Living and Doing Business in Brazil

Living and Doing Business in Brazil.

Why salary-related expenses can be very high in Brazil

Many foreign businessmen coming to Brazil are somewhat shocked to learn that the real cost of an employee is twice his gross salary or even more. In other words, if someone earns R$ 1000 per month (pre-tax), the all-included cost for his employer would be R$ 2000. Furthermore, they often (mis)understand that a big part of this additional cost are for taxes and other tax-like expenses of little benefit for the employee himself. Next, they interfere: if someone earns R$ 7000, his real cost must be R$ 14’000! This is wrong as I shall explain later on in this post, whose intention is to bring some clarification about the calculation of these costs. I have a growing feeling that misunderstanding the true cost of labor here leads to bad management decisions, more of the sort of lost opportunities for fear of risks or costs that may not exist at all.