Brazil Payroll Information – Deel Global Payroll

Updated on: 2025/08/04 14:03 (UTC)

Overview

Brazil is a federal democratic republic in South America formed by the permanent union of 26 States and the Federal District, in which the capital, Brasilia, is located. Brazil is a member of the Southern Common Trading Block, or MERCOSUR, an economic and political agreement revolving around free trade and fluid movement of people, currency, and goods between members. The 26 states of Brazil are Acre, Alagoas, Amapá, Amazonas, Bahia, Ceará, Espírito Santo, Goiás, Maranhão, Mato Grosso, Mato Grosso do Sul, Minas Gerais, Pará, Paraíba, Paraná, Pernambuco, Piauí, Rio de Janeiro, Rio Grande do Norte, Rio Grande do Sul, Roraima, Rondônia, Santa Catarina, São Paulo, Sergipe, and Tocantins.

Brazil is South America’s largest country by far with regard to land area, so much so that Brazil is larger by land area than the contiguous United States (although not larger by land area than the totality of the U.S.) and borders nine of the 11 other countries of South America. The South American countries that share a border with Brazil are Guyana, Suriname, and Venezuela to the north; Colombia to the northwest; Bolivia and Peru to the west; and Argentina, Paraguay, and Uruguay to the south. Brazil also shares a border with France as a consequence of France’s overseas department of French Guiana being located on mainland South America to Brazil’s north. The Atlantic Ocean borders Brazil to its east. While the vast majority of Brazil is part of mainland South America, the country contains numerous islands, some of which have hundreds of thousands of residents, such as São Luís Island (Ilha de São Luís) and Santa Catarina Island (Ilha de Santa Catarina). In Portuguese, which is the official language of Brazil, the country’s name is rendered as Brasil.

Brazil’s currency is the Brazilian real.

Employers in Brazil are responsible for withholding and paying income taxes for employees, and contributing to social taxes on behalf of workers. Taxes to fund unemployment programs are in effect. In addition, Brazil’s labor law requires employers to uphold certain minimum wage, wage payment, and benefits regulations.

The Portuguese term folha de pagamento, which literally translates in English to sheet of payments, sometimes is used in Brazil to refer to payroll.

While non-resident workers, unlike resident workers, are charged a flat income tax rate, they are treated the same as resident workers in most other payroll-related issues, but must be paid in reals.

Foreign workers generally are bound by the same income tax and labor laws as Brazilian citizens, but are not liable to social taxes.

Brazilians working in the United States are covered by U.S. tax law with possible work status exclusions applying. Work within the U.S. states and territories is covered by various labor laws.

News articles regarding payroll in Brazil are available in

CURRENCY DETAILS

The currency of Brazil is the Brazilian real (R$), also known in Brazil simply as the real. The currency’s simplified name of real is a homograph and heteronym with the English word real as relates to reality, and consequentially has a different pronunciation. In the Brazilian dialect of the Portuguese language, real is pronounced as “HEY-AL,” although the currency is commonly pronounced by speakers whose primary language is not Portuguese as “REY-AL” or “REE-AL.” The internationally recognized three-letter currency code for the Brazilian real is BRL, with the R in the currency code serving a dual purpose as part of the internationally recognized two-letter country code for Brazil, BR, and as part of a two-letter abbreviation for real, RL. The plural form of real in Portuguese is reais and in English is reals, with the Portuguese plural form pronounced as “HEY-ICE.”

The Brazilian real currency symbol R$ includes the general dollar currency symbol $ although the real itself is not a dollar currency. When an amount of Brazilian reals is written using the currency symbol R$, the symbol precedes the numerical value with a space between the numerical value and symbol.

One hundredth ( ¹ ⁄ ₁₀₀ ) of a Brazilian real is referred to as a centavo, with the plural form of centavos.

When amounts of Brazilian reals are written in Portuguese, the comma that in English separates the thousands place from the hundreds place instead is rendered as a dot (.), and the dot that in English separates the ones place from the tenths place instead is rendered as a comma.

TAXES

The federal government enacts all laws relating to payroll tax. Payroll-related taxes include income taxes, Social Security taxes, and Guarantee Fund for Length of Service Tax. The Guarantee Fund for Length of Service often is referred to with the abbreviation FGTS, as it is the abbreviation for the equivalent Portuguese phrase Fundo de Garantia por Tempo de Serviço.

All taxes are levied on a yearly basis, based on the calendar year, although some taxes must be paid in monthly installments.

Federal income tax in Brazil is outlined in the National Tax Code (Codigo Tributario Nacional, abbreviated as CTN), regulated by the Ministry of Finance (Ministério da Fazenda, abbreviated as MF), and levied on the global income of Brazilian residents and Brazilian-sourced income of nonresidents. Social taxes are mandated by the Constitution, administered by the National Institute of Social Security (Instituto Nacional do Seguro Social, abbreviated as INSS), and levied on all private and public employers.

Income taxes are payable to the Internal Revenue Service of Brazil (Receita Federal do Brasil, abbreviated as RFB).

Income taxes must be withheld from employee salary, while the FGTS tax is payable solely by employers. Social Security taxes have required employee and employer contributions.

Digital Bookkeeping System for Tax, Social Security and Labor Obligations (eSocial): The eSocial system (also written as E-Social) is Brazil’s new online portal through which data regarding payments to employees and taxes related to those payments generally must be submitted starting with 2018. The primary website address for eSocial is http: //portal.esocial.gov.br/ .

Employers are required to maintain up-to-date information via eSocial on their total payroll, income tax and social security payments, and severance payments. Employers must provide to eSocial on a monthly basis information regarding payments to their employees, and must enter into the system data regarding a payment to an employee generally by the seventh day of the month after the month when the payment was made. The eSocial system automatically calculates income tax amounts, social security obligations, and Guarantee Fund for Length of Service (FGTS) contributions due based on payroll data that employers enter into the system, and facilitates employer payments of amounts due to the government.

Brazil’s Ministry of Finance established six phases for implementing mandatory use of eSocial, and employers must implement each phase by the applicable deadline, with deadlines varying among types of employers.

The six phases are as follows:

phase one: employers must provide data through eSocial regarding themselves and payments they are required to make, with the data including, but not limited to, employer records and tables;
phase two: employers must transmit data through eSocial regarding current workers, new hire data, and separation from employment data;
phase three: employers generally must send payroll-related data through eSocial;
phase four: the process of submitting a Collection Guide of the Guarantee Fund for Employees and Social Security Information (GFIP) in conjunction with social insurance payments outside the context of eSocial ceases, and this process is fully completed through eSocial;
phase five: the process of submitting a GFIP in conjunction with Guarantee Fund for Length of Service (FGTS) payments outside the context of eSocial ceases, and this process is fully completed through eSocial; and
phase six: worker health and safety data must be reported by employers through eSocial.

Private employers with annual revenue of at least R$ 78 million must already have implemented phases one through five, and phase six needs to be completed by Sept. 8, 2020. Private employers with annual revenue of less than R$ 78 million generally must already have implemented phases one through five, and phase six needs to be completed by Jan. 8, 2021. There are varying implementation deadlines applicable for various types of governmental employers.

When eSocial is fully operational, provision through eSocial of data and returns required to be submitted through eSocial will have replaced 15 types of data provisions, including payroll data in general, Statement of Income Tax Withheld (DIRF), Collection Guide of the Guarantee Fund for Employees and Social Security Information (GFIP), General Register of Employees and Unemployed for Hiring and Dismissals (CAGED), Annual Report of Social Information (RAIS), Employee Record Book (LRE), Communication of Accidents at Work (CAT), Dispensing Communication (CD), Work and Social Security Portfolio (CTPS), Social Security Work History Record (PPP), Declaration of Federal Tax Credits and Debts (DCTF), Schedule of Working Hours (QHT), Normative Digital Files Manual (MANAD), Guarantee Fund for Length of Service Guide (GRF), and Social Security Guide (GPS). For each of the aforementioned 15 types of data provisions that have not yet been functionally incorporated into eSocial in a way that would sufficiently enable employers to complete the data provision through eSocial, employers need to use the most recent process for providing that data that was in effect before the advent of eSocial. For example, employers still need to file a Statement of Income Tax Withheld (DIRF) for 2019 without using eSocial to provide the applicable data because eSocial does not yet support the ability to provide an electronic equivalent of the form.

