As one of the largest economies in the world, Brazil is a natural next step for growing companies. So, what does it take to succeed in this part of South America? The short answer: detailed knowledge on how to achieve compliance in a highly complex regulatory environment. 

At a Glance

Yes, local bank account needed.

Yes, local representation is required.

The standard payroll frequency is Monthly/Bi-Weekly.

Yes, local registration needed.

The employer taxes are 35-40% of gross salary.

Yes, there is mandatory 13th salaries.

Good to Know

Brazil is a very bureaucratic country and very complex in terms of tax and payroll, with several different ancillary obligations. Companies should be well supported to avoid contingencies.

In order to have local employees, companies must establish an entity in Brazil. All companies are also subject to local data protection legislation (LPGD) and must have a Data Protection Officer. The DPO might be a third-party provider or an employee of the company.

Companies in Brazil must have an administrator/director who is a Brazilian resident. Foreign investors must also be represented by a Brazilian resident (attorney, in fact). There are specialized companies that offer this service in adherence with governance and compliance standards.

*Regarding vacation time, after a 12 month period, employees are entitled to a 30-calendar day paid annual vacation, which must be taken within the subsequent 12 months and compensated at an amount equivalent to one month’s salary plus 1/3 bonus.  Regarding a Christmas Bonus, at the end of each year, employers must pay employees a Christmas bonus (in Brazil called 13th salary) equivalent to one month’s salary, 50% paid on November 30th and the other part on December 20th. The payroll social contribution and others contributions burden may reach 35%.

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Compliance Obligations

A number of ancillary obligations are required to run a business locally in Brazil — and they can pose a challenge from a compliance standpoint. It’s easy for businesses to lose track or be unaware of the obligations, such as the requirement to register all capital remittances at the Brazilian Central Bank.

Employment Rules

It is highly recommended to conduct a study on the benefits a company is willing to provide to its employees. Employment rules are very strict. Failure to correctly calculate salary and account for all employee rules can result in additional expenses or liabilities.

VAT Complexities

VAT in Brazil differs from one state to another and has several particularities depending on the product and its origin. The correct bookkeeping assures the company can obtain the respective tax credits and the best structure in terms of tax efficiency.

Next Steps

We can help you navigate the complex rules in Brazil. Our expert-led managed services and technical consulting were designed to help you go global with ease.

Backed by GateWay, our pioneering global expansion management (GXM) system, we bring an unparalleled focus on the customer experience. This cloud-based platform unifies everything you need for cross-border success in a single place, allowing you to effortlessly and compliantly manage your international footprint.

“While local vendors tend to primarily care about their sliver of the business, HSP Group is, as the single provider, fully invested in the success of the entire organization.” 

Head of Finance and Operations at a fast-growing FinTech

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