# Contractor or EOR in Brazil: Hiring a Developer Legally > Contractor, Employer of Record or your own entity: what each costs to hire a developer in Brazil, where the legal risk sits, and how to choose. - Author: Filipe Eduardo, Senior Software Engineer (https://filipeeduardo.dev/) - Published: September 28, 2026 - Topic: Hiring in Brazil · Tags: Contracts, Employer of Record, Hiring, Nearshore - Canonical URL: https://filipeeduardo.dev/blog/brazil-contractor-vs-eor ## Key takeaways - There are three legal ways to hire a developer in Brazil: as a contractor through their own company, through an Employer of Record (EOR), or through your own Brazilian entity. - A contractor costs the least and is how most senior engineers work with foreign clients. An EOR costs roughly 1.5 times the salary plus a monthly fee, and removes the employment risk. - The risk with contractors is not the contract but how you treat the person. If they work like an employee, a Brazilian court can say they are one. A US company hiring a developer in Brazil has to decide who legally engages that person. The choice sets the monthly cost, how much control you have over the work, and what can go wrong later. It is also the question founders most often get wrong, usually by signing a contractor agreement and then managing the person exactly like an employee. This post compares the three options and explains where the legal line is. It is part of [the complete guide to hiring a senior engineer in Brazil](/blog/hire-senior-software-engineer-brazil); for invoices and tax forms, see [how to pay a software contractor in Brazil](/blog/pay-software-contractor-brazil). ## What are the options? Contractor (PJ) Employer of Record Your own Brazilian entity Who engages the developer Their company signs a services contract with yours The EOR employs them under Brazilian labor law (CLT) Your subsidiary employs them under the CLT What you pay The agreed rate, against a monthly invoice Salary, employment charges and the EOR’s fee Salary, employment charges, accounting and legal upkeep Setup Days Days to a couple of weeks Months Employment risk Yours, if the relationship looks like employment The EOR’s Yours, as a normal employer Fits Senior, autonomous engineers; project or long-term work People who want employment, or roles you want to run like an employee Teams large enough to justify a local company ## What does each option cost? Take a senior engineer for a full year. The contractor option costs the agreed rate plus, if you use one, a contractor platform: Deel lists $49 per contractor per month ([Deel](https://www.deel.com/pricing/)). An EOR employee costs the salary plus Brazilian employment charges plus the EOR’s fee. Under the CLT the employer pays 20% social security (INSS) and 8% into a severance fund (FGTS), a 13th monthly salary and 30 days of paid vacation ([Athyna](https://www.athyna.com/blog/tax-and-legal-risks-remote-developers-in-brazil)), with a one-third vacation bonus required by the [Brazilian Constitution](https://www.planalto.gov.br/ccivil_03/constituicao/constituicao.htm) (art. 7, XVII). As a rough planning figure, the charges and common benefits add about half the salary again; then add the EOR fee, which Deel lists at $599 per employee per month. Your own entity only makes sense at scale. Opening and running a Brazilian company means local directors or representatives, an accountant and monthly tax filings, whether you have one employee or fifty. ## Where is the legal risk with contractors? Brazilian labor law defines an employee by how the work happens, not by what the contract says. The Consolidation of Labor Laws considers an employee anyone who provides services personally, on a non-occasional basis, under the employer’s direction and for pay ([CLT, art. 3](https://www.planalto.gov.br/ccivil_03/decreto-lei/del5452.htm)). If a contractor relationship shows all of those, a labor court can treat it as employment and award the employee rights backwards: vacation, 13th salary, severance fund deposits and more. The practice of hiring people as companies (known in Brazil as *pejotização*) is under review at the Supreme Court. In June 2026 the court let lower courts resume those cases while its final ruling is still pending ([Felsberg](https://www.felsberg.com.br/tema-1389-pejotizacao-retomada-processos-stf/)). Until then, the safe reading is the old one: the substance of the relationship decides. ## How do you keep a contractor relationship a real contract? Contract for results and let the contractor run their own work. In practice: - **Define deliverables and a scope**, not working hours. Agree on the shared hours you need for meetings, not a timesheet. - **No employee trappings.** No company email signature that says “employee”, no vacation approvals, no performance reviews in the HR system, no inclusion in employee benefits. - **Let them choose tools and methods.** Their own equipment, their own way of working inside your engineering standards. - **Pay invoices, not salaries.** Monthly invoices from their company, as in any business-to-business contract. - **Allow other clients.** Exclusivity is not what makes someone an employee, but it makes the relationship look like employment; if you need it, that is a reason to use an EOR. None of this is unusual for a senior engineer. It is how independent professionals work everywhere. ## When should you choose an EOR instead? Choose an EOR when the role really is employment: you want to direct the person’s daily work, you need exclusivity, the person wants employee protections and benefits, or you plan to offer equity the way you would to a US employee. It costs more, but it moves the employment risk to a company whose business is carrying it. A contractor setup is the better fit for senior engineers who work autonomously, own outcomes and prefer running their own business. I work with clients as a contractor, through my own Brazilian company, for exactly those reasons. > Deciding how to engage a senior engineer in Brazil? Email me at [me@filipeeduardo.dev](mailto:me@filipeeduardo.dev) and tell me how you want the role to work. I’ll tell you which setup fits. > > Work with me ## Frequently asked questions ### Is it legal to hire a Brazilian developer as a contractor? Yes. A US company can sign a services contract with a developer’s Brazilian company. The risk is reclassification: if the developer works personally, continuously, under your direction and for pay, like an employee, a Brazilian labor court can treat the relationship as employment. ### How much does an Employer of Record cost in Brazil? The EOR’s fee plus the full employment cost. Deel lists its EOR at $599 per employee per month. Employment charges and benefits under Brazilian law add roughly half the salary again. ### What is pejotização? The Brazilian term for hiring someone as a company (a PJ) instead of as an employee. It is legal when the relationship is really between two businesses, and treated as fraud when it hides an employment relationship. The Supreme Court is reviewing the rules in a case known as Tema 1389. ## Sources - [Deel — Pricing](https://www.deel.com/pricing/) - [Athyna — Tax and legal risks when hiring remote developers in Brazil](https://www.athyna.com/blog/tax-and-legal-risks-remote-developers-in-brazil) - [Planalto — Consolidation of Labor Laws (CLT)](https://www.planalto.gov.br/ccivil_03/decreto-lei/del5452.htm) - [Planalto — Constitution of Brazil](https://www.planalto.gov.br/ccivil_03/constituicao/constituicao.htm) - [Felsberg — Tema 1389: STF allows pejotização cases to resume](https://www.felsberg.com.br/tema-1389-pejotizacao-retomada-processos-stf/)