When a new employee is hired, applicable identification and payment data regarding the employee must be immediately entered into the eSocial system and any subsequent changes in status must be reported within a specified time period. With eSocial, information on workplace accidents and employee terminations must be sent by the next working day and on-the-job deaths must be reported immediately.

Employers that do not send information through eSocial by the deadline when that information was required to have been sent through the system are subject to penalties and fines.

Coronavirus (Covid-19) Guidance: Deposits of employer social tax contributions, except for CSLL, due for March, April, and May 2020 must be made by the social tax deposit deadlines in August, October, and November 2020, respectively. This extension also includes workers’ compensation taxes.

Effective from April 1 to June 30, 2020, contribution rates to S System organizations, except SEBRAE, were reduced by half.

Social tax deposit deadlines for PIS, COFINS, and the primary employer social security tax were extended for small employers enrolled in the Simples Nacional tax regime. Deposits due April 20, May 20, and June 22 may be made by July 20, August 20, and Sept. 21, respectively.

Also, effective April 27, 2021, employers may delay FGTS deposits for April, May, June, and July 2021 without penalties. Payment may be made in installments beginning September 2021 on the day of the month that the payments are normally due.

Income Taxes

Coverage: Employers must withhold income taxes from the pay of all employees. Resident individuals, whether of Brazilian or foreign nationality, are subject to income tax on their worldwide income. An individual transferring his or her residence to Brazil on a permanent basis or entering the country with an employment relationship with a Brazilian entity is subject to tax as a Brazilian resident as of the date of his/her arrival. Similarly, on leaving the country, such an individual must file a final tax return and pay the applicable taxes due up to the date of the individual’s departure.

The acronym IRPF often is used in Brazil with regard to personal income taxation, and the Portuguese phrase associated with the acronym, imposto sobre a renda da pessoa física, translates to income tax on individuals. The similar acronym IRRF often is used in Brazil to refer to income tax withholding at source from wages, and the Portuguese phrase associated with the acronym, imposto sobre a renda retido na fonte, translates to income tax withholding.

Employees: Any individual that renders non-occasional services to an employer, under his/her direction, and receives a salary is considered an employee. Non-occasional services are considered services which are part of normal work activities and which are rendered continuously, even if for a short period of time.

Rates and Thresholds: Income tax rates are levied on a progressive scale for residents, with rates ranging from zero to 27.5%. In the country’s progressive income tax system, portions of an individual’s income are allocated to the country’s personal income tax brackets, and each portion of income allocated to a tax bracket is multiplied by the rate for that bracket to determine the preliminary income tax due for that bracket. An amount is designated for each of Brazil’s income tax brackets as a deductible amount to be subtracted from the preliminary income tax due for a bracket to determine the actual income tax due for the bracket.

Brazil’s personal income tax rates for residents and minimum and maximum amounts of monthly income for each tax bracket are as follows:

Range of Monthly Income (Brazilian Reals)	Income Tax Rate	Monthly Deduction for Determining Actual Income Tax Due (Brazilian Reals)
Up to R$ 1,903.98	Zero	Zero
R$ 1,903.99 and up to R$ 2,826.65	7.5%	R$ 142.80
R$ 2,826.66 and up to R$ 3,751.05	15%	R$ 354.80
R$ 3,751.06 and up to R$ 4,664.68	22.5%	R$ 636.13
R$ 4,664.69 and higher	27.5%	R$ 869.36

Nonresidents are subject to a flat income tax rate of 25% for employment income paid to them for work in Brazil.

Registration: All companies are required to register with the RFB and the Office of the Secretary of the Treasury within 30 days of commencing commercial activities. Registration requires the submission of over 10 forms which are specific to the type of company the employer qualifies as (e.g., corporation, nonprofit, LLC, cooperative, private company).

Taxable Amounts: In calculating the taxable income of their employees, employers should include all remuneration minus allowable deductions. This includes the mandatory thirteenth month bonus. Some allowable deductions include contributions to Social Security, state and municipality taxes, medical expenses, education costs, child allowance, private pension plan costs, and donations.

In some cases, employees can claim tax credits relating to income tax paid abroad on their individual tax returns, as dictated by existing tax treaties.

Withholding Methods: Generally, all income tax on salaries, cash prizes and raffles, payments for personal services, remittances abroad, and capital gains should be withheld from every paycheck and remitted to RFB monthly. Withholding rates are identical to personal income tax rates. Generally, nonprofit organizations are exempt from withholding income tax and all organizations are exempt from withholding income taxes on court mandated deductions of alimony from pay. Other exemptions apply as well.

Returns and Remittance: Employers generally must pay to the government income taxes withheld from employees’ wages by the 20th day of the month following the month of occurrence of taxable events, while withholding taxes on remittances abroad are due on the date they are withheld. Withholding payments on taxes of other income are due on the third business day following the occurrence of taxable events. If the 20th day of a month would be a Saturday or Sunday, payments of withheld income tax for the previous month instead generally would be due on the last Friday before that Saturday or Sunday.

Payment of withheld tax may be remitted to the RFB using the agency’s Receitanet program.

The RFB annually issues a normative instruction (instrução normativa) for employers on how to file the applicable year’s annual Statement of Income Tax Withheld (Declaracao do Imposto de Renda Retido na Fonte, abbreviated as DIRF). For each year, a Declaration Generator Program (Programa Gerador da Declaração, abbreviated as PGD) that employers may use to electronically compile the applicable year’s DIRF is made available by the RFB on its website. A DIRF’s designated year is the year during which it is required to be filed. For example, the DIRF used for filing 2019 data in 2020 is referred to as the DIRF 2020.

Effective for filing 2019 income tax withholding data in 2020, the applicable normative instruction and PGD respectively are RFB Normative Instruction No. 1915 of November 27, 2019, and PGD DIRF 2020. Effective for filing 2018 income tax withholding data in 2019, the applicable normative instruction and PGD respectively were RFB Normative Instruction No. 1836 of October 3, 2018, and PGD DIRF 2019.

Effective for 2019 data filed in 2020, as was in effect for 2018 data filed in 2019, employers must electronically submit the DIRF to the RFB through the agency’s Receitanet program.

The DIRF must be filed by Feb. 28 of the year after the year for which data are reported on the return, even if an employer adopts a different fiscal year for corporate purposes. Employers must submit a DIRF even if they are exempt from withholding income tax.

While private employers were to be required to start using Brazil’s eSocial reporting system to provide payroll-related data pertaining to income tax withholding from employees’ wages starting with 2018, the government has recognized that eSocial is not yet functionally ready for filing income tax withholding data. The RFB is intending to eventually have DIRF filing be accomplished through eSocial instead of Receitanet.

Micro enterprises with equal or less than R$ 360,000 in gross revenues per year and small companies with annual gross revenue from R$ 360,001 to R$ 3.6 million may use the Simples Nacional Tax program to file their taxes, which is a simplified tax regime with consolidated payments and returns that offers participants certain tax incentives. Employers using Simples must file and pay both income taxes and social taxes at the same time.

Employee Share Plans: Employees who have taken part in an employee equity share plan in Brazil are not subject to income tax at the time the stock is granted or during the exercise of the option. The income derived from employee share plans is not considered taxable remuneration in the terms defined by the Consolidation of Labor Laws (Consolidação das Leis do Trabalho, abbreviated as CLT). However, if income from a share plan exceeds R$ 35,000 in a month, the gains are subject to capital gains tax. Gains from employee share plans generally are not subject to social taxes.

Recordkeeping: Generally, returns and relevant documents must be kept for five years.

Penalties: Employers who fail to remit taxes timely are subject to a daily fine ranging between 0.33% and 20% on the tax due, in addition to interest based on the Selic rate, which is a monthly rate fixed by the government.

Taxpayers that fail to timely submit reports of data regarding income tax withheld from wages are charged 2% of the amount of taxes owed per month after the deadline, limited to a maximum of 20% of taxes owed. Taxpayers whose reports of data regarding income tax withheld from wages contain omissions or errors are charged R$ 20 for each group of 10 errors or omitted fields. These fines may be reduced if fines are paid before notification of delinquency or judicial action.

