How to hire in Brazil from the US (2026): contracts, costs and labor law

There are four, and the choice decides who the legal employer is.

Brazil’s Supreme Court held in 2018 that outsourcing is lawful at every stage of production, core or not, with the client keeping subsidiary liability.[14] For income tax, Brazil taxes branches and agents of foreign companies as Brazilian entities,[15] and it has no income tax treaty with the United States.[16]

Yes, as an outsourcing arrangement under Lei 6.019/1974. The provider hires, pays and directs the work of its employees; there is no employment link between them and the client, and the client may not use them for tasks outside the contract.[13] The client is secondarily liable for the provider’s labor obligations for the period of the services, and the provider must have share capital from BRL 10,000, for up to 10 employees, to BRL 250,000, for more than 100.[13]

The risk is day-to-day direction. If your managers give the worker orders directly, a court looks at the relationship, not the label: the employment test is personal, non-occasional, subordinated and paid work, and any arrangement meant to avoid the labor code is void.[4] Before you sign, ask for the provider’s federal tax clearance certificate, which anyone can issue online for a CNPJ.[17]

When the person provides non-occasional services under the hiring company’s direction for pay: those elements define employment, whatever the contract says.[4] Command and supervision through digital means count the same as in-person direction, so a contractor managed through Slack and Jira is not outside the test.[4] Any act meant to distort or defraud the labor code is null.[4]

The law also protects genuine independence: hiring an autonomous contractor who meets the legal formalities, with or without exclusivity and continuously or not, does not by itself create employee status.[4] If a contractor is reclassified, the employer owes the employee’s back rights and a fine of BRL 3,000 per unregistered employee, BRL 800 for micro and small companies, and employees can claim the last five years, filing within two years after the contract ends.[4]

Contracting through a one-person company, known as pejotização, is under review. In April 2025 the Supreme Court took up Tema 1.389 and suspended all such cases nationwide;[18] on June 18, 2026 it let first-instance and regional labor courts resume them,[19] and on November 2, 2026 its official page still showed no ruling on the merits.[20] The PJ contractor page covers taxes, invoices and the contract.

For how this applies to a US company with no office in Brazil, and how the four main hiring countries compare, see Latin American labor law and US companies.

An employment contract can be tacit or express, verbal or written, and for a fixed or indefinite term; written form is the exception.[4] The cases a US employer usually needs:

• Fixed-term contracts are allowed only for transitory work or activities, or as a probation contract. They last at most two years, become indefinite if extended more than once, and a new contract signed within six months of the end of one is deemed indefinite.[4]
• Probation is a fixed-term contract of up to 90 days.[4] If the employer ends it early without cause, it owes half the pay until the agreed end, unless the contract gives both parties an early-termination right.[4]
• Remote work must be stated in the contract, a written clause must say who pays for equipment and expenses, which are not salary, and remote employees follow the collective agreement of the establishment they are assigned to.[4]

The employer must record the hiring in the employee’s digital work booklet within five business days.[4] Contract terms can only change by mutual consent and if the change does not harm the employee.[4] Employees with a degree who earn at least twice the social security ceiling, BRL 16,951.10 a month in 2026, can individually agree terms such as hours arrangements and telework with the force of a collective agreement.[4][21]

Electronic documents are valid: those signed with an ICP-Brasil certificate are presumed true, and other electronic signatures are valid if the parties accept them.[22] A contract in English is valid, since form is free unless the law requires otherwise,[11] but a foreign-language document needs a sworn translation to be used in court.[23]

BRL 1,621 a month since January 1, 2026, or BRL 54.04 a day and BRL 7.37 an hour.[1] That is about USD 299 at the Central Bank’s PTAX rate of BRL 5.4212 per dollar on October 30, 2026,[2] and 6.8% more than the 2025 figure of BRL 1,518.[24] The 2027 amount will be set by decree; the 2027 budget bill only estimates BRL 1,741, which is a projection, not law.[25]

Wages of an employee must be paid in Brazilian reais, and a monthly salary must be paid by the fifth business day of the following month.[4] For reference, the average real monthly income from work was BRL 3,790 in July-September 2026,[26] and the average hiring wage in formal jobs was BRL 2,410.74 in August 2026.[27]

Constitutional Amendment 141 of October 16, 2026 sets normal work at 8 hours a day and 40 a week, phased in: no more than 42 hours a week from two months after publication, in mid-December 2026, and 40 hours one year after that, in mid-December 2027.[3] It also gives employees two paid rest days a week, one preferably on Sunday, from two months after publication.[3]

The cut applies to existing contracts without any reduction in pay, including salary floors, and collective-agreement clauses that conflict with it lose effect after two months.[3] Employees with a degree who earn at least 2.5 times the social security ceiling, BRL 21,188.88 a month in 2026, are outside the hours and time-control rules unless the employer or a collective agreement says otherwise; the two rest days still apply.[3][21] The Brazil 40-hour week page explains the transition.

