How can an Umbrella Company Help with Contracting in Brazil?
Most freelance workers aren’t superheroes who successfully tackle these issues all on their own. There are companies who specialise in helping workers make the most out of their contracts.
They’re called Umbrella Companies (or, contractor management companies).
Basically, an Umbrella Company acts as your full-time employer, even though you maintain your independence as a contractor. They collect and filter payments from your clients, filtering out the necessary social security and fees. You send them your timesheets, and they send you payments.
Because they act as your “employer,’ they can sponsor you and provide a single work permit for multiple contracts in Brazil. Even better, most are experts in Brazilian and expat tax law, meaning they’ll also help you optimize your earnings in Brazil.
Although the Umbrella Company is technically your “employer,” you’re essentially freeing yourself to work even more independently. You still dictate your contracts, your hours, your schedule. The Umbrella Company simply filters out the time-consuming admin and immigration issues, allowing you to focus on your new contract.
Can I Organise My Taxes and Work Permit Myself?
Generally, you need to have an employer sponsor in order to secure the appropriate work permit and work visa for Brazil.
If you’re working independently, it can be difficult to find clients willing to sponsor you. Moreover, even if your client can do this, you’ll need a new sponsor each time you decide to take on a new contract. Of course, every new sponsor will mean more paperwork.
Also, are you familiar with the intricacies of the tax system in Brazil, as well as your own country’s laws on overseas earnings? If so, good on you!
However, if you’re like the rest of us, figuring out (much less reducing) your tax liability in Brazil and your home country can seem like full-time work in itself.
A Contractor’s Guide to Taxes in Brazil
One of the most consistently challenging aspects of contracting in Brazil is complying with the country’s tax system. As well as paying tax in Brazil, you might also still be eligible to pay some tax in your home country, and understanding the legislation behind this can be a challenge.
How do I calculate my taxable income in Brazil
If you’re working in Brazil under a permanent contract, many employers will handle your tax under the PAYE (pay-as-you-earn) system. This means that they calculate and process your taxes in Brazil for you and then send you a net wage. Your income tax, public health insurance, social security and other deductions will all be covered by this payment. This is the easiest way to handle your income tax in Brazil, but contractors may not be offered this service because of their short stay with each employer.
Anybody who can’t pay their tax in Brazil through PAYE is left with the prospect doing everything themselves.
Do you know much about Brazilian Tax Law? Does Brazil have a tax treaty with your home country? You will need to find out or find someone who can help! Income tax in Brazil can range from 0 to 27.5 percent, and you need to be sure you are placed in the correct tax brackets.
Tax Filing as a Contractor in Brazil
| When Do You Need to Lodge Your Tax Return? | 30 April |
| Tax Filing Deadline | 30 April |
| Can you file it online? | Yes, https://cav.receita.fazenda.gov.br/autenticacao/login |
How to File Taxes in Brazil as a Contractor
You can file taxes in Brazil online or taxes on your tablet or mobile phone via the IRPF app which can be downloaded here(link is external).
Filing Taxes Online
Step 1: Obtain Access Code for e-CAC
You will need the following information to register for an access code:
- Your CPF
- Date of birth
- The 10-digit receipt number for the previous year’s personal income tax return
Alternatively, you can access e-CAC by obtaining a digital certificate. The RFB’s website provides taxpayers with a list of links to Authorised Certification Authorities here.% You can apply for a digital certificate on the website of the Certification authority you have chosen.
Step 2: Log in to e-CAC
Using your access code or digital access, log in to the e-CAC portal here(link is external).
Step 3: File Taxes
A comprehensive guide (in Portuguese) on how to file taxes using e-CAC can be found here(link is external). It is recommended that you consult a translator or tax specialist, as all instructions and prompts on e-CAC are written in Portuguese.