Social Taxes

Brazil has a comprehensive Social Security system run by the National Institute of Social Security (Instituto Nacional do Seguro Social, abbreviated as INSS) under the Ministry of Social Welfare (Ministerio de Previdencia Social, abbreviated as MPS). The system contributes to workers’ pensions, education funds, and other welfare initiatives. Both employees and employers must make social security contributions.

Brazil’s worker’s compensation program funds replacement compensation for individuals who either totally or partially cannot perform applicable work because of an injury or illness experienced at the workplace or otherwise in the course of performing job activities. Workers’ compensation also is known in Brazil as work accident risks (riscos de acidentes de trabalho, abbreviated as RAT), work environment risks (riscos ambientais de trabalho, also abbreviated as RAT), and as work accident insurance (seguro de acidente do trabalho, abbreviated as SAT).

A series of organizations with programs designed to assist with workforce training and professional skills development also is funded by employer contributions. This group of organizations often is referred to in Brazil as the S System (Sistema S), or alternatively System S, because most of their names in Portuguese start with the letter S and the nine main organizations of System S all have Portuguese names that start with the letter S. The organizations together also are often referred to as the Autonomous Social Services (Serviços Sociais Autônomos) and as the third parties (terceiros) because they are not themselves directly part of the National Institute of Social Security but have authority to mandate contributions from employers to fund their activities.

Coverage: Generally, all employers must make payments and withholdings for all employees and temporary workers. Nonprofit organizations and a number of other employers are exempt from withholdings.

Rates and Thresholds: Employees and employers are assessed general social security tax rates, and employers, but not employees, also are assessed a workers’ compensation program tax rate and a tax rate under the S System.

Employee Social Security Tax: Effective through social taxes assessed on employment income paid in February 2020, social security tax rates assessed on private-sector employees range from 8% to 11% of employment income and the social security tax rate assessed on public-sector employees generally is 11%. Effective starting with social taxes assessed on employment income paid in March 2020, social security tax rates assessed on private-sector employees range from 7.5% to 14% and social security tax rates assessed on public-sector employees range from 7.5% to 22%.

Effective through social taxes assessed on employment income paid in February 2020, the social security tax rates assessed on private-sector employees are assessed in a progressive manner, but the mechanism of progressiveness for applying the rates differs from the method that is used not just for Brazil’s progressive personal income tax rates, but for personal income tax rates in progressive income tax systems around the world. Under the globally most common form of progressive individual taxation, multiple tax rates may apply to an individual’s taxable ordinary income during a tax year because each portion of an individual’s taxable ordinary income for the tax year is taxed at the rate assigned to the bracket that covers that portion of income. Instead, under the method in effect for the social security tax brackets in effect for private-sector employees through employment income paid in February 2020, an employee may be assessed only one social security tax rate, with the single rate assigned to an employee based on the employee’s income for the month. Effective starting with taxes assessed on employment income paid in March 2020, the social security tax rates assessed on employees are assessed under the globally most common form of progressive individual taxation.

The maximum monthly amount of employment income upon which the maximum social security tax rate may be assessed on employees is Brazil’s social security ceiling (teto previdenciário), which also is used for determining maximum amounts of payable social insurance benefits and is subject to annual adjustment.

Effective for social taxes assessed on employment income paid in 2021, Brazil’s social security tax rates for private-sector employees and minimum and maximum amounts of monthly income for each social tax bracket are as follows:

Range of Monthly Income (Brazilian Reals)	Social Security Tax Rate
Up to R$ 1,100	7.5%
At least R$ 1,100.01 and up to R$ 2,203.48	9%
At least R$ 2,203.49 and up to R$ 3,305.22	12%
At least R$ 3,305.23 and up to R$ 6,433.57	14%

Effective for social taxes assessed on employment income paid in 2021, private-sector employees with monthly employment income of more than R$ 6,433.57 are taxed as if they had monthly employment income of R$ 6,433.57.

Effective for social taxes assessed on employment income paid from March 1, 2020, to Dec. 31, 2020, Brazil’s social security tax rates for public-sector employees and minimum and maximum amounts of monthly income for each social tax bracket include the aforementioned rates and ranges of income for the social tax brackets for private-sector employees, plus the rates and ranges of income for four additional social tax brackets for public-sector employees, as follows:

Range of Monthly Income (Brazilian Reals)	Social Security Tax Rate
At least R$ 6,101.07 and up to R$ 10,448	14.5%
At least R$ 10,448.01 and up to R$ 20,896	16.5%
At least R$ 20,896.01 and up to R$ 40,747.20	19%
At least R$ 40,747.21	22%

Effective for social taxes assessed on employment income paid in January and February 2020, the 2019 rates for private-sector employees were in effect, with adjustment of the ranges of income for each bracket from the 2019 brackets.

Effective for social taxes assessed on employment income paid from Jan. 1, 2020, to Feb. 29, 2020, Brazil’s social security tax rates for private-sector employees and minimum and maximum amounts of monthly income for each social tax bracket are as follows:

Range of Monthly Income (Brazilian Reals)	Social Security Tax Rate
Up to R$ 1,830.29	8%
More than R$ 1,830.30 and up to R$ 3,050.52	9%
More than R$ 3,050.53 and up to R$ 6,101.06	11%

Effective for social taxes assessed on employment income paid in January and February 2020, unchanged from 2019, the social security tax rate assessed on public-sector employees generally is 11%.

The ranges of employment income within each social security tax bracket are subject to annual adjustment by the Ministry of Social Welfare.

Primary Social Security Tax on Employers: There is no maximum amount of employment income upon which the primary social security tax on employers may be assessed on them.

Employers generally are assessed a social security primary tax rate of 20% on the total payroll, although the applicable social security primary tax rate for employers that are financial institutions or insurance institutions is 22.5% of payroll. Among the types of entities that are financial institutions or insurance institutions for determining applicability of the higher employer social security tax rate are brokerage firms, commercial banks, credit companies, development banks, financing companies, insurance companies, investment banks, investment companies, leasing companies, pension companies, real estate credit companies, savings banks, and securities distributors.

Effective from Jan. 1, 2020, to April 20, 2020, employers that hired qualifying youths through the Green-Yellow Job Program were exempt from being assessed the social security primary tax on payments of employment income to these employees. Qualifying youths were youths from 18 to 29 years of age who did not have previous formal job experience.

Microenterprises and small companies that are eligible for the Simple National (Simples Nacional) tax regime are eligible for reduced social taxation in some cases.

Workers’ Compensation Tax: Employers are assessed a workers’ compensation program tax rate that is the result of multiplying two components: a basic rate that varies among employers based on the level of workplace risk associated with their industry sector, and an experience-modification factor.

There is no maximum amount of employment income upon which workers’ compensation taxes may be assessed on employers.

The basic workers’ compensation tax rate for employers in industry sectors with relatively low workplace risk to employees regarding injury or illness is 1% of payroll; average risk, 2% of payroll, and relatively high risk, 3% of payroll. An employer’s basic workers’ compensation tax rate is multiplied by its accident prevention factor (fator acidentário de prevenção, abbreviated as FAP), which is a measure of the employer’s workers’ compensation program experience in comparison to that of other employers, with employers that had a relatively low number of workplace injuries and illnesses in comparison to other employers having the lowest accident prevention factors and employers that had a relatively high number of workplace injuries and illnesses in comparison to other employers having the highest accident prevention factors. The period of an employer’s workers’ compensation program experience examined for determining its accident prevention factor is the last two years. Accident prevention factors range from 0.5 to 2.

S System Taxes: The specific set of workforce training and professional skills development organizations of the S System that employers are required to fund varies among employers based on their industry sector, or set of industry sectors, as recognized by the Social Security and Pension Fund (Fundo de Previdência e Assistência Social, abbreviated as FPAS). S System taxation on employment income paid to a particular employee is not restricted to funding just one S System organization, and it is common for taxes to fund multiple S System organizations to be assessed on an employer based on employment income that the employer paid to an employee.

Effective March 6, 2020, as per a decision of Brazil’s Superior Court of Justice, the maximum monthly amount of employment income paid to an employee upon which S System taxes may be assessed is equal to 20 times the national monthly minimum wage. Effective until March 5, 2020, there was no maximum amount of employment income upon which S System taxes could be assessed on employers.

