How to set up as an independent contractor in Brazil

Bem-vindo! If you’re thinking of going it alone and becoming an independent contractor in Brazil, then buckle up: you’re in for a journey as intense and exciting as the Rio Carnival itself.

Because being self-employed as a contractor or freelancer isn’t easy. There are laws to adhere to, regulations to comply with, and mountains of paperwork to fill out. For starters, you’re going to need to know how to:

• Register your business in Brazil

• Avoid misclassification as an employee

• Create compliant contracts that protect you

• Invoice your clients and collect payments from around the world

Sounds… fun, right?

Well, fear not. In this article, we cover the nuances of setting up shop as an independent contractor or freelancer in Brazil so that you’ll know exactly how to navigate the legal requirements and your tax responsibilities as a self-employed worker.

We’ll also discuss some of the other risks and liabilities you should be aware of (allowing you to spend more time on the fun stuff, like attracting new customers and hitting up the beach). So, let’s begin.

First, it’s important to clarify how Brazil defines independent contractors. After exploring this fundamental issue, we dive more deeply into the similarities and differences between independent contractors and freelancers.

What is an independent contractor according to Brazilian law?

Independent contractors are workers who provide paid professional services (or products) to another party. However, they are classified differently from employees and are usually not entitled to the same benefits, such as paid leave, sick days, and minimum wage. On the flip side, contractors have more freedom and flexibility in the way they work.

See also: Why businesses hire contractors vs. international employees

The Brazilian Civil Code (Código Civil) dictates that contractors should be free to decide when and how their services are performed, which isn’t the case for employees. As a result, you are generally considered an independent contractor if you:

• Determine your own work schedule and working hours

• Perform work for other companies

• Set your own rates and scope of work

• Provide your own tools or equipment

• Are not integrated into the company and its operations (i.e., you don’t have an internal email address)

• Are able to delegate or subcontract work

• Work without direction or supervision

When you work with clients, it’s important to be correctly classified to avoid penalties and fines, and to ensure that you are paying the right taxes.

Contractor vs freelancer: What’s the difference?

The primary differences between independent contractors and freelancers lie in the nature and scope of their work.

Independent contractors typically engage in longer-term projects and may be involved in more varied and technical fields, whereas freelancers usually handle shorter, more specialized tasks within creative and digital fields.

The key similarity between contractors and freelancers is their independent status, which gives them the freedom to choose their projects and clients, manage their own schedules, and direct their professional careers.

Let’s look at the differences in more detail.

An independent contractor is a self-employed individual who provides services to clients under terms specified in a contract or agreement. They operate independently from the businesses they serve and are responsible for their own business operations, including taxes, insurance, and other liabilities.

Independent contractors work in a variety of fields, such as construction, consulting, or IT services. They often have multiple clients at a time and work on a project-by-project basis. One of their main benefits is the flexibility of setting their own schedules and working conditions.

Freelancers are a subset of independent contractors. They typically offer creative or specialized services, such as writing, graphic design, programming, or marketing.

The term “freelancer” points to an ability to work independently across a number of projects without a long-term commitment to any single employer.

Freelancers usually find work through online platforms, personal networks, or direct outreach to potential clients. They often juggle multiple projects simultaneously, which gives them more control over their workload and work-life balance.

Despite these differences, both independent contractors and freelancers operate with a high degree of autonomy. They’re responsible for their own business expenses and don’t receive employee benefits, like health insurance or retirement plans, from the clients they serve. 

The freelancing landscape in Brazil

In Brazil, freelancing is a rapidly growing sector, with more than 25 million people in the country identifying as self-employed. It’s generally referred to as “freelancer” or “trabalho autônomo” (i.e., autonomous work or self-employment).

Freelancing in Brazil spans a number of different fields, including software development, digital marketing, and creative services, making it a versatile career choice for many Brazilians.

The Brazilian freelancing market has seen significant growth in recent years. Economic uncertainty and company closures have pushed many professionals toward more flexible and independent work arrangements.

Despite challenges like language barriers and navigating international markets, a substantial portion of Brazilian freelancers are expanding their services globally, particularly to foreign countries like France and Germany.

How do Brazilian freelancers find work?

The freelance economy in Brazil benefits significantly from online platforms, which easily connect freelancers and clients worldwide. In fact, the majority of Brazilian freelancers and gig economy workers use these platforms to find projects and receive payments.

