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Expense Reimbursement Process in Brazil

Expense reimbursement is an issue every HR department faces with foreign assignments, and the challenge is that host country rules have to be followed to avoid taxation.  We had a client in Brazil with many questions about the process in that country, since the Brazilian rules are fairly specific and detailed on expense reimbursement, depending on the payor and amounts.

Here are the basics:

As with most countries, the employee must present receipts for reimbursement (scanned copies are ok) and even with receipts, any amount that is greater than 50% of monthly salary will be taxed in Brazil.  This will be added to the payroll that month as a taxable benefit.

The exception (and recommendation) is if the employee uses a company credit card for expenses, and then there is no monthly limit or taxable amount.  This simplifies expenses, recordkeeping and minimizes taxation.

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There are some other things to keep in mind as well in Brazil when reimbursing expenses:

Receipts

Receipts for expenses incurred inside of Brazil need to have the name of the Brazilian employer (or employer of record), and in some cases the Tax Identification number.  Even if you are using a third-party employer (such as Shield GEO), the receipts should be in the name of your home company for expenses incurred outside of Brazil.  If there is no receipt, the amount is paid as a taxable bonus.

Timing

There is no time limit for submitting expenses in Brazil, but as always prompt reimbursement is good for the employee.  There is no issue with audits or investigations for delayed reimbursement.

Allowances

Allowances for housing, education, etc. are actually included in the 50% of monthly salary considered to be non-taxable.  If the sum total of expenses and allowances exceed that limit, the excess is taxed in Brazil.  Any sum total less than that does not have to be calculated or reported for tax purposes.

The Shield GEO Solution

This is an excellent example of the type of support Shield GEO offers to its clients.  Using our local partners and experts, we can quickly find the solution to any employment related problem or question.  We offer a simple international employment solution for all sizes of companies wishing to expand abroad, from employment to payroll and immigration compliance.

Need help employing in Brazil? Get in touch.

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