Effective Jan. 1, 2021, as the national monthly minimum wage since Jan. 1, 2021, is R$ 1,100, the maximum monthly amount of employment income paid to an employee upon which S System taxes may be assessed is R$ 22,000.

The tax rates for the nine main organizations of the S System are as follows:

Brazilian Service of Micro and Small Size Companies Support (Serviço Brasileiro de Apoio às Micro e Pequenas Empresas, abbreviated as SEBRAE): ranges from 0.3% to 0.6%;
National Service of Cooperative Learning (Serviço Nacional de Aprendizagem do Cooperativismo, abbreviated as SESCOOP): 2.5%;
National Service of Industrial Learning (Serviço Nacional de Aprendizagem Industrial, abbreviated as SENAI): 1%;
National Service of Rural Learning (Serviço Nacional de Aprendizagem Rural, abbreviated as SENAR): ranges from 0.2% to 2.5%;
National Service of Trade Learning (Serviço Nacional de Aprendizagem do Comércio, abbreviated as SENAC): 1%;
National Service of Transportation Learning (Serviço Nacional de Aprendizado dos Transportes, abbreviated as SENAT): 1%;
National Trade Social Service (Serviço Social do Comércio, abbreviated as SESC): 1.5%;
Social Service of Industry (Serviço Social da Indústria, abbreviated as SESI): 1.5%; and
Social Service of Transportation (Serviço Social do Transporte, abbreviated as SEST): 1.5%.

It is common, with regard to assessment of S System taxes on employment income paid to employees in the private sector, for employers to be assessed a total S System tax rate of 3.1% consisting of a rate of 1.5% for SESC, SESI, or SEST; a rate of 1% for SENAI, SENAC, or SENAT; and a rate of 0.6% for SEBRAE.

Effective from Jan. 1, 2020, to April 20, 2020, employers that hired qualifying youths through the Green-Yellow Job Program were exempt from being assessed S System taxes on payments of employment income to these employees.

Education Funding Tax: Employers generally are assessed a tax to fund public education programs in Brazil, with part of the tax funding public primary schools through providing funds to Brazil’s states and federal district, part of the tax funding federal programs to support public schools, and part of the tax funding the National Fund for Educational Development (Fundo Nacional de Desenvolvimento da Educação, abbreviated as FNDE). The National Fund for Educational Development administers this tax. This tax is commonly referred to in Brazil as the education salary (salário-educação).

The education funding tax is assessed on employers at the rate of 2.5% on the amount of employment income they pay to employees.

Effective since March 6, 2020, as per a decision of Brazil’s Superior Court of Justice, the maximum monthly amount of employment income paid to an employee upon which the education funding tax may be assessed is equal to 20 times the national monthly minimum wage. Effective until March 5, 2020, there was no maximum amount of employment income upon which the education funding tax could be assessed on employers.

Effective since March 6, 2020, as the national month minimum wage since Feb. 1, 2020, is R$ 1,045, the maximum monthly amount of employment income paid to an employee upon which the education funding tax may be assessed is R$ 20,900.

INCRA Tax: Employers generally are assessed a tax to fund Brazil’s National Institute of Colonization and Agrarian Reform (Instituto Nacional de Colonização e Reforma Agrária, abbreviated as INCRA).

The standard rate of the tax assessed on employers to fund INCRA is 0.2%, with that rate assessed on the amount of employment income they pay to employees.

Effective since March 6, 2020, as per a decision of Brazil’s Superior Court of Justice, the maximum monthly amount of employment income paid to an employee upon which the INCRA tax may be assessed is equal to 20 times the national monthly minimum wage. Effective until March 5, 2020, there was no maximum amount of employment income upon which the INCRA tax could be assessed on employers.

Taxable Amounts: Social Security taxes related to payroll are calculated based on all salary, pension, and remuneration of any kind earned by employees. This includes the 13th month bonus.

Effective since Aug. 5, 2020, as per a decision by Brazil’s Supreme Federal Court, maternity leave paid by the employer is no longer subject to Social Security taxes.

Registration: Employers must enroll in the National Registry of Legal Entities (CNPJ) on the RFB website, or if they are exempt from doing so, complete the Registration in the INSS (CEI) form and submit it to the RFB within 30 days of initiating commercial activities.

Returns and Remittance: Employers are required to submit amounts of social security tax withheld from employees’ wages and employer portions of social security tax to the government on a monthly basis, by the 15th day of the month following the month when the payments to employees occurred upon which the taxes were assessed.

Since 2018, private employers have been required to use Brazil’s eSocial reporting system to provide various types of data to the government, including payroll-related data pertaining to social security tax withholding from employees’ wages and employer portions of social security tax. Details on the six-phase implementation schedule for eSocial and other aspects regarding the online portal are available in the introduction to this primer’s examination of payroll-related tax provisions in Brazil.

Employers that are not already required to use eSocial to transmit to the government data regarding social security tax due based on payments to employees or are not voluntarily using eSocial for that purpose must report that information using the Social Security Guide (Guia de Previdencia Social, abbreviated as GPS), which is due by the 15th day of the month following the month when employees received payments upon which the social tax reported on the form was assessed.

Contributions related to the bonus 13th monthly salary (Aguinaldo) are due Dec. 20. INSS payments should be paid to the Brazilian Internal Revenue Service (RFB). Employers owing less than R$ 10 should only make payments in the month when accumulated taxes due reaches at least R$ 10.

Employers enrolled in the Simples Nacional tax regime must make income tax and Social Security tax payments together by the 20th of each month.

Recordkeeping: The statute of limitations for all Social Security liabilities is five years from the point at which taxes were assessed.

Penalties: Failure to make timely social security payments can result in penalties of 0.33% of taxes due per day of delay, capped at a maximum of 20% of taxes due. In addition, delinquent payments will be assessed a 1% interest charge per month of delay. Social Security fees accumulated before 2008 will be assessed additional fees.

Other Taxes

Another employment-related tax that employers must consider in Brazil is the Guarantee Fund for Length of Service, which is an unemployment insurance fund. Employers also are required to pay revenue-based social security contributions. Before March 1, 2019, employers also generally were required to deduct union dues from employees’ wages.

Guarantee Fund for Length of Service (Fundo de Garantia por Tempo de Serviço, abbreviated as FGTS)

All employers are required to enroll in and contribute to a Guarantee Fund for Length of Service (Fundo de Garantia por Tempo de Serviço, abbreviated as FGTS) for each employee. The fund, which functions as a severance pay indemnity fund, consists of an employee account located in the federal savings bank (Caixa Economica Federal) and owned by the employee. Withdrawals from the account are restricted to cases of termination without justifiable cause, purchase of a house by the employee, and other situations enumerated upon in current legislation.

Coverage: Generally, all employers must contribute monthly to employees’ FGTS accounts.

Rates and Thresholds: Employers in general must contribute the equivalent of 8% of employees’ salaries to FGTS accounts. In the case of domestic workers, employers are assessed a total tax rate of 11.2%, which includes the standard FGTS tax rate of 8% and rate of 3.2% for an indemnity reserve for loss of employment (reserva indenizatória por perda de emprego). An employer tax rate of 2% is applicable for some young apprentices. Employers must contribute to this fund even if workers are on any type of paid leave and must calculate their payments based on salaries that include most government mandated payments to the employees.

Effective from Jan. 1, 2020, to April 20, 2020, employers that hired qualifying youths through the Green-Yellow Job Program were assessed an FGTS tax rate of 2% instead of the standard rate of 8% on payments of employment income to these employees. The availability of this rate of 2% in connection with the Green-Yellow Job Program was distinct from the availability of the rate of 2% that otherwise is available for some young apprentices outside the context of the Green-Yellow Job Program.

Registration: Employers must register all employees with the Ministry of Labor, register employees in the social integration program (Programa de Integracao Social, PIS), and open account for all employees with the federal savings bank (Caixa Economica Federal). This involves completing a PIS/PASEP registry form (document de cadastramento de trabalhador, DCT) and delivering it to the federal saving bank, and registering all new hires in the Registry of Employment (Cadastro Geral de empregados e desempregados, CAGED), which can be done at the Ministry of Labor offices or on their website.

Taxable Amounts: FGTS payments are calculated based on all amounts paid to employees, including overtime, hazardous pay, night work, 13th month bonus, vacation pay, and other payments.

