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Find out how Remote can guide you through the complexities of managing cross-border hiring, payroll, taxes, and compliance.

Stock options for employees in Brazil

Equity incentives are an invaluable way to attract, motivate, and retain top talent for your business. But when you cross hiring borders, they can become deeply complex.

Remote enables you to easily offer non-qualified stock options (NSOs) to your team members in Brazil. There are no compliance headaches or administrative hassles — just simplicity and clarity for you and your people at every step.

What are NSOs?

NSOs are a type of equity incentive. They give your team members the right to buy a set number of shares in your company at a fixed price, known as the exercise price.

This typically happens after a vesting period, which is often based on the length of time your team member stays at your company. As a result, they are a great way to foster long-term commitment, and align people with your company’s strategic goals.

Who can receive NSOs in Brazil?

Direct employees EOR employees Contractors
Can receive NSOs? Yes Yes Yes
Difficulty score Hard Hard Hard

It’s important to note that granting stock options to contractors can potentially increase your misclassification risk in Brazil (although this is not the primary factor). See how Remote protects you against misclassification.

How are NSOs taxed in Brazil?

Note that there is no specific legislation regarding stock options in Brazil, so the gains realized could either be considered income (similar to business income), or something closer to capital gains.

Direct employees EOR employees Contractors
At grant There is no taxation at grant. There is no taxation at grant. There is no taxation at grant.
At exercise Taxation at the time of exercise is not clear. Your team member may or may not be taxed, depending on how the tax authorities view the employment relationship. That said, recent case law tends to suggest that there should be no taxation at exercise. Taxation at the time of exercise is not clear. Your team member may or may not be taxed, depending on how the tax authorities view the employment relationship. That said, recent case law tends to suggest that there should be no taxation at exercise. Taxation at the time of exercise is not clear. Your team member may or may not be taxed, depending on how the tax authorities view the employment relationship. That said, recent case law tends to suggest that there should be no taxation at exercise.
At sale Regardless of how the tax authority views the employment relationship, there is taxation at the point of sale. If there was taxation at exercise, this will be determined based on the difference between the sale price and the fair market value of the shares (at the time of exercise). If there was no taxation at exercise, it will be determined based on the difference between the sale price and the exercise price. In both cases, the sale would be subject to capital gains tax. Regardless of how the tax authority views the employment relationship, there is taxation at the point of sale. If there was taxation at exercise, this will be determined based on the difference between the sale price and the fair market value of the shares (at the time of exercise). If there was no taxation at exercise, it will be determined based on the difference between the sale price and the exercise price. In both cases, the sale would be subject to capital gains tax. Regardless of how the tax authority views the employment relationship, there is taxation at the point of sale. If there was taxation at exercise, this will be determined based on the difference between the sale price and the fair market value of the shares (at the time of exercise). If there was no taxation at exercise, it will be determined based on the difference between the sale price and the exercise price. In both cases, the sale would be subject to capital gains tax.

Are there tax advantages for your team members?

Direct employees EOR employees Contractors
There is no tax-favored scheme. There is no tax-favored scheme. There is no tax-favored scheme.

Is your business eligible?

If you want to use Remote Equity Advanced to offer stock options to your Brazil-based team members, your top corporation (i.e., your parent company) must be incorporated in Delaware. Your company must also be private — not publicly listed.