Brazil ranks among the top 10 countries globally for freelance talent. Its large pool of independent contractors gives global companies access to skilled professionals, with far fewer overheads than full-time hires. But, hiring independent contractors in Brazil means carefully navigating local classification laws, tax rules, and compliance obligations.
This guide shows you how to do it right, exploring how solutions like an Agent of Record can help you reduce risks and streamline every step from onboarding to payment.
Hiring independent contractors in Brazil: key terms
If you are a global business engaging contractors in Brazil, familiarize yourself with these frameworks and terms:
CLT: While Brazil’s labor code, also known as Consolidated Labor Law, applies to employees, not contractors—understanding it is key to avoiding misclassification.
Código Civil: Brazilian civil code. Governs service contracts with contractors.
LGPD (Lei Geral de Proteção de Dados): Brazil’s general data protection law
Nota fiscal: Nota Fiscal is a legal record of transactions that acts as an invoice and record of service or goods delivery. Contractors must issue it for tax compliance purposes. An Electronic Nota Fiscal (NF-e) is the commonly used digital version.
Compared to countries like the U.S., UK, or across the EU, hiring contractors in Brazil requires a stricter approach to contractor compliance. Here, the Ministry of Labor frequently audits misclassification and imposes significant penalties for getting classification or tax obligations wrong — including back pay, fines, and reputational damage.
The steps below explain how to hire independent contractors in Brazil — compliantly, efficiently, and with less risk.
Step 1: Classify your contractor correctly
Brazilian labor law draws a firm line between employees and contractors — and enforces it strictly. In Brazil, contractors typically fall into three main categories:
- Pessoa Física (individuals): Freelancers who operate under their personal tax ID (CPF). They may register as “autônomos” but are not formal companies.
- Pessoa Jurídica (legal entities): Contractors who operate as registered businesses with a CNPJ. These include micro-entrepreneurs (MEIs), small businesses (EPPs), or limited companies (LTDA).
- Temporary workers: Hired for short-term roles through staffing agencies, governed by separate rules under Brazilian labor law.
A company’s obligations to employees and contractors differ significantly, and wrongly misclassifying your employee as a contractor could mean fines, lawsuits, and back-pay claims.
Risks and consequences of misclassification in Brazil
- Lawsuits. Misclassified contractors can file lawsuits claiming employee status and demanding:
- Back-pay for wages, overtime, vacation pay,
- 13th salary (a mandatory annual bonus in Brazil)
- Severance pay and other employee benefits.
- Fines. If found guilty of misclassification, the Brazilian labor authorities may fine the employer for the duration of the misclassification.
- Tax liabilities. The company may be held liable for unpaid social security contributions (INSS), severance funds (FGTS), and other taxes that would have been applicable if the worker was correctly classified as an employee. In such cases, you company would pay back payments and interest.
To avoid these misclassification risks, thoroughly assess your new hires’ roles, working hours, and supervisory requirements.
The difference between employees and contractors in Brazil
Classification criteria | Full-time employee | Independent contractor |
Degree of supervision | Close and direct supervision of work hours, tasks, and methods. You provide all the required equipment. | Contractors work independently. They choose their methods and working hours, and often use their own equipment. |
Engagement type | Indefinite contracts; subject to the rules of the CLT. | Contracts must define a fixed engagement period. |
Working hours | As per CLT, employees work a maximum of eight hours a day and 44 hours a week. CLT mandates overtime pay. | Contractors do not have fixed working hours and are not entitled to overtime pay. |
Social security contribution | Employers typically pays up to 28.8% of an employee’s salary to the INSS (National Institute of Social Security ), FGTS (Severance Fund), and RAT (Work Accident Insurance). | Contractors are responsible for paying their own taxes and social security contributions. |
Individual income tax | Employees pay between 7.5% and 14% of their salary to INSS. Employers can withhold and remit this tax. | Contractors pay their own taxes to INSS. 11% (contribuinte individual simplificado) or 20% (contribuinte individual). |
Annual bonus(13th pay) | This annual bonus (Gratificação de Natal) is mandatory. | Contractors are not eligible for the 13th pay. |
Useful resources
Are you hiring a contractor or employee? Find out by taking our employee misclassification quiz
Step 2: Understand labor laws relevant to contractors in Brazil
While independent contractors are not subject to the full scope of Brazil’s Consolidated Labor Laws, certain legal principles and regulations remain relevant. Understanding these labor laws are important for drafting compliant agreements, protecting IP, and safeguarding data privacy for both the employer and contractor.
- Código Civil: Brazilian Civil Code defines service contracts, including each party’s rights, duties, and liabilities.
