Q: How do I Register an Independent Contractor in Brazil?
Learn about the various forms of self-employment in Brazil and what you need to do to become self-employed.
Brazil, the geographically largest country in South America, is a vibrant place with beautiful nature, iconic festivals, and a killer soccer team. Brazil’s developing mixed economy and specific employment laws have made self-employment a very popular option. In fact, as of this year, almost one-third of the country identifies themselves as self-employed, and you can join them! Here we break down the basics of becoming an independent contractor or self-employed legal entity in Brazil. The information here should not be used in place of legal counsel.
What does freelancing mean in Brazil?
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Brazil’s legislation does not mention freelance work specifically, but the closest it comes to that is the classification of trabalhador autônomo and Pessoa Jurídica (PJ). A trabalhador autônomo is a self-employed person who provides services to other companies, while a PJ is a legal entity with several subcategories.
Becoming a self-employed individual (trabalhador autônomo) for freelancing
There are no requirements or legal hoops to jump through to be a self-employed individual (trabalhador autônomo). If you are independent of a company and not subordinate to any company regulations, you are an independent contractor. All you have to do is register yourself as an autonomous professional with Social Security, and the contracting company must pay 20% payroll as INSS. Keep in mind, under this classification, you agree to take on all obligations and liability relating to your financial commitments, and Brazilian labor rights laws will not protect you.
Other types of business structures in Brazil for self-employed freelancing
Companies often prefer to hire legal entities (someone working under the Pessoa Jurídica regime) as it can be a cheaper and more reliable option for the company. To work in Pessoa Jurídica, you must obtain a CNPJ number, which can be done by opening up a company. You can open a company from forms that are counted as having privileged tax collection, like Microempreendedor Individual (MEI) and Empresa Individual de Responsabilidade Limitada (EIRELI). The business structure known as Empresario Individual (EI or Individual Entrepreneur) lies somewhere in between legal entity and natural person – an EI does require a CNPJ but is not subject to the same requirements as legal companies.
Any of these could be used for freelancing in Brazil but are not required.
Empresario Individual (EI) – Individual Entrepreneur in Brazil
As an Empresario Individual, you act as a sole proprietor by running your business in your name. Your business and you are one entity in that if you are in debt, your liabilities extend to your personal assets. Your business’s name may be your own personal name or another name that is connected to your trade. You can also hire employees as an EI. Empresario Individuals are considered a Microenterprise (ME) if their maximum billing per year is R$360,000 and is considered a small business (EPP) with a maximum billing of R$4.8 million per year.
Microempreendedor Individual (MEI) – Individual Micro-Entrepreneur in Brazil
You can also get a CNPJ number by starting a one-person business known as Individual Micro-Entrepreneur, or Microempreendedor Individual (MEI) in Brazil. As an MEI, you cannot exceed R$81,000 in income or R$36,000 in invoicing each year. As an MEI, you will have privileged tax collection, and you will only need to pay a monthly amount for Social Security and ICMS/ISS. Through that, you can access certain benefits (maternity pay, sick pay, retirement, etc.). However, there are a few other MEI regulations:
- Microentrepreneurship is not open to all business activities – see the appropriate activities listed here.
- You can only hire one employee.
- You must not be an owner/partner for another company.
- MEI is subject to a specific tax treatment and is provided a surplus exemption of specific federal taxes (income tax, social contribution, etc.).
Empresa Individual de Responsabilidade Limitada (EIRELI) – Individual and Single-Member Limited Liability Companies in Brazil
Another way to achieve privileged tax collection is through starting an Individual Limited Liability Company, known as Empresa Individual de Responsabilidade Limitada (EIRELI) in Brazil. The EIRELI is an actual legal entity, so it is distinct from the person who owns it, giving the owner more protection for their personal assets than an Individual Entrepreneur (EI).
The EIRELI is quite like the MEI, except EIRELI does not have an upper limit on invoicing amounts. However, there is a minimum capital requirement of about R$105,000 and a maximum on annual billing (R$360,000 for microenterprises and R$4.8million for small businesses).
Similar to the EIRELI is the Single-Member Limited Liability Company (Sociedade Limitada Individual), which differs in that there is no requirement of minimum corporate capital.
Tax Regime and Invoicing in Brazil
Brazil has one of the most complicated tax regimes globally, so it is a good idea to do your research on what is needed for your business or even talk to an accountant. One tax option is the Simples Nacional, an optional regime that allows the unified collection of municipal, state, and federal taxes. This system is meant to help with tax collection for micro/small businesses that cannot bear the standard tax regime’s expense. Only certain businesses are entitled to be a part of Simples Nacional – the businesses discussed above (EI, MEI, EIRELI, and LLCs) do benefit from this regime.
In terms of invoicing, Brazil requires electronic invoice submissions to tax authorities, which can be done through a few different formats:
- Nota Fiscal Eletrônica (NF-e) for goods
- Nota Fiscal de Serviós Eletrônica (NFS-e) for services
- Conheçimento de Trasporte Eletrônico (CT-e), an e-waybill for freight services.
To see more information on executing Brazilian invoices, check out Alvara’s e-invoicing page.
Go ahead and get started as an independent contractor in Brazil!
There you have it: the basic breakdown of self-employment in Brazil. Now you can decide which business structure is best for your freelancing. With proper research and preparation, you will have no trouble launching your company and making your independent income. Don’t be afraid to dive in and join the millions of self-employed workers in Brazil.
Ready to invoice your United States-based clients? Try Liquid today.
Updated: February 4, 2021
Quick note: This is not to be taken as tax advice or legal advice or payroll advice. Since tax rules and laws change over time and can vary by location and industry, consult a CPA / tax advisor and/or attorney for specific guidance.