Expatriates in Brazil: planning and attention to the rules prevent risks and costs associated with foreign professionals’ work

Rio de Janeiro – article written by Augusto Andrade, associate and responsible for the Individual division of Domingues e Pinho Contadores

Brazilian legislation encompasses particularities that might surprise companies that are interested in hiring expatriates in Brazil.To manage the characteristic complexity of the country and mitigate unnecessary risks and costs, it is essential to have attention to aspects related to immigration, labor law, social security, and tax.

As regards a foreigner’s own tax obligations, noncompliance with rules applicable to individuals might compromise their performance in the Brazilian market, and it might even affect the company’s business.

Hiring or transferring employees coming from abroad is associated with costs that must be taken into consideration. Working with the projection of these expenses might help the company choose the most appropriate employment type.

To do so, knowing every process involved is necessary, and that’s where hiring specialized guidance opens a window of opportunity. The ideal is for the whole process to be conducted in a planned and structured manner.

Preparation for hiring a foreigner

In this matter, it is possible to combine compliance with reduction in costs by the adoption of the best strategies. In general terms, outlining the management of expatriates is important to:

· suggest the best practices for complying with the Brazilian legislation;

· indicate measures that represent opportunities related to tax and social security both for the company and the foreigner, as to prevent double taxation; and

· support the expatriate as they come to Brazil and remain in it.

Check some points that must be considered:

Obtaining the work visa

A preliminary analysis might offer guidance about the most suitable type of visa for each case, recommending the best path for obtaining the document.

To determine the type of visa, it is necessary to assess whether the foreigner is going to play an administrative role within the company and even if they are going to be registered in the company’s statute. It is also important to know whether they are going to take part in the executive board or are simply going to be part of the company’s local employees. Moreover, it should also be determined if they are going to be responsible for the CNPJ (Cadastro Nacional de Pessoas Jurídicas, or National Register of Corporate Taxpayers), and if the work involves seafarer’s shipboard working scheme or any specific technical job.

In addition, depending on the visa type, the pay structure would have to be arranged in a distinctive manner, what also needs to be part of the planning.

Paperwork

CPF (Cadastro de Pessoas Físicas, or Individual Tax Registration), CRNM (Carteira de Registro Nacional Migratório, or Migratory National Register Card), and labor evidence booklet are some of the documents required to maintain professional activities in Brazil. Thus, it is necessary to take into consideration the amount of time to be spent on the arrangements for issuing these documents.

Labor law and social security-related issues

Any expatriate employee is protected by Brazilian labor laws. These workers are entitled to the payment of FGTS (Fundo de Garantia por Tempo de Serviço, or Guarantee Fund for Length of Service), PIS (Programa de Integração Social, or Social Integration Program) or PASEP (Programa de Formação do Patrimônio do Servidor Público, or Public Servant’s Estate Formation Program) and social security, besides the remainder of rights common to the Brazilian worker, such as vacations and Christmas bonus among others.

It is important to highlight that Brazil has social security agreements with different countries and the application of those agreements before the expatriation starts might allow for significant savings for the Brazilian company.

For instance, by submitting an order of displacement to Brazilian social security and the expatriate’s country of origin, they may keep contributing to social security in their country without having to contribute here. This is also a relieve of obligation in regard to the employer’s contribution to INSS (Instituto Nacional do Seguro Social, or Social Security National Institute), what grants savings for the employer.

Compliance with individual tax obligations

It is also necessary that employers support their foreign employees in complying with obligations of individuals in Brazil. Since the company is responsible before authorities for ensuring that the foreigner pays their taxes and tax obligations. It is relevant to point out that, just like it has social security agreements, Brazil also has agreements with several countries to avoid double taxation of its taxpayers.

If a Brazilian monitoring body identifies the non-compliance with an individual obligation, the company might experience difficulties obtaining new work permits within the same type.

A foreigner who holds a directive position must also keep a regular CPF, since a possible individual issue in this matter might cause difficulties in the company’s business course.

Planning and guidance for expatriate management

If it is properly designed and executed in an integrated way, considering tax, labor law and social security-related aspects, this action brings significant advantages to companies that embrace international mobility to evolve and develop their affairs.

The best strategy to bring a foreigner to work in Brazil starts with planning. Transfer in compliance with the rules is essential so that a company and an employee can establish a relationship as per current legislation, from which they can get every possible benefit.