- Service agreements (Contratos de Prestação de Serviços): In Brazil, a formal, written contract outlines scope, payment terms, timelines, and responsibilities for employees and employers.
- Data protection laws (LGPD): Brazil’s data protection law is relevant for handling contractors’ data and if contractors handle personal data.
- Intellectual property laws: Brazil IP laws require that you clearly assign IP to the correct party within the agreement (typically the hiring company).
- Occupational health and safety: Your business must ensure a safe working environment for contractors working on your premises.
Preventing misclassification and adhering to local laws can be difficult for foreign companies hiring in Brazil, and it’s advisable to use local legal counsel.
Employers can also consider using an Agent of Record (AOR) — also known as Contractor of Record — to comply with Brazilian labor and tax laws and pay and manage contractors in Brazil.
Step 3: AOR or in – house? Choose how to hire and manage your Brazil contractors
When hiring independent contractors in Brazil, foreign companies can choose from several pathways, depending on their goals, risk tolerance, and legal structure.
Your options for hiring contractors in Brazil include:
- Hiring via a foreign entity. Engage the contractor as an individual (pessoa física) or a legal entity (pessoa jurídica) from a foreign entity.
- Hire via a local entity (if you have one). Engage contractors through your registered subsidiary or branch.
- Partner with a staffing agency. Staffing firms can supply independent professionals for short-term or project-based roles. This is a useful, though costly way, to hire talent quickly.
- Hire through an AOR (Agent of Record). An AOR becomes the legal employer and handles worker classification, contracts, payments, tax withholdings, and compliance on your behalf. It is more cost-efficient than hiring via a staffing agency.
- Convert contractor to employee through an EOR (Employer of Record). When you want to hire contractors as employees but do not have a local Brazilian entity, hire them remotely via an EOR.
How to hire contractors in Brazil: Quick decision guide
Unless you already have an established, registered entity in Brazil, an AOR or directly hiring through a contractor’s legal entity (pessoa jurídica) is the most cost-effective and risk-free option for global companies.
Step 4: Find the right contractor
There are several ways for you to find the right contractor to hire in Brazil. These include:
- Online platforms and job boards: Sites like GetNinjas, Freelancer.com.br, and Workana
- Professional networks and referrals: Tap into local contacts, LinkedIn, or industry – specific forums for trusted recommendations.
- Recruitment agencies: Many recruitment agencies like Gini Talent, Brunel, Randstad, Manpower, and ISG help with temporary staffing and freelancers
- University career centers: Many universities like University of São Paulo (USP), University of Campinas (Unicamp), and Federal University of Rio de Janeiro (UFRJ) have career services to help students find internships and part-time opportunities.
Depending on the role, consider verifying credentials, references, or running background checks in compliance with Brazilian law. Ensure the contractor is fluent in your company’s working language (e.g., English), or arrange for communication support if needed.
Step 5: Draft a compliant service agreement
Brazilian law requires a written agreement for independent contractor relationships. Use a Contrato de Prestação de Serviços (service agreement).
This agreement should include:
- Identification of parties
- Purpose and detailed scope of work
- Duration and termination. Specify project timelines and termination conditions. A clear ‘end date’ helps avoid worker misclassification.
- Payment terms and invoicing. Clarify payment terms, frequency, and method
- Intellectual property ownership. Clearly assign IP ownership to prevent disputes.
- Confidentiality and non-disclosure. Include data protection clauses and non-disclosure or confidentiality clauses (if needed)
- Data protection (LGPD Compliance). If the contractor handles personal data on your behalf, ensure your agreements comply with LGPD.
- Tax responsibilities and withholding
- Occupational safety. Ensure occupational safety obligations if work is on-site
- Dispute resolution and governing law
- Signatures and witnesses
If you hire contractors directly, get a Brazilian legal expert to review the agreements. Alternatively, your AOR can help you generate a legally compliant agreement in Portuguese — within minutes — with the right clauses included for IP, tax, and classification.
Step 6: Setup systems to pay contractors compliantly
To pay contractors securely and compliantly in Brazil, set up the right payment terms, documentation, and payment channels. Follow these three steps:
- Confirm contractor type (individual vs company)
- Agree on currency, method, and payment terms
- Setup your payment channel, invoicing, and tax compliance
Confirm contractor type (individual vs company)
You handle invoicing, tax withholding, and payment flow differently depending on whether your contractor is a:
- Pessoa física (individual)
- Pessoa jurídica (registered business)
- Autônomos (freelancer)
- Temporary worker
Pessoa jurídica typically issues a nota fiscal and handles their own taxes. You may have to withhold taxes for a Pessoa física or Autônomos contractor.