Returns and Remittances: Starting in 2018, private employers were required to start using Brazil’s eSocial reporting system to provide various types of data to the government, including payroll-related data pertaining to FGTS contributions. Details on the six-phase implementation schedule for eSocial and other aspects regarding the online portal are available in the introduction to this primer’s examination of payroll-related tax provisions in Brazil.

Employers that are not already required to use eSocial to transmit to the government data regarding FGTS contributions or are not voluntarily using eSocial for that purpose must report that information using the Collection Guide of the Guarantee Fund for Employees and Social Security Information (Guia de Recolhimento de Fundo de Garantia por Tempo de Servico e Informacoes a Previdencia Social, GFIP), which must be submitted on a monthly basis with the FGTS payment whose details are reported on the form.

Payment of FGTS contributions based on payments to employees during a month must be made to the federal savings bank by the seventh day of the following month.

Labor Union Dues Deductions from Wages

Effective since June 29, 2019, as had been in effect from July 14, 2017, to Feb. 28, 2019, employers are able to deduct union dues from employees’ wages, but may do so only upon prior authorization of the affected employee. Effective from March 1, 2019, to June 28, 2019, employers could not deduct union dues from employees’ wages. Effective until July 13, 2017, all employees were required to deduct union dues from employees’ wages.

When an employee voluntarily agrees to pay the union dues fee through a wage deduction, the fee is annually assessed and is equivalent to the employee’s average daily employment income. Employers need to deposit union dues withheld from employment income into the applicable union fund and must provide proof of contributions to the unions with which affected employees are affiliated.

Effective from March 1, 2019, to June 28, 2019, if workers wanted to pay a union fee, they needed to ask their local union to send them a bill, needed to pay the fee through a bank, and needed to sign a document indicating that they agreed to pay the fee.

Revenue-Based and Profit-Based Social Security Financing

All legal entities in the private sector are required to provide additional social security contributions that are not based on payroll, but instead are based on their gross revenue or net profit. While these components of taxation in Brazil are not directly related to payroll, the details of social security contributions based on gross revenue and net profit are included in this primer to distinguish them from the payroll-based social security contributions and further clarify how Brazil’s social security assessments function, especially because Brazil is relatively rare among countries with regard to assessing social security taxes based on a factor other than payroll.

The two social security contribution components based on gross revenue are the contribution for the Program of Social Integration (Programa de Integração Social, abbreviated as PIS) and the Contribution for the Financing of Social Security (Contribuição para Financiamento da Seguridade Social, abbreviated as COFINS). These contributions help finance the Fund for Workers’ Assistance (Fondo de Amparo al Trabajador, abbreviated as FAT), unemployment insurance, salary bonuses, and economic development programs of the National Bank for Economic and Social Development (Banco Nacional de Desenvolvimento Economico e Social, abbreviated as BNDES.)

To reduce payroll-based social security charges to employers, Brazil’s government permits companies in some industry sectors to inquire with the Ministry of Finance as to whether they may be assessed a social security contribution ranging from 1% to 4.5% of their gross revenue instead of being assessed some of the aforementioned payroll-based social security contributions. This contribution of 1% to 4.5% of gross revenue as an alternative to some of the payroll-based social security contributions is separate from the PIS and COFINS contributions, and is known as the payroll exemption (desoneração da folha de pagamentos), or simply as the exemption (desoneração).

Brazil assesses the Social Contribution on Net Income (Contribuição Social sobre o Lucro Líquido, abbreviated as CSLL) on companies’ profits.

Coverage: Generally, all legal entities governed by private law, including service companies, public companies, mixed capital companies and their subsidiaries, are subject to PIS, COFINS, and CSLL assessments. Micro enterprises and small companies enrolled in the Simples Nacional tax regime are exempted of contributions.

Rates and Thresholds: PIS and COFINS contributions are assessed on gross revenues through a cumulative or non-cumulative regime. Under the cumulative regime, taxes are levied at the rate of 4% for COFINS and the rate of 0.65% for PIS. However, for nonprofits, PIS is assessed at the rate of 1% of payroll.

Under the non-cumulative regime, COFINS is assessed at the rate of 7.6%, PIS is assessed at the rate of 1.65%, and taxpayers are allowed to offset contributions with tax credits.

Effective since June 1, 2018, there are 17 sectors that are eligible for the payroll exemption. Effective until May 31, 2018, 56 sectors were eligible for the payroll exemption.

Among the sectors eligible for the payroll exemption, and the applicable percentages of gross revenue that would be assessed for social taxation, are the following:

information technology, construction and infrastructure: 4.5%;
call centers: 3%;
strategic defense companies, repair and maintenance of aircraft and ships: 2.5%;
subway and rail lines: 2%;
buses, freight transport by road, air transport of cargo, air transport of passengers, companies whose primary business is communication by radio or television or the Internet: 1.5%; and
pork and poultry producers, fishing: 1%.

The standard rate of the CSLL is 9%, although some businesses in some industry sectors have a different contribution rate.

Registration: Employers must register all employees with the Ministry of Labor, register employees in the PIS, and open account for all employees with the federal savings bank (Caixa Economica Federal). This involves completing a PIS/PASEP registry form (document de cadastramento de trabalhador, DCT) and delivering it to the federal saving bank, and registering all new hires by submitting the General Register of Employees and Unemployed for Hiring and Dismissals (CAGED) or submitting new hire data through eSocial.

Taxable Amounts: The taxable amount is the totality of the gross revenue. In the case of non-profits, the taxable amount refers to the total payroll.

Returns and Remittances: Payment should be made to the federal savings bank by the seventh day of each month.

State/Jurisdiction Taxes

Taxes on employment income are not assessed by any of Brazil’s states or local jurisdictions.

COMPENSATION AND BENEFITS

The Consolidation of Labor Laws (Consolidação das Leis do Trabalho, abbreviated as CLT) of 1943 in conjunction with the constitution are the governing pieces of labor law legislation in Brazil. These two bodies of legislation detail wage-related benefits, worker protections, and unemployment benefits, among other standards for compensation and benefits, such as minimum wage, overtime pay, hours of work, holidays and leave, wage payment, profit sharing, transportation subsidy, termination pay, and workers’ compensation.

In addition, employers contribute to retirement benefits through the country’s social security system, covered above.

Brazil strictly regulates time collection and hours worked by employees. Employers are required to note the time of entry and exit in a record manual, either mechanically or electronically. Guidelines for the use of electronic systems to track hours worked are available from the Ministry of Labor and Employment.

The Ministry of Labor and Employment (Ministerio de Trabalho e Emprego) is responsible for enforcing all laws relating to compensation and benefits. To ensure the adherence to the labor laws, the Ministry of Labor and Employment certifies all working establishments before they are opened and conducts regular inspections of working conditions thereafter.

The Social Security law, as described above, requires workers and employers to contribute to fund pensions for all workers.

Coronavirus (Covid-19) Guidance: Effective April 27, 2021, employers may agree with individual employees to reduce working hours and wages by 25%, 50%, or 70% or suspend employment contracts for up to 120 days. The salary reduction program began April 1, 2020, and was extended several times, finally expiring at the end of December 2020. Employees will be compensated by the government, which will pay out unemployment benefits equal to a worker’s salary reduction created by this program. To participate, employers must sign an agreement with employees covering the reduction and agreeing to keep affected workers employed after the agreement expires for at least the same amount of time that the reduction was in place.

Effective April 27, 2021, for a period of 120 days, employers, with 48-hours notice, may decide to have employees work remotely without previous agreements. Employers also may declare company shutdowns, require employees to take leave for periods of at least five days, and move forward the day off for any holiday (federal, state, district, or municipal).

Effective April 2, 2020, if days of employer-paid sick leave are taken by an employee who has Covid-19, the wages paid for those days of leave are exempt from social taxes.

Minimum Wage

Effective for 2021, the national monthly minimum wage is R$ 1,100. Effective from February to December 2020, the national monthly minimum wage was R$ 1,045.