The other rules on hours:

• Overtime is limited to 2 hours a day and paid at least 50% extra.[4]
• Hours banks can be agreed individually if hours are compensated within six months, or collectively within a year.[4]
• Rest: 11 consecutive hours between working days, and a 1-to-2-hour break for shifts over 6 hours.[4]
• Night work, from 10 p.m. to 5 a.m., is paid at least 20% extra, and each night hour counts as 52 minutes and 30 seconds.[4]
• Remote employees paid by task or output are outside the hours chapter, and after-hours use of devices and apps is not on-call time unless an agreement says so.[4]

• Vacation: 30 calendar days after each 12 months of work,[4] paid with a bonus of at least one third.[5] With the employee’s agreement it can be split into up to three periods, one of at least 14 days; the employee may sell one third of it; and the pay is due two days before the vacation starts.[4]
• Maternity leave: 120 days, paid by the employer and offset against its social security contributions.[28] Companies in the optional Empresa Cidadã program add 60 days to maternity and 15 to paternity leave.[29]
• Paternity leave: 5 days in 2026.[4] A 2026 law raises it to 10 days from January 1, 2027, 15 from 2028 and 20 from 2029, the last step only if the fiscal target is met; the employer pays it and is reimbursed by social security, and the employee cannot be dismissed without cause until one month after the leave.[30]
• Sick leave: the employer pays the first 15 days, and social security pays from the 16th.[28]
• Other paid absences include 2 days for the death of a close relative and 3 days for marriage.[4]

Federal law sets nine fixed national holidays,[31][32][33] and states and municipalities add their own, including up to four municipal religious holidays such as Good Friday, so the calendar varies by city.[34] The federal calendar for 2026 lists Good Friday as a national holiday and treats Carnival and Corpus Christi as optional days.[35] Work on a holiday is paid double unless the employer gives another day off.[36]

The 2027 dates follow the same laws; Good Friday, Carnival and Corpus Christi move with Easter, which falls on March 28, 2027.

Profit or results sharing (PLR) is not mandatory, but when adopted it must be negotiated with employees, can be paid at most twice a year and carries no payroll charges.[38] Performance awards and meal assistance not paid in cash are not part of remuneration.[4] Independent contractors are not entitled to FGTS.[8]

Worked example, calculated by Nearshorers. An employee on BRL 15,000 a month, about USD 2,767 at the October 30 PTAX rate,[2] at a company in the regular tax regime, with a RAT of 1% and a factor of 1.0. The 13th salary and the vacation bonus add 11.1% to annual pay, and the contributions apply to them too: the on-cost is 46.1% of salary, BRL 6,917 a month, for a total of BRL 21,917, about USD 4,043. With a RAT of 3% it is 48.3%, BRL 22,250 in total. Other third-party contributions by activity code come on top.

Companies in the revenue-based payroll-relief regime, which includes IT services at a 4.5% rate, are moving back to payroll contributions: in 2026 they pay 60% of the revenue rate plus 50% of the 20% payroll rate, in 2027 40% plus 75%, and from 2028 the full payroll contribution.[42][43] Under the Brazil-US Social Security Agreement, a person employed in Brazil is covered only by Brazilian social security for that work.[44] The Brazil cost guide runs four salary levels.

The employee’s social security contribution in 2026 is progressive: 7.5% up to BRL 1,621.00, 9% up to BRL 2,902.84, 12% up to BRL 4,354.27 and 14% up to the ceiling of BRL 8,475.55, each rate on its band.[21] Monthly income tax withholding runs from 0% up to BRL 2,428.80 to 27.5%,[45] and since January 2026 a reduction makes the tax zero on taxable monthly income up to BRL 5,000, phasing out at BRL 7,350.[46] The employer withholds both and pays them with its own contributions by the 20th of the following month.[39]

For an own-entity structure, two 2026 changes matter: individuals with annual income above BRL 600,000 face a minimum income tax,[46] and dividends paid abroad, for example to a US parent, now bear 10% withholding tax.[47]

• Notice: 30 days for up to a year of service, plus 3 days per additional year, up to 90 days in total.[48] It can be worked or paid in lieu; during notice given by the employer, the employee works 2 fewer hours a day or takes 7 days off.[4]
• Dismissal without cause: the employer deposits a fine of 40% of all FGTS deposits made during the employment,[8] and pays notice, the proportional 13th salary,[6] and accrued and proportional vacation with the one-third bonus.[4]
• Mutual agreement: half the notice and a 20% FGTS fine; the employee can withdraw 80% of the FGTS balance but gets no unemployment insurance.[4]
• Just cause: only the grounds listed in the labor code, such as dishonesty, negligence, insubordination or job abandonment.[4]

Final pay is due within 10 days, with a penalty of one month’s salary if late, and dismissals need no union authorization.[4] A pregnant employee cannot be dismissed without cause from the confirmation of pregnancy until five months after the birth,[5] and a worker who had a work accident keeps the job for 12 months after the sickness benefit ends.[28] A settlement becomes binding when a labor court approves a joint petition, with each party represented by its own lawyer.[4]

For an employee on BRL 15,000 a month dismissed without cause after three years, the FGTS deposits add up to about BRL 48,000, so the 40% fine is about BRL 19,200 before FGTS interest (calculated by Nearshorers).

