Do I Need a Local Entity to Hire in Brazil?

In Brazil, a "local entity" refers to a recognized business presence that can act as the employer, such as a subsidiary or branch office. This setup allows you to be recognized locally for payroll and employment obligations, ensuring compliance with Brazilian labor laws.

Without a local entity, you generally cannot manage payroll, register as an employer, or comply with mandatory employment protections. An Employer of Record (EOR) can help you hire without the need for a local entity, taking on these responsibilities on your behalf.

What is Required to Employ Someone in Brazil?

• Local employing entity required to directly employ? Usually yes (unless using an EOR)
• Payroll registration required? Yes (registration with the Receita Federal is mandatory)
• Withholding/tax remittance required? Yes (employers must withhold income tax and social contributions)
• Social contributions required? Yes (mandatory contributions to INSS and FGTS)
• Local employment agreement required? Yes (written contracts are standard and legally required)
• Mandatory benefits to budget? Yes (13th salary, vacation pay, and health insurance)
• Works council/collective agreements considerations? Often (many sectors are influenced by collective bargaining agreements)

Best Options If You're Hiring in Brazil

Can I Hire Contractors Instead of Setting Up an Entity?

Yes, but you should be cautious about misclassification risks.

While hiring contractors in Brazil doesn't require a local entity, you must ensure that these contractors are genuinely independent. Misclassification can lead to significant legal issues, as Brazilian law offers strong protections for employees. Here are some key considerations:

• Ensure contractors have multiple clients and are not dependent on your business for their income.
• Avoid controlling their work hours, location, and methods, as this can imply an employment relationship.
• Contractors should not be integrated into your organization in a way that resembles employee status.

How Long Does Entity Setup Take And What Does It Cost?

Typical entity setup timeline: It often takes 6–12 weeks to set up an entity in Brazil, depending on the type of entity and required registrations.

Ongoing cost categories (entity route):

• Accounting, bookkeeping, and statutory filings: Estimated R$1,500–R$3,500 per month ($300–$700)
• Payroll provider: Estimated R$500–R$1,500 per employee per month ($100–$300)
• Employer registrations and recurring compliance: Estimated R$1,000–R$2,000 per year ($200–$400)
• Corporate tax filings and annual reporting: Estimated R$2,000–R$5,000 per year ($400–$1,000)

EOR cost components (no-entity route):

• A per-employee EOR service fee (from $399 per month with Playroll)
• Pass-through statutory costs (e.g., employer social contributions, typically around 20% of gross salary)
• Any optional benefits you choose to provide beyond statutory minimums

How an Employer of Record Can Help You Hire in Brazil

Hiring in Brazil can be complex, but it doesn’t have to require setting up a local entity or taking on long-term overhead. With an Employer of Record like Playroll, you get a simple, predictable way to hire compliantly while keeping costs transparent and under control. We help you:

• Hire employees in Brazil quickly without establishing a local entity, eliminating incorporation costs, ongoing administration, and exit complexity.
• Stay fully compliant with local payroll, tax, and employment regulations with Playroll’s managed payroll services.
• Control your total employment costs, with a clear monthly EOR service fee (from $399 per employee).
• Focus on growing your business, while we manage contracts, payroll, compliance, and labor law obligations end to end.
• Scale up or exit the market easily, without the financial or legal burden of closing a local entity.