Brazil’s states are permitted to establish and enforce minimum wages that are higher than the national minimum wage and may do so for some industry sectors but not others. Five of Brazil’s states have minimum wages higher than the national minimum wage:

Paraná: Effective for 2021, the industry-specific monthly minimum wages range from R$ 1,467.40 to R$ 1,696.20. Effective for 2020, the industry-specific monthly minimum wages ranged from R$ 1,383.80 to R$ 1,599.40.
Rio de Janeiro: Effective since Jan. 1, 2019, the industry-specific monthly minimum wages range from R$ 1,238.11 to R$ 3,158.96. Effective for 2018, the industry-specific monthly minimum wages ranged from R$ 1,165.17 to R$ 2,972.82.
Rio Grande do Sul: Effective since Feb. 1, 2019, the industry-specific monthly minimum wages range from R$ 1,237.15 to R$ 1,567.81. Effective from Feb. 1, 2018, to Jan. 31, 2019, the industry-specific monthly minimum wages ranged from R$ 1,196.47 to R$ 1,516.26.
São Paulo: Effective since April 1, 2019, the industry-specific monthly minimum wages range from R$ 1,163.55 to R$ 1,183.33. Effective from Jan. 1, 2018, to March 31, 2019, the industry-specific monthly minimum wages ranged from R$ 1,108.38 to R$ 1,127.23.
Santa Catarina: Effective for 2020, the industry-specific monthly minimum wages range from R$ 1,215 to R$ 1,391. Effective for 2019, the industry-specific monthly minimum wages range from R$ 1,158 to R$ 1,325.

In Brazil, a state minimum wage rate often is referred to as a salary floor (piso salarial) or regional salary floor (piso salarial regional).

Other than trainees, every new hire in Brazil must be paid the minimum wage, or more if the Ministry of Labor and Employment (Ministerio de Trabalho e Emprego) deems the employee’s work or workplace as unclean or hazardous.

Employers must increase the pay of workers deemed to be involved in unhealthy work (trabalho insalubre). Unhealthy work is work deemed to be detrimental to an employee’s health because the work involves exposing employes to harmful substances based on the nature, conditions, or methods of that work. The Ministry of Labor and Employment chooses which work activities and work operations are designated as unhealthy. Employers must pay employees working in activities that the ministry designated as unhealthy but only to a minimum degree at least the total of the minimum wage for which the employee is eligible, plus 10% of that amount. Employers must pay employees working in activities that the ministry designated as of an average degree of unhealthiness at least the total of the minimum wage for which the employee is eligible, plus 20% of that amount. Employers must pay employees working in activities that the ministry designated as highly unhealthy at least the total of the minimum wage for which the employee is eligible, plus 40% of that amount.

Separately from the premiums for unhealthy work, employers must pay employees involved in hazardous work (trabalho periculoso) a premium of 30% more than the base salary they otherwise would be paid. Hazardous work is work deemed to be work that involves an employee being in permanent contact with explosives, flammable agents, radioactive substances, or ionizing radiation, or the employee being subject to high risk of theft or physical violence against them or their property, or the employee working with particularly dangerous electrical operations, or the employee needing to ride a motorcycle as a regular part of the job. The Ministry of Labor and Employment chooses which work activities and work operations are designated as hazardous.

Additionally, employers who temporarily transfer an employee to a different location must increase their salary by 25% for the duration of the transfer.

A company that has hired an employee with a salary based on the minimum wage is not required to increase that employee’s pay if the minimum wage later is increased, according to a 2008 Supreme Court ruling.

Overtime

Generally, overtime begins when work extends beyond eight hours per day or 44 hours per week, subject to collective bargaining agreements. Employees may be required to work a maximum of two overtime hours per day. In an emergency, additional overtime may be required if a special agreement is registered with the Ministry of Labor and Employment. Compensation for overtime must be at least 50% higher than compensation for normal working hours. Part-time employees are not entitled to overtime pay. The employer can avoid paying for the overtime hours under agreements or collective pacts that stipulate that overtime hours will be compensated by the corresponding amount of hours during another work day, as long as the total work period during a year does not exceed the foreseen normal workweek duration period.

Employers requiring employees to work on Sunday must compensate them at double their pay rate.

Employers must pay workers a third of their hourly compensation when employees are called or texted by their managers outside of regular work hours.

Hours of Work

The regular working period may not exceed eight hours per day and 44 hours per week, with the option to offset work hours and reduce work by way of a collective labor agreement. The daily work period also may be extended to 12 hours, followed by 36 hours of uninterrupted rest, by way of a collective labor agreement. Alternatively, an extension of the daily work period to 12 hours for employees in the health care industry may be accomplished through a collective labor agreement or an individual written agreement. All work shifts exceeding six hours must include a break of a minimum of one hour but no longer than two hours. This break is not considered to contribute to the cap on daily working hours. Employers must provide employees with 11 hours off between shifts and a weekly rest period of 24 hours, which must be given on Sundays except when demanded by public convenience or service requirements. Sunday work must be performed according to a monthly and organized work shift calendar that can be presented for inspection.

The part-time working period may not exceed 30 hours per week, or 26 hours per week plus the possibility of up to 6 overtime hours per week.

Work done between 10 p.m. and 5 a.m. must be paid at 120% of normal daytime work. Workers under the age of 18 may not work during these times.

Holidays

Employers must provide all workers with nine mandatory paid holidays per year, each of which is a national holiday (feriado nacional). Employees working on these days must be given double pay. The public holidays are:

Jan. 1: New Year’s Day/Day of Universal Confraternization (Confraternização Universal)
Good Friday/Passion of Christ (Paixão de Cristo), the Friday immediately before Easter Sunday
April 21: Tiradentes
May 1: World Labor Day (Dia Mundial do Trabalho)
Sept. 7: Independence Day of Brazil (Dia Independência do Brasil)
Oct. 12: Our Lady of Aparecida Day (Dia Nossa Senhora Aparecida)
Nov. 2: All Souls Day/Day of the Dead/Finados
Nov. 15: Proclamation of the Republic Day (Dia Proclamação da República)
Dec. 25: Christmas Day (Natal)

Brazil recognizes numerous additional holidays for which it is customary, but not required, for employers to provide paid leave. These holidays include:

Carnival (Carnaval), the Monday and Tuesday immediately before Ash Wednesday
Ash Wednesday (Quarta-feira de Cinzas), 46 days before Easter Sunday
Feast of Corpus Christi (Festa de Corpus Christi), 60 days after Easter Sunday
Oct. 28: Public Servant’s Day (Dia do Servidor Público), for government workers
Dec. 24, after 2 p.m.: Christmas Eve (Véspera de Natal)
Dec. 31, after 2 p.m.: New Year’s Eve (Véspera de Ano Novo)

Additionally, July 9 is a holiday in the state of São Paulo, the Holiday of the Constitutionalist Revolution of 1932 (Feriado da Revolução Constitucionalista de 1932), for which employers customarily provide paid leave.

Leave

Employers must provide employees with up to 30 days of annual leave per year, the exact number of days depending on how many unexcused absences the worker had during the year, as follows:

five or fewer unexcused absences: 30 days of paid leave
six to 14 absences: 24 days
15 to 23 absences: 18 days
24 to 32 absences: 12 days
more than 32 absences: no entitlement to leave

Vacation pay must be at least one-third higher than the employee’s regular salary. If the employee so agrees, annual leave may be divided into three periods, provided that one of the periods may not be less than 14 days, and the other periods may not be less than five days. Periods of annual leave may not start in the two-day period before a weekly day of rest or a holiday. Employers must allow workers to take leave within 12 months of earning it, or they are entitled to double their regular pay when they do take it. An employee may elect to receive a cash payment in lieu of up to one-third of annual leave days due. The granting of annual leave must be communicated in writing to employees at least 30 days in advance.

Sick leave: Employers must provide 15 days of sick leave. After using their 15 sick leave days, employees who must miss work because of a non-work-related injury or illness may be eligible for benefits from the Social Security system.

Marriage leave: Employers must provide three days of paid leave to employees who get married.

Bereavement leave: Employers must provide two days of paid bereavement leave if a spouse, parent, child, sibling, or other dependent dies.

Paid parental leave: Employers must provide four months (120 days) of paid maternity leave, including up to a month before the due date, or five days of paid paternity leave. The maternity leave may be extended for a further period of two months. Employers pay the maternity leave, but are later reimbursed by the Social Security system.