A contractor can work as an individual or through a company:

• As an individual, the contractor pays 20% social security on earnings between the minimum wage and the ceiling, BRL 324.20 to BRL 1,695.11 a month in 2026, or 11% under a simplified plan,[21] and must pay monthly income tax on income from abroad through the carnê-leão.[49] A Brazilian company that pays an individual for services owes its own 20% contribution on that payment.[39]
• As a micro-entrepreneur (MEI), revenue is capped at BRL 81,000 in 2026, rising to BRL 110,000 in 2027 and BRL 140,000 from 2028.[50]
• As a small company in Simples Nacional, annual revenue can reach BRL 4.8 million, export revenue counts separately up to the same limit again, and many services pay the lighter Annex III rates when payroll is at least 28% of revenue.[12]

Services exported to a US client are largely free of Brazilian indirect taxes. The municipal ISS does not apply to exports, unless the result of the service occurs in Brazil;[51] PIS and COFINS do not apply when payment comes in foreign currency;[52] and exports are immune from the new IBS and CBS taxes. In 2026, the tax reform’s test year, CBS is charged at 0.9% and IBS at 0.1%, but payment is waived for taxpayers that meet the reporting obligations, and every municipality must allow the national electronic service invoice, the NFS-e.[53][54]

Foreign-exchange operations go through institutions authorized by the Central Bank, and a contract with a non-resident client can be priced in US dollars.[55] The IOF tax on the exchange of export receipts is zero.[56] Anyone can check a company’s CNPJ registration, including its partners,[57] and an individual’s CPF status online.[58]

On the US side, collect a Form W-8BEN from an individual or a W-8BEN-E from a company, and screen them against the OFAC sanctions lists; most US employment and payroll laws do not reach a contractor working in Brazil.

Software has its own rule. Unless agreed otherwise, rights in software developed during an employment or services contract belong to the employer or the client when the contract is aimed at development, the activity is foreseen, or it results from the nature of the duties. Software created without relation to the contract and without the company’s resources belongs to its author.[59] Moral rights in software are limited to claiming authorship and opposing harmful changes, protection lasts 50 years, and registration is optional.[59]

For other works, such as texts and designs, moral rights cannot be waived and contracts are read restrictively.[60] A total transfer of copyright needs a written contract; without one, a transfer lasts at most five years and is valid only in the country where it was signed.[60] Inventions belong to the employer when they result from work whose purpose is research or invention, applications filed up to a year after the contract ends are presumed made during it,[61] and the same rules apply to independent contractors.[61]

Only through a mechanism the LGPD allows. The law applies to data collected in Brazil wherever the company is based,[62] and international transfers need a listed basis, such as standard contractual clauses or a transfer needed to perform a contract.[62] Companies relying on contractual clauses had to adopt the regulator’s standard clauses, without changes, by August 23, 2025, and the only adequacy decision so far is for the European Union, so transfers to the United States rely on the standard clauses or another legal basis.[63]

The regulator, ANPD, became an agency with financial autonomy in 2026, and fines reach 2% of revenue in Brazil, capped at BRL 50 million per infraction.[62]

Not to take an employee out of Brazilian law. Labor courts have jurisdiction where the employee works, even if hired abroad,[4] and foreign law has no effect in Brazil where it offends public order.[64] Arbitration is allowed in an employment contract only for employees earning more than twice the social security ceiling, and only if they start it or expressly agree to it.[4]

Between companies it is different. In a services contract, the parties can agree to arbitration and choose the rules of law that apply,[65] and Brazilian courts decline cases covered by an exclusive foreign forum clause in an international contract when the defendant raises it.[23] Brazil has been a party to the New York Convention on foreign arbitral awards since 2002.[66]

Brazil has four time zones; Brasília time, UTC-3, covers the Federal District and the most populous states, including São Paulo, Rio de Janeiro, Minas Gerais and the South,[9] and the country has had no daylight saving time since 2019.[10] São Paulo is one hour ahead of New York while the US is on daylight saving time and two hours ahead in winter. A 9 a.m. to 6 p.m. Pacific schedule in the US winter runs until 11 p.m. in São Paulo, so its last hour is night work.

Holidays vary by state and city,[34] and remote employees follow the collective agreement of the establishment they are assigned to.[4] On talent, Brazil scored 482 in the EF English Proficiency Index 2025, 75th of 123, and Brazilian respondents working in IT scored 551.[67] GitHub reports that the number of developers in Brazil more than quadrupled from 2020 to 2025 and projects 19.6 million by 2030, the third-largest community after India and the United States.[68]