Tax Figures in Brazil
| Currency | Brazilian Real (BRL) | ||||||||||||
| Tax-free Threshold in Brazil | BRL1,903.98 | ||||||||||||
| Income Tax Rates |
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|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Notes | Tax Rates for Non-Residents: Non-residents are subject to a flat employment income tax rate of 25% (with no deductions allowed). Deductions: Deductibles from an individual’s annual taxable income include dependants (a specific amount specified by the tax authorities every year), alimony payments, tuition expenses, medical expenses, social security contributions, and private pension contributions. |
Tax Residency in Brazil
When do you become a tax resident in Brazil
You become a tax resident in Brazil when:
- You are a Brazilian citizen living in Brazil;
- You are a Brazilian resident living abroad within the first 12 months of your departure (if the exit process has not been filed);
- You are a naturalised foreign national living in Brazil;
- You are a foreign national and a holder of a permanent or temporary visa under an employment contract with a Brazilian entity;
- You are a foreign national, a holder of a temporary visa without an employment contract with a Brazilian entity, and have stayed in Brazil for at least 183 days within a 12-month period; or
You enter into Brazil under a temporary visa to work as a doctor under the ‘Mais Médicos’ program.
Does the 183 day rule apply in Brazil
Yes
Am I taxed on my global income in Brazil
Residents are taxed on their global income. Non-residents are taxed on their Brazil-source income only.
Can you set up your own Limited Company in Brazil?
| How long does it take to set up | 101.5 days |
| How much does it cost | BRL1,184.03 – BRL1,334.03 |
| Is it easy? | Starting a Business Rank: 176/190 (Source: World Bank) |
Tax Calculator in Brazil
If you are a contractor and want a calculation on your tax and net retention in Brazil, we can supply it to you free of charge.
Using an Umbrella Company for Income Tax in Brazil
Contractors in Brazil are faced with masses of paperwork and numerous wasted hours filing a tax return unless they find an alternative option. A Brazilian umbrella company can act as your employer during your stay in the country whilst still allowing you the freedom of a contractor. The only difference is that you submit your timesheets to them; they’ll calculate and pay your taxes as you earn, and then you receive a net wage (as well as documentation for your records).
The companies are experts in Brazilian taxation, and they’ll ensure that you keep the largest proportion of your earnings whilst complying with local laws. They can deal with any issues with the Brazilian tax office or tax department directly including processing your tax refund if you are eligible.
How We Can Help You with Tax in Brazil
We work with numerous umbrella companies in Brazil, many of whom are experts in tax and immigration laws. If you have any questions about tax in Brazil, we’ll get the answers from them directly so you can rest assured you’ll be getting accurate information. We have comprehensive knowledge of the different services they provide, and can help you find the right company to handle your income tax. We help oil and gas workers, software developers, IT project managers, testers, business analysts and telecommunications contractors get tax efficient payments and sponsorship for their Brazilian work permit.
Our advice is 100 percent free, and comes with no obligations. You will be paying taxes in Brazil but without the overhead of directly dealing with the Brazilian tax authorities. Get in touch with us today for some reliable advice on tax in Brazil!
A Contractor’s Guide to Work Permits in Brazil
Immigration is one of the primary concerns for any contractor hoping to start working in Brazil. Permanent employees will find it easy to get their Brazilian work permit because they’ll receive “sponsorship” for their entire stay from their prospective employer.
The Brazilian work permit, known more commonly as the Brazilian Work Visa, is dependent on this sponsorship because it confirms that you’ll be earning money during your stay in the country. Contracting in Brazil is more difficult because the work permit is tied to one employer, so you have to change it to suit each new contract. Thankfully, umbrella companies provide a convenient and effective solution to this issue.
How Does an Umbrella Company Work?
Most people want to do their work, earn their money and enjoy their spare time without taking on loads of admin in a new country. That is why an umbrella company can help.
When you’re working through an Umbrella Company, you’ll essentially be outsourcing the admin and tax issues to specialists.
While the umbrella company will charge a fee, you’ll likely end up saving more money in the long run: you’ll be able to focus on your work, expertly reduce your tax liability, and comply with all laws and regulations in Brazil (which means avoiding fees, fines, or even worse penalties).
How Can We Help You?
There’s a huge variety of Umbrella Companies with different specialities and advantages in Brazil. How do you find the right one for your circumstances?
We work closely with Umbrella Companies all throughout Brazil and match contractors with the right company for them. If you’ve already secured a contract in Brazil, we can help you find your best match (for free). Or, we can simply give you feedback on your situation (for free).
