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Cross-border remote work FAQ’s Brazil

Assume that a foreign national employee of a foreign company wishes to work remotely for a period of time in your country performing services exclusively for the foreign company and not interacting with the local market in your country.

Work authorisation

A. Is work authorisation required? If so, please provide a brief description of the type of visa, procedure, processing time, etc.

Yes, on January 24, 2022, the Brazilian National Immigration Council published the Normative Resolution No. 45 (“RN 45”) regulating the granting of temporary work visa/residence authorization (“visa”) for digital nomads, who are defined as foreign workers able to perform their professional activities for a foreign company remotely from Brazil (i.e., with the use of information and communication technologies).

There are two alternatives for applying for this visa: (i) while the foreigner is still abroad or (ii) when the foreign worker is already in Brazil. The documentation to apply for the visa will vary according to the chosen alternative but, among others, includes evidence of the “digital nomad” status, criminal certificate, and, a health insurance valid in Brazil.

To prove the “digital nomad” status, the foreign worker must present the following documents:

  • Declaration attesting the ability of performing the professional activities remotely by means of information and communication technologies;
  • Employment or services agreement or any other document evidencing the relationship with the foreign company; and
  • Proof of means of subsistence, from a foreign paying source, in a monthly amount equal to or higher than USD 1,500 or availability of bank funds in the minimum amount of USD 18,000.

This visa may be granted for 1 year, renewable once for an equal period.

RN 45 also establishes that the foreign worker that is in Brazil for visit purposes (i.e., with a visit visa for tourism or business) may perform remote work for his/her foreign employer during his/her stay in the country without needing to apply for the digital nomad’s visa, provided the foreign worker observes the period of stay and any requirement of the visit visa in accordance with his/her nationality. For reference, visit visas are usually for 90 days (in a 12-month period or 180-day period) and depending on the nationality of the foreigner may be extended for an equal period.

This type of visa does not apply to foreigners that work/will work for Brazilian companies, regardless of their hiring status (e.g., with or without a formal employment agreement/service agreement with such company) or that will interact with the Brazilian market performing activities in Brazil that require any other type of work visa/residence authorization.

Risk of 'permanent establishment'

B. Is there risk of 'permanent establishment' consequences for the foreign company by virtue of the remote worker’s activities?  If so, what are the main factors determining the exposure.

Brazilian law does not provide for specific internal rules regarding taxation or the definition of a “permanent establishment” (PE). The doctrine debates whether national legislation should define and tax the PE, while only Double Taxation Agreements (DTA) could restrict this right to tax.

As a general rule, Article 7 of the DTA states that a company's profits will be subject to taxation only in the jurisdiction of residence, unless they are attributable to a PE, which is defined by Article 5 of the DTA as the fixed place of business where the company develops all or part of its activities, especially, among others: (i) the registered office of the company; (ii) subsidiaries; (iii) offices; and (iv) manufacturing facilities.

A person who acts in a contracting state on behalf of a company established in the other contracting state is also considered a PE, if this person has and exercises the power to conclude agreements on behalf of the company of the other contracting state; an exception is made if the person is acting as an independent agent.

Thus, if the foreigner is in Brazil for a short term, performing services exclusively for the foreign company, and he/she does not have the power to conclude agreements on behalf of the foreign company, then an argument could be made defending the lack of a permanent establishment.

Nevertheless, Double Taxation Agreements do not expressly address the impact of the remote worker’s activities. However, we recognise that several remote activities have replaced the need for physical presence; thus, although not expressly provided for in the DTAs, one could argue that depending on the activities developed by the remote workers, a permanent establishment could be characterised.

There are few administrative decisions regarding a permanent establishment. In at least two cases, the characterisation of a permanent establishment was recognised, thus allowing the income tax charge. To recognise the permanent establishment in such decisions, it was considered that the activities of such foreigner in Brazil (in view of the circumstances analysed in each case) corresponded to the existence of a material installation, on a permanent basis in Brazil, which allowed the foreign company to perform activities in such installation or through it.

Local social security and other payroll requirements

C. At what point and under what circumstances would the remote worker become subject to local social security and other payroll requirements?  Can such requirements be fulfilled by a foreign company, and if so by what mechanisms?

Considering that the foreigner will apply for the “digital nomad visa”, will be employed by the foreign company and will not be employed by any Brazilian company or interact with the local market, the applicable labour law should be that from the country of the foreign company and therefore, no social security and labour charges should be paid in Brazil.

Local employment law requirements

D. At what point and under what circumstances does the remote worker become subject to local employment law requirements such as is wage-hour, local holidays, annual leave, maternity leave, disability leave, protection against unfair dismissal, etc.