Well-known US platforms, like Upwork, Freelancer.com, and Fiverr, are widely used by international contractors in Brazil, but there are also some local platforms that cater specifically to Brazilian freelancers. These sites are popular due to their understanding of local and regional markets and the fact that jobs are offered in Portuguese rather than in English.

Workana is one of the most prominent local platforms. It focuses on the Latin American market and provides a wide range of job categories, making it a go-to option for many Brazilian freelancers with specialized skills.

Other significant local platforms include 99Freelas, Trampos.co (a popular platform specializing in creative and tech jobs), and GetNinjas, which offers a broad range of freelance services, from home repairs to event planning.

How to become a freelancer in Brazil

The process of becoming a freelancer in Brazil is similar to becoming an independent contractor. Here are the key components:

1. Both freelancers and independent contractors in Brazil need to register as self-employed individuals. This typically involves registering with the Cadastro Nacional da Pessoa Jurídica (CNPJ), which is essential for tax purposes and to formalize the business (more on that in a moment).

2. Both have self-employment tax obligations, which include income tax, social security tax, and contributions tax. Social security contributions cover benefits such as healthcare, pensions, and coverage for work-related accidents.

3. Both need to comply with Brazilian labor laws and maintain proper documentation of all business activities and earnings. This includes keeping detailed records of all invoices, expenses, and income to facilitate tax filing and legal compliance.

Since the legal obligations and tax requirements for independent contractors and freelancers are similar, we describe them here as one process for self-employed workers, beginning with setting up your business.

Business registration in Brazil

Before you can begin working as an independent contractor in Brazil, you’ll first need to choose a formal structure for your business. Some of the most popular models include:

• Individual Entrepreneur (EI) or Individual Micro-entrepreneur (MEI): A simple structure that is ideal for independent, individual contractors. EIs have full control of the enterprise, although there is no legal separation between you (the owner) and the business; you are personally responsible for all its debts and liabilities. Note that there are slight differences between these titles: MEIs can only generate revenue up to R$81,000 (around $16,500) each year, while the ceiling for EIs is R$4.8 million (around $950,000). MEI status is also only available for certain business activities.

• Limited liability company (SRL): A formal legal entity that is separate from you, the individual. All income and losses are attributed to the company as opposed to you personally (i.e., you are only liable for the capital you invest in the company). You can also set up a sole-shareholder limited liability company (EIRELI).

There are pros and cons to each of these structures, but most independent contractors choose the EI or MEI model, as it is fairly simple to set up and operate. If you’re unsure, it’s a good idea to speak with a registered solicitor or accountant first.

If you do opt for this structure, you’ll need to register your business with the National Register of Legal Entities (CNPJ). This can be done online through the Companies and Business portal. Note that if you are a regulated professional, such as an architect or a doctor, you must register with your relevant regulatory body.

If you want to use an assumed trading name (say, for marketing or branding reasons), you will need to denote this in your registration and adhere to the trademark rules laid out by the National Institute of Industrial Property (INPI).

How do I get paid as an independent contractor in Brazil?

As an independent contractor, it’s down to you to handle your invoices and payment collection. Unfortunately, this means billing each client individually and collecting payment through their preferred payment method — which can be inefficient and time-consuming.

Some of the most common ways to collect payments include:

• Bank transfers

• Direct deposits

• Paper checks

• Money orders

• Virtual wallets

• Digital transfer services like PayPal and Wise

These methods all have their own pros and cons. For instance, bank and digital transfers can be pretty quick but often come with hefty service fees. And if you have clients in other countries besides Brazil, the payment collection process can be even more complicated.

Alternatively, you can use a trusted solution like Remote. Our designated platform, Freelancer Hub, is a simple, secure, and reliable way to get paid quickly in Brazilian reais — and with no hidden fees. Learn more about how our platform can help.

Independent contractor taxes in Brazil

As an independent contractor, you’re responsible for filing and paying your own taxes.

As an EI, you will likely be eligible for the Simples Nacional tax regime, which is a simplified, one-form tax system specially designed for small business owners. Under this regime, you pay reduced tax rates of anywhere between 4% and 33%, depending on your business activity and your level of income. If you do not qualify (for example, if you earn too much revenue), you can register to pay tax under another structure, such as the Presumed Profit regime.

As an MEI, you will pay a fixed monthly tax of around R$60 ($12) using the DAS form. This covers both income tax and social security contributions.

VAT information for independent contractors in Brazil

In Brazil, value-added tax (VAT) laws are notoriously complex and are enacted at the federal, state, and municipal levels. It is a good idea to discuss your VAT obligations with an accountant or a tax professional to understand what you will need to charge and how you will need to pay it.

