Labor Court rules out levy of FGTS on wages paid abroad

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The Regional Labor Court of the State of Paraná has adopted the understanding that the remuneration paid abroad, in foreign currency, does not serve as a calculation basis for the payment of FGTS.

In the case analyzed by the TRT, foreign employees provided services in Brazil, linked to a Brazilian company and with an employment contract in Brazil. The remuneration of these employees was paid with the practice of “splity salary”, that is, the employees received both for the contract in Brazil and for the contract abroad.

Thus, in the understanding of the TRT, “deposits in the FGTS escrow account on amounts paid abroad, by a foreign company, in the currency in force in the respective country, arising from a preexisting relationship with it, different from the employment contract maintained with the appellee in the Brazil.”

This was the same understanding of the Federal Court, in a tax foreclosure action, which judged:

“I understand that this provision does not authorize the requirement, in view of the appellant, of FGTS and respective social contribution on amounts paid by another company, headquartered abroad, which also has an employment contract with an employee temporarily hired in Brazil.

Emphasizing: payments were made abroad, by a foreign company, in the currency in force in the respective country.”

Recent decisions, which are still subject to appeal, demonstrate the importance of adopting labor planning and compliance practices when expatriating employees.

To learn more about expatriation compliance practices , click here .

Written by Daniel Rangel, Labor Lawyer at Drummond Advisors