While the foreigner is properly observing the conditions of his/her digital nomad visa, Brazilian employment law will not apply to the relationship.

After two years in Brazil as digital nomad, the foreigner will need to apply for a different work visa to continue to be in Brazil and depending on the adequate visa, he/she will become subject to Brazilian employment law.

Remote foreign worker

E. Are there special requirements governing remote work in your country which would cover the remote foreign worker?

While the foreigner is properly observing the conditions of his/her digital nomad visa, Brazilian employment law will not apply to the relationship.

Our law related to remote work only applies to workers subject to Brazilian employment law.

Income tax

F. What is the employee’s exposure to local income tax, and under what circumstances is the foreign employer required to arrange for withholding of income tax?

RN 45 related to digital nomad visa only exempt the foreign workers and foreign companies from labour and social security contributions.

However, when the foreigner obtains a digital nomad visa, he/she becomes a Brazilian tax resident and as a rule, resident individuals are subject to taxation on a worldwide basis, meaning that all income (both active and passive) derived from Brazilian and foreign sources is subject to income tax in Brazil.

Foreigners will be considered residents in Brazil for tax purposes if they: (i) stay in Brazil for a period longer than 183 days within a period of 12 months or (ii) obtain a work visa/permit (depending on the type of the work visa/permit, the foreigner will be considered a tax resident as from his/her arrival in Brazil and the 183-day rule will not apply). Therefore, they will have to pay income tax over the total amounts received on a worldwide basis.

For instance, a foreigner with a visitor visa is not considered a Brazilian tax resident, except if he/she stays in Brazil for a period longer than 183 days. On the other hand, a foreigner with digital nomad visa is considered a Brazilian tax resident as from his/her arrival in Brazil.

It is necessary to analyse whether there is a bilateral income tax treaty between Brazil and the country where the foreigner is from, in order to verify alternatives related to the income tax that would be due in Brazil.

Claim for workplace injury

G. Would the remote worker be entitled to bring a claim for workplace injury in your country?

While the foreigner is properly observing the conditions of his/her digital nomad visa, Brazilian employment law will not apply to the relationship and he/she would not be entitled to bring a claim for workplace injury.

National healthcare system or insurance

H. Would the remote worker be covered under the local national healthcare system or insurance?

In Brazil, there is a national healthcare system, which is known as “SUS”. Foreigners who live in Brazil are covered by SUS. However, despite the fact that this is a universal system, due to the large number of users, which results in an overload of the system, several companies provide healthcare plans for their employees.

Additionally, in order to have access to SUS services, it is necessary to obtain the SUS card. To receive this card, the foreigner is required to have the Brazilian ID (“CRNM”) and also the National Registry of Individual Taxpayers (CPF). Thus, if the foreigner is in Brazil under the circumstances of a visitor, he/she will not have such documents and, consequently, he/she will not be able to obtain the SUS card.

However, with a digital nomad visa, the foreigner would be able to obtain the CRNM and be entitled to the local national healthcare system.

Nevertheless, as mentioned in the RN 45, the digital nomad must have a valid health insurance plan in Brazil.

Data privacy and security

I. Is a foreign employer subject to data privacy and security requirements regarding protection of employee personal information for a foreign employee working remotely in your country?

Yes, the Brazilian data privacy law (“LGPD”) applies to any operation(s) that involves the processing of personal data, carried out by an individual or legal entity, governed by public or private law, and regardless of the country where its corporate headquarters are located or the country where such data is located, provided that:

  • the processing operation is carried out in the national territory; or
  • the purpose of the processing activity is to offer or provide goods or services or the processing of data of individuals who are located in the national territory; or
  • the personal data being processed was collected in the Brazilian territory. For this rule, personal data collected in the national territory is understood as those personal data whose data subject is in the Brazilian territory at the time of the collection.

Foreign remote worker

J. Has there been any litigation or specific law or regulation regarding the foreign remote worker in your country?

Although remote work existed prior to the COVID-19 pandemic, it has become much more popular since the worldwide outbreak of the coronavirus. However, as this situation is a rather new one, there has not been any significant litigation, legislation or directives specifically concerning foreign remote workers in Brazil.

Citizenship

K. Would any of the above answers change if the remote worker (a) is a citizen of your country, or (b) engages in activity interacting with the local market?

a. Yes, in that the worker would not need a visa of any kind to enter and work from Brazil. Also, any interaction with the local market increases the risks of labour and social security inspections, along with the risk of labour claims. Considering that the foreigner will be rendering services from Brazil to the Brazilian market, Brazilian labour law would therefore apply.

b. Yes, depending on the activities of the remote worker, his/her interaction with the local market also increases the risk of creating a permanent establishment in Brazil.

Any questions

Ask our member firm TozziniFreire in Brazil