Social Security Agreements: Avoiding Double Contributions for Assignees in Brazil

When a multinational sends an employee to its Brazilian subsidiary, two social security systems may claim contributions on the same salary: the home country’s and Brazil’s. Brazilian employer social security is significant, generally 20% of payroll plus workplace accident and third-party contributions, so double coverage is expensive for the company and of little use to an assignee who will not stay long enough to build Brazilian benefits. Brazil’s international social security agreements solve this for many countries. This guide explains how they work, which countries are covered and what the company has to do.

What the agreements do

Social security agreements, often called totalization agreements, do two things:

• Avoid double contributions: a worker temporarily sent to the other country can remain covered only by the home system for a limited period, proven by a certificate of coverage.
• Add up contribution periods: periods paid in both countries can be combined to qualify for benefits, with each country paying a share proportional to the time contributed to its system.

The coverage of each agreement varies. The agreement with the United States, for example, covers old-age, disability and survivors’ pensions.

Which countries have an agreement with Brazil

How long an assignee can stay in the home system

The maximum period of a temporary assignment (deslocamento temporário) is set by each agreement:

Other agreements have their own periods and conditions. Check the specific agreement before planning an assignment, especially when the expected stay is close to the limit.

Contributions the Brazilian company stops paying

When an inbound assignee holds a valid certificate of coverage from the home country, the worker is not affiliated with Brazil’s general social security regime for that period. According to Federal Revenue rulings, the Brazilian company then does not pay the employer contribution, the workplace accident contribution (RAT) or the third-party contributions, and does not withhold the employee contribution; amounts paid in error can be offset or refunded. In payroll, the salary items are reported in eSocial as not subject to social security because of an international agreement.

Two points need care:

• FGTS is not social security. The severance fund is outside the scope of the agreements, so its treatment for an assignee employed by the Brazilian company should be analyzed separately.
• Income tax is not affected. Social security agreements do not deal with income tax, which follows the residence rules and any tax treaty (see work and investor visas for the immigration side).

The certificates

Coming to Brazil

The certificate of coverage is issued by the home country’s social security institution, on that country’s form (for example, the forms established under the agreements with Germany, Japan or the United States), and is kept by the Brazilian company as support for not paying contributions. It should be obtained before the assignment starts.

Leaving Brazil

For employees sent from Brazil abroad, the employer requests the initial temporary assignment certificate from the INSS through the Meu INSS portal or by phone. The service is free; the INSS indicates an average response time of about 45 days. There are separate services for extensions, exceptions and corrections.

A checklist for international assignments

1. Check whether an agreement exists with the home country and its maximum assignment period.
2. Request the certificate of coverage in the home country before the employee starts in Brazil.
3. Set up the Brazilian payroll so that social security is not charged for the period covered, and keep the certificate on file.
4. Decide the FGTS treatment and the income tax position separately.
5. Monitor the end date and request an extension, if allowed, before it expires.
6. Without an agreement, budget for full Brazilian contributions alongside the home country’s (see the cost of an employee in Brazil).

How Solidy can help

Solidy already serves subsidiaries of multinational companies in Brazil. Our payroll team sets up assignees correctly in eSocial, applies the social security agreements, keeps the certificates on file and coordinates the income tax position with the employee’s home country. See our payroll service or talk to our consultants.