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 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 and collect payments from around the world

Sounds… fun, right?

Well fear not. In this article, we’ll cover all these things with the ease and deftness of a Neymar stepover, allowing you to navigate 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.

What is an independent contractor according to Brazilian law?

Independent contractors are workers who provide paid services (or products) to another party. However, they are classified differently to 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.

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 platform 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 designed specially 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, 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 expenditure (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 to 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. 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?

Open a dialogue with your client and carefully discuss the risks and benefits of moving to an employer-employee relationship. 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, approvals, and payments 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 reias (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 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 platform 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.