Agree on currency, method, and payment terms
By this stage, you would have agreed to payment currency, frequency, and due dates in your service agreement.
- Choose your payment currency whether BRL or foreign currency (e.g., USD, EUR).
- Set up payment frequency as hourly, daily, monthly or project-based.
- Define who bears transfer and conversion costs.
Note: Cross-border payments often come with hidden costs. Companies may face unfavorable exchange rates, high transfer fees, and payment delays — especially when relying on international wire transfers or unfamiliar platforms.
Avoid currency hassles and conversions losses with an AOR/COR
AORs handle local payouts in Brazilian Real, often at more favorable rates, and take care of all currency conversions and transfer logistics. This reduces financial risk and ensures your contractors are paid promptly, without you having to manage the back-end complexity.
Set up your payment channel, invoicing, and tax compliance
To pay independent contractors and freelancers in Brazil, you must
- Choose an efficient payment method.
- Set up automated payments or reminders to ensure timely payments despite different working hours and office holidays.
- Manage tax withholdings (IRFF) when applicable.
How you manage these taxes and payments will depend on whether you have a local entity in Brazil or are hiring from abroad. Here is a comparison:
Hiring method | Directly from foreign entity | Via local Brazilian entity | Via Agent of Record (AOR) |
How to pay | Pay in foreign currency via SWIFT transfers, or digital platforms like Payoneer, or Remitly | Use TED, bank transfer, or PIX to pay contractors and freelancers. | Pay the AOR in your currency; they handle payouts in BRL (or other currencies the contractor might choose). |
Invoicing & documentation | Collect contractor’s CPF/CNPJ and nota fiscal (service invoice) if available. Keep proof of payment. | Archive nota fiscal for audits. Maintain signed contracts and proof of bank transfer. | AOR manages all invoicing and documentation. You receive consolidated records for all contractors. |
Tax compliance | Contractors handle INSS.
| Withhold IRRF and possibly INSS if hiring a pessoa física. Ensure proper classification and filings. | AOR assumes tax compliance, including withholding, reporting, and remittance to authorities |
Other considerations | Agree on currency, frequency, and who will bear transfer costs and conversion costs. | You need a local bank account and a financial system in place to manage disbursements and reconciliation. | AOR manages all local obligations. |
Paying directly from a foreign entity will require local legal and tax guidance, while paying through a local entity requires in-house legal or accounting support.
An AOR is the most convenient and low – risk way to pay your remote contractor workforce in Brazil. You needn’t set up payroll, manage record-keeping, or consult local tax experts. It helps you manage currency conversions efficiently, prevent payment delays, and ensure tax compliance without adding to your HR teams’ administrative tasks.
It also ensures that you’ve met all the necessary compliance steps, and are ready to onboard your contractors.
Compliance checklist: Hiring and paying contractors in Brazil
Legal and classification
- Correctly classify worker as contractor (not employee)
- Draft a compliant service agreement (Contrato de Prestação de Serviços) defining scope, deliverables, and termination date.
- Confirm CPF (individual) or CNPJ (company) details
Payment and taxes
- Agree on currency, terms, and method (SWIFT, PIX, AOR/COR)
- Collect nota fiscal (if applicable)
- Withhold IRRF and/or INSS if required (especially for pessoa física)
- Maintain proof of payment and tax records
Data and IP compliance
- Add LGPD-compliant clauses for personal data handling
- Sign confidentiality and IP assignment agreements
Step 7: Onboard your contractors
Once you have ticked off your compliance checkboxes, it’s time to welcome your contractors into your team. A strong onboarding process sets the tone for a successful partnership. Beyond contracts and compliance, make sure your contractor has the tools, context, and clarity to deliver effectively.
- Share a welcome pack with a company overview, key contacts, and communication norms.
- Set up email, project management tools (e.g., Trello), and messaging platforms (e.g. Slack).
- Clarify deliverables, timelines, and reporting structure.
- Assign a point of contact for support and regular check-ins.
- Brief contractors on LGPD responsibilities and sign confidentiality agreements.
Confidently hire and pay contractors in Brazil with Multiplier
Whether you’re hiring one contractor or scaling a distributed team in Brazil, Multiplier helps you:
- Generate compliant contracts in minutes
- Effortlessly review and pay invoices for independent contractors in Brazil
- Manage invoices, payments, reimbursements, and timesheets — all in one unified platform
- Simplify documentation, ongoing compliance, and offboarding
From contract to activation — onboard contractors via Multiplier in as little as 48–72 hours. Eliminate administrative hassles and reduce legal risks while giving your Brazilian contractors a smooth, professional experience from day one.
Book a demo and see why hundreds of companies trust Multiplier’s Contractor of Record for their global contractor management.
