Insights
Employer of record or subsidiary in Brazil: when to switch
For a small team, an employer of record is usually faster and cheaper. A subsidiary makes sense when headcount, contracts or sales need your own entity.
Many foreign companies start hiring in Brazil before they have a legal entity. There are two main routes: an employer of record (EOR) that employs the people on your behalf, or your own subsidiary. Neither is always better.
How they differ
- EOR: a provider employs the people locally and you direct their work. You pay a fee per employee on top of the employment costs, so the cost grows with headcount.
- Subsidiary: you create a Brazilian company and employ people directly. It has fixed running costs, such as accounting, filings and payroll administration, whatever the headcount.
Why an EOR fits a test
Setting up a Ltda takes weeks and, for a foreign-owned company, the bank account is often the slowest step. An EOR lets you put someone on payroll while you decide. One provider guide notes that an EOR is typically faster and cheaper at low headcount, and that the break-even point depends on your entity quote, the EOR fee and how fast you grow.
When a subsidiary becomes the better choice
- You need to sign contracts or issue invoices in Brazil in your own name.
- Your team is large enough that fixed entity costs are lower than the sum of per-employee fees.
- You want to hold licences, import in your own name or open local bank accounts.
Our approach
We tell you honestly which option fits your plan, and we can move you from an EOR to your own subsidiary when the time comes. See the FAQ.
General information, not legal or tax advice. Cost levels vary by provider and over time.