Tax obligations for expatriates: understand the role of HR

Do you know how the income tax for expatriates and other obligations work? Knowing about this subject is important, considering we are talkikg about people, generally professionals, who live outside their countries of origin. Therefore, companies need to be aware of the laws that involve these processes, including tax matters.

By taking the necessary precautions, it is possible to avoid a series of problems, such as fines for non-compliance with duties, double taxation (which happens when an individual is subject to being taxed twice) and others.

Thinking about clarifying the main doubts about the subject, we created this content with the most relevant topics. Keep reading!

When the expatriate must declare the income tax in Brazil?

The obligation to declare income tax in Brazil will depend on the visa that the migrant has, or on his intention to establish a permanent residence in the country. For example, an individual with a temporary visa with an employment contract must render accounts as from his arrival in the country.

For temporary visa without employment contract, the income tax declaration is only required if the migrant stays more than 183 days in Brazil in a 12-month period. In this case, the income obtained on a worldwide basis, as well as rights, assets and obligations acquired anywhere in the world must be declared.

How do the income tax return works?

The expatriate must submit the Annual Income Tax Adjustment Statement, based on information provided by the company and other paying sources.

When should the monthly income tax be paid?

In cases where the expatriate obtains income abroad, it will be necessary to pay also the Monthly income tax. It is measured considering the income received, based on the progressive table and applicable standards for currency conversion.

In order to prevent the taxpayer from being taxed twice, international treaties can be applied to benefit individuals from countries covered by these agreements.

Is the tax rate the same applicable to Brazilians?

The rules are the same as those applicable to Brazilian individuals.

What are the amounts of fees and deductions?

There are several countries in which this kind of tax rates are higher than those in Brazil, where the maximum percentage is 27.5%. However, considering the small possibility of deducting expenses, migrants residing in the country end up considering the rates high.

How can HR help ensure tax compliance?

Although the Income Tax return is an obligation of the expatriate professional, the hiring companies must be willing to direct and guide their employees in the best way, so that they can keep up with the requirements and tax rules of Brazil. After all, any failure may impact these employees’ visas.

So, an important action for the HR department is to review whether these professionals are subject to any corporate tax risk, and, if any gap is identified, create the most appropriate solutions to reduce risks.

In any case, the best thing to do is to count on a specialized company that understands everything related to tax obligations, preventing any imposition from being disregarded. There must be a team work between the contracting and the contracted parties, in order to avoid problems.

Are there other tax obligations for the expatriate?

When the expatriate leaves Brazil for good, another issue must be considered in order to avoid Brazilian taxation. It is necessary to present a digital document to the Internal Revenue Service: Communication Final Country Exit, available online.

In addition, it will be necessary to deliver the Declaration of Final Country Exit to replace the Annual Adjustment Declaration. In this case, there is a deadline for delivery, which is until the last working day of April of the calendar year after the definitive departure or representation of the non-resident status in Brazil.

After this process, the last calculations of taxes due in the country will be finished and the migrant will be up to date with Brazilian tax authorities.

As you could see, the tax obligations of professionals who come from other countries to work in companies in Brazil are a little complex. For this reason, having a tax specialized consultancy is highly reccomended.

Did you understand how the income tax for expatriates works? BR-Visa is a company that offers complete advice on tax obligations for migrants in Brazil. If you need any assistance, get in contact with our team!

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