Payroll in Brazil
Capital
Brasilia
Official Language
Portuguese
Currency
Brazilian Real
Payroll cycle
Bi-monthly
Quick facts about Brazil
The sixth largest country in the world by population, Brazil is home to the most species of plants and animals in the world. As one of the world’s most diverse countries, Brazil is a hub for talented workers from all backgrounds. Known as a melting pot, the country has some of the largest Italian, Arab, and Japanese communities in the world.
What is payroll in Brazil?
Brazilian payroll encompasses onboarding, payments, benefits like health insurance, retirement plans, 13th-month pay, deductions, compliance, and taxes for full-time employees.
Companies who want to onboard Brazilian employers can open an entity and run payroll with a PEO, or skip the process of opening an entity and partner with an EOR like Via.
Payroll cycle
In Brazil, the payroll cycle is either bi-weekly or monthly. For bi-weekly payments, employees are paid their salary on the 15th and 30th/31st of each month. For monthly salary payments, employees are paid on the 30th/31st of each month.
How to setup payroll in Brazil
To set up payroll in Brazil from a foreign country like the United States, there are a few options available. Most companies decide to set up a remote global payroll system. In this approach, the non-resident company outsources payroll through a global payroll PEO or EOR service.
Establishing an entity and setting up internal payroll
For employers that want to establish a legal entity within Brazil, building your local HR team and setting up local payroll is an option. This is a great approach for companies who have the time and resources to establish a business presence in the country.
However, the process of opening an entity is time consuming and expensive because of strict laws set forth by the Brazilian government.
Setup a PEO/have another company run payroll
Another option for handling payroll in Brazil is to use a global payroll service like a PEO or have another company run payroll for your company. You will still need to open an entity and register your business in Brazil under one of the available forms, but you won’t need to worry about building out a local HR team.
Companies that choose to partner with an international PEO service enter a co-employment model, which means that you are still on the hook for maintaining global compliance for employment issues each year.
Fully outsource payroll and benefits with an EOR like Via
A great option to make sure your company is following all of their legal obligations for paying employees is to use a global employer-of-record (EOR) service like Via. Global EOR services like Via handle payroll, benefits, Brazilian legal compliance and more.
Your global EOR service ensures that employees are being paid correctly, in the right currency, and on time. They make sure that your payroll process is compliant with all local labor laws, which includes making the right payroll deductions yearly.
As your team’s employer of record, Via takes on full responsibility for maintaining employment compliance so you can focus on the day-to-day operations of your global business.
Payroll taxes in Brazil
When establishing payroll, you will need to make sure that you are making the correct payroll deductions for each employee or face heavy penalties.
You are legally allowed to provide employees with electronic pay slips. Employee payroll records must be kept for 5 years.
Tax year
The tax year in Brazil runs from 1 January-31 December.
Minimum wage
The minimum wage in Brazil is $1,212 BRL per month.
Corporate income tax
The corporate income tax rate in Brazil is 15% of company profits, with a surcharge of 10% on annual revenue over BRL 240,000. In Brazil, companies can choose to pay taxes based on their presumed or actual income. There are also two different methods for paying corporate income tax in Brazil:
Lucro real method is based on the actual annual or quarterly taxable income
Lucro presumido method which is based on deemed taxable or estimated quarterly income
Payroll tax
Payroll taxes are deducted based on both the employee and employer’s social security contributions for each period.
Sales tax
In Brazil, they use the VAT (value added tax) system for sales tax. Sales tax is deducted on federal, state and municipal levels.
Industrialized product tax is a federal mandate on manufactured goods and imports in Brazil. This rate is around 20% and varies based on the commodity.
Merchandise and Service Circulation tax (ICMS) is a VAT imposed at the state level. This is for the circulation of goods and ranges from 4%-25%, depending on the goods. Exports in Brazil are exempt from VAT.
Other taxes
Smaller businesses with revenues less than BRL 3.6 million may qualify to be taxed under a simplified regime.
There is also PIS/PASEP (social integration program) taxes of 0.65%-1.65%. COFINS (social security tax) is another tax that ranges from 3%-7.6%. For the import of goods and resources for these taxes, there is a combined rate of 9.25%.
Employee social security
Employee deductions range from 8%-11% of total wages, based on their salary. The max required contribution is BRL 828.38.
Total cost: 7.5%-14%
Employer social security
Employers deduct 8% of employees salary to their severance fund, 20% to public pension, and 1-3% for their health and safety.
Employers pay an additional social security contribution of 5.8%.
Total cost: 28-35%
Employee income tax
Gross Income | Percentage |
|---|---|
$0-$22,846.76 BRL | 0% |
$22,847.77-$33,919.80 BRL | 7.5% |
$33,919.91-$45,012.62 BRL | 15% |
$45,012.63-$55,976.16 BRL | 22.5% |
$55,976.17+ BRL | 27.5% |
Working hours
The standard working hours is 8 hours per day with up to 44 hours per week. Working hours may differ depending on what was agreed upon in the employment contract. The work week is Monday-Friday.
Overtime
Any work over 44 hours is considered overtime. Generally, overtime limits are set at 2 hours per day and paid at 150% the regular salary rate. Working on a holiday is paid at 200% of the regular salary.
13th-month salary
A mandatory 13th-month pay is paid to Brazil every year. Employees who have worked for an employer for a full year are entitled to a full payment, while those who have only worked a partial year will receive a payment equal to what they've worked.
13th-month payments are made in 2 parts in November and December.
Paid time off
Employees are entitled to 30 days of paid vacation per year after 1 year of service, plus paid time off for national holidays.
Leave is calculated as a monthly salary plus 1/3 of the monthly salary. Employers must pay this leave 2 days before the employees vacation time starts.
Sick leave
Employees are entitled to sick leave with a medical note from their doctor. The note must be provided with 48 hours of the onset of illness in order for the leave to be excused and paid. Employers pay the first 15 days of sick leave.
Maternity leave
All new mothers are entitled to maternity leave in the event of adoption. Maternity leave is paid for 120 days for the country's social security system. After 120 days, the employer and employee can choose to extend the leave for up to 60 more days if the employer agrees to pay the difference.
Paternity leave
New fathers are entitled to 5 mandatory days of paternity leave. The employer has the option to extend the leave for up to 20 days if they are enrolled in the government program Empresa Cidadãs.
Brazilian payroll deduction calculator
To calculate deductions for Brazil, you can use a payroll deduction calculator like the one here: Brazil Income Tax Calculator 2022/23.
Why companies partner with Via
Businesses of all sizes want to work with employees in Brazil, but don’t know how to navigate the country’s local labor laws. As a global payroll and EOR service, Via makes hiring Brazilian talent and building your global team seamless. With our easy-to-use platform, Via helps you manage local HR processes for direct employment such as work visas & permits, benefits, payroll, background checks, and more. Our team of local labor lawyers and on-the-ground experts ensure that your company remains compliant while expanding abroad. As your employer-of-record/entity in Brazil, Via assumes responsibility for employment liability, so that you can focus on what matters: recruiting and managing your team.
With Via’s transparent pricing, you can pay full-time employees or contractors in Brazil with no hidden set-up fees, no foreign exchange or transaction fees, and no minimums–start with 1 employee and scale up at your own pace.