The maximum monthly maternity leave benefit is equivalent to the monthly social security ceiling (teto previdenciário) and the minimum monthly maternity leave benefit is equivalent to the national monthly minimum wage.

Effective for 2021, the minimum monthly maternity benefit is equal to the national monthly minimum wage of R$ 1,100 and the maximum monthly maternity benefit is equal to the 2021 monthly social security ceiling of R$ 6,433.57. Effective for 2020, the minimum monthly maternity benefit was equal to the national monthly minimum wage of R$ 1,039 and the maximum monthly maternity benefit was equal to the 2020 monthly social security ceiling of R$ 6,101.06.

Women who adopt a child or who are granted custody of a child as a result of a judicial decision are entitled to paid maternity leave of 120 days for a child younger than twelve years of age. The two-month maternity leave extension also applies to adoptions.

New mothers are entitled to two half-hour breaks a day to breast-feed until the child has reached 6 months of age. Employers with at least 30 female workers over 16 years of age must provide a place for parents to care for their newborns, either at the workplace or through arrangements with child-care facilities.

Blood donation leave: Employers must provide employees with one day for voluntary blood donation. Employees must present proof of blood donation to their employers to receive the benefit.

Military service leave: Employers must provide an unlimited amount of days during which employees are required to present themselves for military service.

Higher-education testing leave: Employers must provide leave to employees who can provide evidence that they were taking a test to enter an higher education establishment.

Wage Payment

Payment must be distributed at the workplace during working hours, except in the case of bank deposits. When payment is made on a monthly basis, it should be paid by the fifth business day of the month following the month in which the labor was performed. Employers must provide workers with a copy of salary statement.

Remuneration must be paid in local currency. A portion of remuneration may be paid in kind, provided these benefits are not necessary for the development of the job itself, in which case they will be regarded as work instruments and not as salary.

Bonuses and Special Benefits

Christmas bonus: Employers must pay all employees a Christmas bonus called the thirteenth monthly salary. It is based on the average monthly remuneration given to employees in the preceding year. It should be delivered in two payments, one by November 30, and the other by December 20.

Profit-sharing program (Programa de Participação nos Lucros e Resultados, abbreviated as PLR): Although not legally required, many employers offer profit sharing plans to their employees. The amount of profit sharing, however, is left to negotiations between the employer and employees. Profit-sharing payments are not considered part of an employee’s wages for tax purposes if the plan is offered to all employees of the company and the employer negotiates the plan with employees and their union. Payments are taxed at source based on separate tax tables available on the Ministry of Finance website. Employers must pay the profit sharing bonus in no more than two segments per year and may make no more than one payment per quarter.

Transportation Vouchers: Workers are entitled to transportation vouchers to cover the cost of commuting to work on public transportation. Such vouchers are not considered part of the employee’s compensation. Employers may withhold up to six% from employees’ salaries, not including bonuses, and employers must pay the rest. Vouchers must be valid for all forms of public urban transportation, transportation between municipalities, or inter-state transportation. Employers who provide other means of transportation to employees are exempt from providing vouchers.

Vale-Cultura: The Vale-Cultura is a monthly benefit of R$ 50 granted by employers to workers to be used to buy cultural products or services in Brazil. Employers are encouraged to provide this benefit to employees who receive less than five minimum wages, to stimulate access to culture for low and middle income citizens. Vale-Cultura benefits are exempt of social security contributions, FGTS payments, and personal income tax.

Termination Pay

An employee terminated for just cause is not entitled to a pro rata payment for vacation time or the year-end bonus. An employee who disputes an employer’s finding of just cause for dismissal may bring suit against the employer in Brazil’s labor courts.

Employers who dismiss employees without just cause must make additional deposits to employees’ Guarantee Fund for Length of Service (FGTS) accounts and make additional severance payments.

For an employee terminated without cause and covered by the FGTS, employers must pay a fine equal to 40% of the total funds accumulated during the period of employment with that employer in the employee’s FGTS account in addition to paying a fine equal to 10% of the total funds accumulated during the period of employment to the government. If the employee had been employed by the terminating employer for more than 10 years prior to 1988 and had not opted to be covered by the FGTS, the terminating employer must pay the employee:

one month’s salary for each year worked for that employer, if the employee had been hired for an indefinite term of employment, or
half the total amount due as salary through the end of the employment agreement, if the employee had been hired for a fixed term of employment.

Employers must also pay employees all back pay due, payment for accrued vacation time, and a pro rata payment of the year-end bonus based on the number of months the employee worked during the year.

Additionally, employees discharged without just cause must be given advance notice of termination. If the employees are paid weekly, or at shorter intervals, eight days’ notice is required. If the employees are paid less frequently than weekly or have worked for the employer for one year or longer, 30 days’ advance notice is required. During the period of notice, employees may take leave for up to two hours a day with pay. Alternatively, employees paid weekly or at shorter intervals may take off one full day with pay, and those paid less frequently or who have at least one year of seniority may take off seven full days with pay. If the employer fails to give the required notice, the employee is entitled to be paid his or her regular salary for the period of required notice.

Workers’ Compensation

Brazil’s workers’ compensation program is administered by the National Institute of Social Security (INSS). In case of an occupational injury or disease, this scheme offers substantial benefits above ordinary medical coverage. These include medical costs, full wage replacement, compensatory payments for loss of function, rehabilitation costs, and death benefits.

When an occupational injury or illness occurs, employers are required to report to INSS within 24 hours. The report automatically triggers SAT coverage, which pays for medical care. The employer continues to pay full wages for the first 15 days of lost time, at which point the SAT takes over with continued full wage replacement. If a company fails to report an injury or illness, claiming that it is not occupational, then a worker may take the case to labor court.

Rural workers often are not covered by SAT.

Recordkeeping

Employers must annotate an employee’s Portfolio of Work and Social Security (CTPS), a legal document that all employees must possess, within forty eight hours of hiring that employee.

The statute of limitations for violation of the labor laws are five years, if the employment contract is still valid. If it has been terminated, the statute of limitations is two years. There is no statute of limitations when the employee in question is under the age of 18.

eSocial: In January 2018, Brazil initiated a multi-phase implementation for requiring employers to use the eSocial system for reporting payroll-related data to the federal government. Deadlines for implementing components of the eSocial system are elaborated upon in the Taxes section of this primer.

Under the eSocial system, information on company employees must be reported online as soon as it becomes available. When a new employee is hired, compensation and benefits data regarding the employees must be immediately entered into the system and subsequent changes in employment status must be reported within a specified time period. At present, employers have seven days to report new hires.

Employers using eSocial must maintain up-to-date information on their total payroll, tax, and social security payments, and must enter into the system data regarding a payment to an employee generally by the seventh day of the month after the month when the payment was made.

FOREIGN WORKERS

Foreign workers are entitled to the same rights as Brazilian citizens and generally are covered by the same tax and workplace laws. Generally, nonresidents are noncitizens working in Brazil informally or temporarily for less than 183 days during a 12-month period. An expatriate that is transferred to Brazil on a temporary basis and without an employment relationship with a Brazilian entity may be deemed to be a nonresident.

To be eligible to apply for a permanent visa for its director or manager, the foreign company must have invested at least R$ 600,000 in Brazil for each foreign officer. Alternatively, the minimum investment may be reduced to at least R$ 150,000 for each officer if the foreign company takes on the commitment to generate, within the two following years, at least 10 new jobs after the company is established or its officer takes office.

Visas: Foreign individuals wishing to work in Brazil must apply for a temporary work visa or permanent work visa. To apply for a temporary work visa, the company located in Brazil must submit the employment contract or training form to the National Council for Immigration and the Ministry for Labor and Employment in Brazil for approval. Once those organizations have approved the employment contract or training form, the Brazilian Ministry of Foreign Affairs will authorize the applicant’s local consulate, whereupon applicants must complete a Visa Application form at the consulate.

Temporary work visas are valid for up to two years and can be extended for an additional two year or converted into a permanent visa.

A foreign worker who has worked four years under a temporary workers visa may apply to the Ministry of Justice to convert his or her visa into a permanent one.

Special visas are available for Haitian citizens, foreign investors, partners in a stable union, administrators of a nonprofit organizations, representatives of a financial or similar institution with headquarters abroad, and asylum seekers.

