Expatriates: companies can benefit from social security agreements

Social security agreements reduce the costs for companies in labor relocation operations, in addition to bringing benefits to workers

The management of expatriates by companies must start long before the foreigner arrives in Brazil. And social security agreements are one of the aspects thats should be analyzed in advance.

When properly implemented, the agreements reduce costs for companies in international mobility operations. For this reason, multinationals have been investing in defining policies for transferring workers and executives to other countries.

However, almost half of companies still do not use the benefits of social security agreements. According to a survey published in 2019 by the Brazilian National Confederation of Industry (CNI), 45% of multinationals are losing savings opportunities with the relocation of workers.

And what is the advantage of this practice for the company?

Once the agreement is established, the company in which the foreign employee works becomes exempt from the employer's contribution to the INSS, which represents a relevant saving for the employer.

Thus, there is a single payment of social security charges by the company, so that double taxation does not occur. Only one social security contribution, from the country of origin, must be paid.

What is the advantage of social security agreements for workers?

A worker can use the contribution time or insurance completed in another country, with which Brazil has an agreement, to ensure social security benefits.

In practice, this allows for counting contribution time to social security systems of other countries for old-age pension, death pension, and disability pension, besides avoiding double taxation of the worker himself.

When a request for relocation is formalized with the social security system in Brazil and in the expatriate's country of origin, he can continue to contribute in his country, without having to contribute here.

It is worth highlighting that the agreements guarantee social security coverage for both Brazilian workers living abroad and foreigners working in Brazil.

What are the expatriate's labor and social security rights?

An expatriate employee who performs his duties here is covered by Brazilian labor laws, with FGTS, PIS/PASEP and social security payment rights, in addition to other common rights to Brazilian workers, such as vacation, 13th salary, among others.

What agreements are in force?

Brazil has the following bilateral agreements in force: Germany, Belgium, Cape Verde, Canada, Chile, South Korea, Spain, France, Greece, Italy, Japan, Luxembourg, Portugal, Quebec and Switzerland.

Multilateral agreements are established with Mercosur countries (Argentina, Paraguay and Uruguay) and countries on the Ibero-American peninsula (Argentina, Bolivia, Brazil, Chile, El Salvador, Ecuador, Spain, Paraguay, Peru, Portugal and Uruguay).

Why is it important to plan the movement of expatriates?

The transfer must be made in accordance with the rules so that the company and the professional may establish a relationship in accordance with current legislation, making it possible to seize the benefits of social security agreements.

As these rules are complex and involve requirements, documents, and attention to deadlines, the company must plan to comply with all stages without jeopardizing the expatriate's execution of the service. Each country has specific provisions.

In addition, the company must formalize the relocation request to the social security authority before the worker travels to the destination.

Planning and guidance for expatriate management

Domingues e Pinho Contadores brings together specialists with vast experience in the adoption of international agreements on tax and social security matters to avoid double taxation.

This support helps both companies that adopt international mobility for the evolution and growth of their business, as well as expatriates who, individually, seek ways to make their professional experience in another country more advantageous.