Do I Need a Local Entity to Hire in Cape Verde?

In Cape Verde, a "local entity" refers to a recognized business presence that can legally employ individuals; this often means establishing a subsidiary or branch office. This setup allows you to manage local payroll and comply with employment laws effectively.

Without a local entity, you generally can't register as an employer, manage mandatory social security processes, or issue compliant employment contracts. An alternative to establishing a local entity is to use an Employer of Record (EOR), which can handle these responsibilities on your behalf.

What is Required to Employ Someone in Cape Verde?

• Local employing entity required to directly employ? Yes (you need a local entity for direct employment)
• Payroll registration required? Yes (mandatory registration with the Direção Geral de Receitas do Estado)
• Withholding/tax remittance required? Yes (employers must withhold income tax and remit it to the state)
• Social contributions required? Yes (employers are obligated to contribute to social security)
• Local employment agreement required? Yes (written contracts are mandatory under Cape Verdean law)
• Mandatory benefits to budget? Yes (statutory benefits include vacation, sick leave, and social security)
• Works council/collective agreements considerations? Usually (many sectors are subject to collective agreements)

Best Options If You're Hiring in Cape Verde

Can I Hire Contractors Instead of Setting Up an Entity?

Yes, but be cautious about misclassification risks.

Hiring contractors in Cape Verde doesn’t require a local entity, but ensure that the contractor operates independently. Misclassification can lead to legal issues if the contractor is seen as an employee.

• Ensure the contractor has multiple clients and isn't exclusive to your business.
• Maintain clear boundaries in how you manage the contractor's work.
• Document the contractor's independence to protect against potential claims.

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 Cape Verde, depending on the type of entity and necessary registrations.

Ongoing cost categories (entity route):

• Accounting, bookkeeping, and statutory filings: Estimated 25,000–50,000 CVE per month ($250–$500)
• Payroll provider: Estimated 5,000–15,000 CVE per employee per month ($50–$150)
• Employer registrations and recurring compliance: Estimated 10,000–20,000 CVE per year ($100–$200)
• Corporate tax filings and annual reporting: Estimated 50,000–100,000 CVE per year ($500–$1,000)

EOR cost components (no-entity route):

• A per-employee EOR service fee (from $399 p/month with Playroll)
• Pass-through statutory costs (e.g., employer social security contributions)
• Any optional benefits you choose to provide beyond statutory minimums

How an Employer of Record Can Help You Hire in Cape Verde

Hiring in Cape Verde 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 Cape Verde 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 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.