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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 15588
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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We are going to hire an employee residing in Brazil, payroll

Resolved Question:

We are going to hire an employee residing in Brazil, payroll will be paid out of the US. This employee is asking to be wired directly to his bank account in Brazil for his salary, with NO witholding taxes. Is this correct per US tax law?
Submitted: 1 year ago.
Category: Tax
Expert:  Megan C replied 1 year ago.

Megan C :

Thank you for your question. Thanks for requesting me directly

Megan C :

How are you doing tonight?

Megan C :

If the employee is working in Brazil, and is not working in the United States, then he/she would have no US tax liability

Megan C :

It would be correct to send them a wire of their payment with no withholding taxes.

Megan C :

This is true if they are NOT a US resident or citizne

Megan C :

so, if they are a green card holder they would still be subject to US taxes.

Customer:

he is a Brazilian citizen

Megan C :

But, if they are a Brazilian national they have no tax liability to the US

Customer:

even though he is employed by us, it is OK not to withhold any payroll taxes?

Megan C :

That is correct. It is not the employer that determines tax nexus - it is where the work is performed

Megan C :

He performs all duties abroad, he's not performing them in the US and has no US tax

Customer:

OK, Great! Thanks, XXXXX XXXXX your help! Appreciate it!

Megan C :

You're welcome

Megan C :

Is there anything else I can assist you with tonight?

Megan C :

IF not, please rate positive so that I may receive credit for assisting you today

Customer:

What if we transfer his salary to a US bank in Miami, instead of Brazil?

Megan C :

Same difference, because he is performing work abroad ... he's not performing work in the US

Customer:

OK.. Thanks!

Megan C :

You're welcome

Customer:

If I have more questions related to this issue, can I ask you without paying again?

Megan C :

Yes, just come back to this page. You can do that even after you rate.

Megan C :

Do you need any additional assistance?

Customer:

No. that's all for now.. Thank you again for your help!

Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 15588
Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
Megan C and 5 other Tax Specialists are ready to help you
Customer: replied 1 year ago.

Megan, one follow-up question: If we pay this employee from the US, will the US entity create a permanent establishment in Brazil and thus subject the US entity for tax in Brazil?

Expert:  Megan C replied 1 year ago.
Thank you for your follow up. No, simply paying an employee in Brazil does not set up a permanent establishment there. You should be clear of having a Brazilian tax liability.

Thanks! Let me know if you need anything else. If not, please rate positive so that I may receive further credit for assisting today.
Customer: replied 1 year ago.


OK. Thanks!

Expert:  Megan C replied 1 year ago.
You're welcome
Customer: replied 1 year ago.


Sorry.. I just googled "what creates permanent establishment" and I found this article: http://www.hsp.com/knowledge/resources/explanation-what-creates-permanent-establishment-pe


 


I think the US entity will create a PE in Brazil for having an employee there.

Expert:  Megan C replied 1 year ago.
I wouldn't think it would create a permanent establishment. But, that's what the article says. So, I would find the advice of an accountant in Brazil to ensure you understand the tax implications of operating in that country. I would not know what taxes, if any, would be due under Brazilian law.

Thanks!

Megan
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 15588
Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
Megan C and 5 other Tax Specialists are ready to help you
Customer: replied 1 year ago.

OK. Thanks for your help!

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Megan C
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Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level