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Brazil Payroll Guide

Overview

Brazil is the largest national economy in Latin America, the world’s ninth largest economy and the eighth largest in purchasing power parity.

With its growing economy and highly educated workforce, Brazil continues to entice multinationals looking to expand internationally.

 

Brazil Payroll Facts

  • Population : 209.3 Million
  • Working Population : 105.5 Million
  • Currency : Brazilian real R$
  • Minimum Wage : R$4.26 per hour
  • Identity Number : CPF (Cadastro de Pessoas Físicas)
  • Number Of Pay Periods : 13
  • Main Languages : Portuguese
  • Capital City : Brasilia
  • Big Mac Index : $4.55
  • Fun Fact : Brazil has been the largest producer of coffee for the past 150 years.

Taxes

Tax year – January 1st to December 31st.
Brazil has a progressive personal taxation system under which individuals are taxed up to a maximum of 27.5% of their income.

Brazil is known for charging a high tax burden for citizens and companies and there are numerous different kinds of taxes. To complicate matters further, they are governed at federal, state and municipal levels. These systems are not always centralised and this can increase the complexity of doing business in Brazil.

Employers, employees, and the government all make monthly contributions to the Brazilian Social Security Institute. These payments entitle employees to receive the appropriate benefits for the various types of pensions: retirement, disability and length of service.

Typically, the employee is expected to contribute between 8 and 11 % of their monthly salary to social security, while the employer contributes 20%. In addition, the employer is also required to provide work accident insurance for all employees, with the costs fixed by the Ministry of Labor and the Social Security Institute.

 

Brazil’s personal income tax rates

Taxable income Tax on this income
R$0 – R$1,903.98
Exempt
R$1,903.99 – R$2,826.65
7.5%
R$2,826.66 – R$3,751.05
15%
R$3,751.06 – R$ 4,664.68
22.5%
R$4,664.68 and over
27.5%

Healthcare & Benefits

Fathers are entitled to up to 5 days’ paid parental leave. An employer can grant an additional 15 days’ paid paternity leave and recover that payment from tax benefits granted by the federal government.

A pregnant employee is entitled to 120 days of paid maternity leave. This payment is made by the employer and reimbursed by the National Social Security.

Expatriates

The applicable law is that of the place where the employee renders the services. If a foreign national works in Brazil, Brazilian labor law applies. In this case, Brazilian law is applied regardless of any choice of law governing the contract or the nationality of the parties.

To ensure successful payroll operations and to meet full compliance with Brazil’s complex rules and regulations, employers must understand the Consolidation of Brazilian Labor Laws, known simply as CLT. The requirements of this legislation outline the labor rights in the country, covering all aspects of employment and payroll.

Work Leave & Holidays

Employees are entitled to a minimum holiday period after a period of 12 months’ employment, which depends on how many days’ leave the employee has taken, as follows:

  • 30 days’ holiday when no more than 5 days’ leave has been taken during the year.
  • 24 days’ holiday when between 6 and 14 days’ leave has been taken during the year.
  • 18 days’ holiday when between 15 and 23 days’ leave has been taken during the year.
  • 12 days’ holiday when between 24 and 32 days’ leave has been taken during the year.

 

Brazil National Holidays
January 1st
New Years Day
March 4th to March 5th
Carnival
March 6th
Ash Wednesday
April 19th
Good Friday
April 21st
Tiradentes Day
May 1st
Labour Day
June 20th
Corpus Christi
September 7th
Independence Day
October 12th
Lady of Aparecida
November 2nd
All Souls’ Day
November 15th
Republic Day
December 25th
Christmas Day

 

Half day holidays are observed on Christmas Eve (December 24th) and New Year’s Eve (December 31st).

Outsourcing Brazilian payroll to a trusted service provider can ensure compliance and in turn peace of mind.

 

To learn more about Brazilian tax and payroll speak with one of the Immedis experts, get in touch