Registration: Employers must register employees with the Ministry of Labor, the Registry of Employment, the RFB, and INSS, as they would a Brazilian resident. Additionally, all immigrants and temporary residents who come to work in Brazil must register themselves with the Federal Police within 30 days of their arrival.

Taxes: Nonresidents are taxed at a flat rate of 25% and may only deduct a limited number of costs and expenses. However, extended business travelers who stay less than 183 days during any 12-month period may be able to avoid taxation in Brazil if they can be considered nonresident and no part of their wages is paid locally.

Wages/Payments: Wages must be paid to foreign workers as they would be paid to residents. They must be denominated in Brazilian reals and paid no less frequently than monthly.

WORKING IN THE UNITED STATES

Foreign workers from Brazil must meet general visa requirements and be certified to be employed in the United States. General visa requirements for the U.S. are included in the separate

U.S. employers also must check the names of all new-hires and employees against the Specially Designated Nationals and Blocked Persons List, administered by the Treasury Department’s Office of Foreign Assets Control (OFAC). Because OFAC prohibits financial transactions with individuals on the list, employers cannot employ them and may face fines for failing to comply.

Brazilian workers are eligible to work in the U.S. under H-2B visas, which cover labor or services of a temporary or seasonal nature in occupations other than agriculture or registered nursing. The number of H-2B visas issued each year is limited by U.S. law.

For tax purposes, Brazilians are subject to U.S. employment-based taxation on income earned in the U.S. unless they work under specific visa types that exempt earnings from taxes.

State and local taxation of Brazilian workers also can apply.

The U.S. labor laws apply to all workers employed and providing services in the country.

Work eligibility as an employee is contingent upon Department of Homeland Security and Labor Department approval and the employee receiving a U.S. Social Security number from the Social Security Administration.

Tax Residency: In general, employees working in the U.S. on a temporary basis are considered nonresidents for tax purposes unless they qualify for resident status. Employees can be granted permanent resident status through the so-called green card test or if they meet the substantial presence test under the U.S. tax code. More information on these requirements is in the

Permanent residents are subject to U.S. tax requirements the same as U.S. citizens and are taxed under the U.S. system on their worldwide earnings.

Income Taxes: Generally, nonresidents in the U.S. who are from Brazil and are working in the U.S. are subject to U.S. taxes based on their U.S.-sourced income. Income is taxed differently based on whether it is categorized as wage income or nonwage income, which includes interest and dividends.

A Form W-4, Employee’s Withholding Certificate, must be filed by each employee with their employer. All nonresidents in the U.S. who are from Brazil and are working in the U.S. must claim “single” in Step 1c, regardless of marital status; write “Nonresident Alien” or “NRA” in the space under Step 4c of the form; and may not claim “exempt” in the space under Step 4c.

Nonresident alien employees may adjust withholding using Step 2b or 2c of the Form W-4; certain employees also may be able to use Steps 3, 4a, or 4b. More information about Form W-4 requirements for nonresident alien employees is available in the

Although the versions of Form W-4 issued in 2020 or later significantly differ from the versions issued in 2019 or earlier, nonresident employees that filed a valid version of Form W-4 from 2019 or earlier with their employer do not need to file another Form W-4 with the employer unless they need to implement a change for their withholding. On Forms W-4 issued in 2019 or earlier, nonresident alien employees were required to check the “single” box on line 3, regardless of marital status; write “Nonresident Alien” or “NRA” above the dotted line on line 6; and were not permitted to claim “exempt” on line 7 of the form.

An additional amount is added to a nonresident alien employee’s wages for calculating federal income tax withholding, with the amount based on pay period frequency and the date of the employee’s most recently filed Form W-4. The table of additional amounts applicable to Forms W-4 from 2020 or later and the table applicable to Forms W-4 issued before 2020 are available in the

Nonwage income and self-employed foreign workers can be subject to income tax withholding at a flat rate of 30%.

Additionally, foreign workers may be taxed differently based on the specific type of visa they hold.

Tax treaties: Brazil and the U.S. do not have a tax treaty.

Social Taxes: Most foreign workers are subject to paying into the U.S. Social Security system. Foreign nationals who are exempt from paying income tax and who do not have the eligibility to receive a social security number may not be required to pay social taxes. Foreign workers contributing to Social Security for a certain time period may be eligible to receive benefits.

Generally, foreign workers in the U.S. that have specific visas as exchange visitors or students or who are temporarily in the U.S. for agricultural work are not subject to social taxes on income that is obtained from the purpose in which they originally entered the United States.

Totalization Agreements: Brazil and the United States have entered into a totalization agreement and a summary of those provisions is included in

Wage Payment: Under certain visas for certain types of employment, employers are required to pay foreign workers the higher of either the prevailing wage or the actual wage that is paid to U.S. workers that have similar skills and qualifications.

There are no particular requirements that employees be paid in U.S. dollars.

TREATY ARRANGEMENTS

Brazil has entered into more than 30 income tax treaties, but has not entered into an income tax treaty with the United States. Brazil has a totalization agreement with the United States for social tax coverage purposes.

The countries with which Brazil has a bilateral income tax treaty in effect are Argentina, Austria, Belgium, Canada, Chile, China, Czech Republic, Denmark, Ecuador, Finland, France, Hungary, India, Israel, Italy, Japan, Luxembourg, Mexico, Netherlands, Norway, Peru, Philippines, Portugal, Russia, Slovakia, South Africa, South Korea, Spain, Sweden, Switzerland, Trinidad and Tobago, Turkey, Ukraine, and Venezuela.

Brazil has totalization agreements for social tax purposes with more than 30 countries. The countries with which it has agreements are Andorra, Argentina, Belgium, Bolivia, Cabo Verde (Cape Verde), Canada, Chile, Colombia, Costa Rica, Cuba, Dominican Republic, Ecuador, El Salvador, France, Germany, Greece, Guatemala, Honduras, Italy, Japan, Luxembourg, Mexico, Nicaragua, Panama, Paraguay, Peru, Portugal, South Korea, Spain, Switzerland, United States, Uruguay, and Venezuela. Brazil also has an agreement with the Canada province of Quebec.

RESOURCES

All resources in English unless otherwise noted.

General

U.S. State Department: U.S. Relations With Brazil

CIA World Factbook: Brazil

Constitution of Brazil

Portal Brazil

Currency Details

International Organization for Standardization: Currency Codes - ISO 4217

Unicode Consortium: Currency Symbols

United Nations: United Nations Terminology Database: Brazil

Taxes

Brazilian IRS (Portuguese)

Ministry of Finance, Tax System and Administration in Brazil (Portuguese)

National Tax Code (Portuguese)

Ministry of Social Welfare (Portuguese)

Lecture on Employee Stock Option Plans

Ministry of the Economy, Special Secretariat of the Internal Revenue Service of Brazil: Normative Instruction No. 1,867 of Jan. 25, 2019 (Portuguese)

Brazil 2019 Constitutional Amendment on Social Security Reform (Portuguese)

Brazil Provisional Measure No. 873 (Portuguese)

Brazil Provisional Measure No. 905 (Portuguese)

Brazil Superior Court of Justice March 6, 2020, Decision on Social Tax Assessments (Portuguese)

Compensation and Benefits

Christmas Bonus Law (Portuguese)

Consolidation of Labor Laws

CAIXA, Brazil’s Public Bank (Portuguese)

Guarantee Fund for Length of Service (Portuguese)

Guarantee Fund for Length of Service Law (Portuguese)

Minimum Wage Law (Portuguese)

Profit Sharing Law (Portuguese)

Transportation Vouchers Law (Portuguese)

Brazil Provisional Measure No. 1,045 (Portuguese)

Brazil Provisional Measure No. 1,046 (Portuguese)

Law No. 14,158, of June 2, 2021 (Portuguese)

Foreign Workers

Brazilian Embassy (Portuguese)

Ministry of Foreign Relations (Portuguese)

Working in the United States

U.S. Internal Revenue Service:

IRS Notice 1392, Supplemental Form W-4 Instructions for Nonresident Aliens
IRS Publication 15, Circular E, Employer’s Tax Guide
IRS Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities
IRS Publication 519, U.S. Tax Guide for Aliens
IRS Publication 901, U.S. Tax Treaties

U.S. Labor Department, Foreign Labor Certification

Hiring Foreign Workers