You can learn more about VAT in Brazil here.

Liability considerations for independent contractors in Brazil

As an EI, you are personally liable for finance and tax debts, which means your private assets can be forcibly used to settle your business debts. Many independent contractors purchase liability insurance to help mitigate this risk.

It’s also important to cover yourself when drafting and signing agreements with clients. Our legal experts can provide you with fully compliant contract templates for both Brazilian and international clients.

Accounting requirements for independent contractors in Brazil

As an EI or MEI, you do not need to publish financial statements or accounts. However, you must still keep organized, accurate records of all your income and expenditures (including client invoices, purchase orders, bank statements, and receipts) for at least five years. This will also help you correctly file your taxes, give you a stronger picture of your financial situation, and generally make life easier if you are audited by the tax authorities.

You can either manage these records yourself using an accounting or bookkeeping tool or hire a professional bookkeeper or accountant.

The dangers of contractor misclassification in Brazil

As we’ve mentioned, independent contractors are classified differently from employees. Many of the protections and benefits employees enjoy do not typically apply to contractors.

As a result, companies may deliberately misclassify you to circumvent their legal obligations, while at other times, it may happen accidentally. Misclassification of employees is no small matter. Whether it’s intentional or not, misclassification can result in penalties and fines for both you and your client.

As an independent contractor, you can work with your clients to ensure this doesn’t happen. Discuss your role and responsibilities with them, and review the working arrangement regularly.

If your working relationship changes over time and you become more integrated into a client’s company, you can ask to be converted into an employee.

Use our Contractor Compliance Checklist to avoid misclassification

Work through this checklist to help determine if a new hire should have a contractor or employee relationship.

Download

How do I ask the company I’m working with to convert me to an employee in Brazil?

Occasionally, independent contractors or freelancers develop a close relationship with a client company that can lead to a desire by one or both parties to enter into an employment relationship instead. If you find yourself in this situation, here’s what to do:

Open a dialogue with your client and carefully discuss the risks and benefits of becoming a part-time or full-time employee. In particular, be clear about how it can benefit both parties — not just you.

You can even suggest the help of a third-party solution, such as Remote, to ease the transition. Our global employment services help both parties stay compliant by taking care of key HR functions (like payroll management and benefits administration) in line with Brazilian law.

4 ways Remote makes life easier for contractors and their clients

As you can see, there’s a lot to take on board when setting up as an independent contractor. Remote can help you with many of these challenges, allowing you to focus on growing your business and delivering to your clients. Here’s how:

1. International payments in countries around the world

Navigating all of your clients’ different invoicing, approval, and payment systems can be complicated and time-consuming. And manual methods of invoicing and collecting payments can increase the risk of fees, errors, and delays.

Remote gives you access to a highly secure, streamlined dashboard that makes invoice management and international payments cost-effective and efficient. You can use our platform to get paid in Brazilian reais (or other currencies) without any hidden fees.

2. Localized in-app contracts and advice

When you draft agreements and contracts for your clients, you run the risk of non-compliance with local labor laws — especially when working with international clients.

Remote offers localized contracts tailored to Brazilian laws, ensuring that you stay compliant. Our legal experts can also provide guidance on complex issues, such as local classification and intellectual property protections.

3. Invoicing automation

With Remote, you no longer need to rely on spreadsheets and other manual tools to invoice for payments; we remove many of the inaccuracies and delays caused by archaic processes and manual management.

Our platform lets you create invoices, submit them for approval, and subsequently get paid in your local currency without needing to switch to any other tool or software.

4. Tax management

Tax management is notoriously complex work. Remote helps you quickly and efficiently deal with tax management by compiling data about your income based on your invoices and payments received.

Setting up as a contractor in Brazil

Having the freedom and flexibility to work on your own terms is liberating. But your administrative responsibilities can distract you from what you really want to be doing: helping your clients, delivering great work, and collecting invoices.

By using a stable, trusted platform like Remote, you can manage these obligations quickly and efficiently, allowing you to focus on your business goals. Specifically, we can help you:

• Avoid intermediary fees and delays with international client payments

• Draft compliant contracts for Brazilian and foreign clients

• Enhance your invoice management and avoid manual processes

• Comply with local labor laws regarding work practices

Our Freelancer Hub makes it quick, simple, and seamless to get started as an independent contractor. Learn more about how our expertise can save you time and resources today.