Professional Employer Organization (PEO) offers has the advantage that suits the needs of both small and big businesses whether they operate locally or internationally. A start-up can benefit from PEO services when they cannot spend resources on setting up a HR department and a big company can benefit from this kind of services by focusing valuable time on their core-business.

«PEO Services offers has the advantage that suits the needs of both small and big businesses whether they operate locally or internationally«

PEO Services for Small Businesses

A PEO is especially designed for small employers that may not have HR expertise or the time and resources available to focus on many of their HR activities. Depending on the PEO services contracted, a few or all of the HR functions can be outsourced. In essence, what a PEO does, is to take care of all your HR-related needs, including administration, payroll, retirement benefits, employee health insurance, compliance issues, taxation, and even worker training.

Depending on the PEO services contracted,
a few or all of the HR functions can be outsourced.

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