The covid-19 pandemic intensified the adoption of remote work, through which the employee performs his duties without physically attending the company. From the perspective of social security contributions, the place where the employee performs his/her duties is of little relevance, as long as this place is in Brazil. However, if the employee resides in another country and there develops his activities, the situation requires additional attention.

As a general principle, social security contributions should be required only in the country in which the employee provides his services. After all, it is in this country that he will probably seek access to the benefits of social security, funded by the contributions. However, Law 8,212/91, which establishes and regulates these contributions, does not bring any exception as to the country in which the services are provided. Therefore, a preliminary analysis indicates that social security contributions are due if the professional has a job relationship with a Brazilian company, regardless of the place in which he/she performs his services.

Brazil, however, has a broad network of international treaties concerning social security. These agreements regulate from access to security benefits, including total contribution times for those who have made contributions in more than one country, to the imposition of social security contributions on wages received by employees residing abroad. While there may be controversy as to the nature of these agreements and their status before domestic law, Article 85-A of Law 8,212/91 determines their insertion as a special law. In other words, even if the Brazilian legislation has a general normative provision on the subject, if it is contrary to the provisions of the treaty, the treaty must prevail because it is a special rule.

As the page of the Secretariat of Social Security of the Ministry of Labor and Social Security indicates, Brazil has 18 international agreements in force that regulate these aspects and 6 more international agreements – on the same theme – in the process of ratification by the National Congress. Among the 18 agreements in force, some were established with countries that have a strong migratory relationship with Brazil, including the United States, Portugal and Spain. Also among these agreements are the Ibero-American and Mercosur conventions, which cover a multiplicity of countries.

Unlike treaties to avoid double income taxation, which have the UN and OECD model conventions as standard, social security agreements do not follow a pre-established standard. The analysis on a case-by-case basis, therefore, becomes more important, and it is necessary to verify, first, the country to which the employee moving and, also, how long this employee will reside there. As a general rule, treaties signed by Brazil that the employee is subject to social security legislation (which, in our view, may include the obligation to pay social security contributions) of the country in which he/she performs his/her work.

This general rule is, for example, article 9 of the Ibero-American Multilateral Convention on Social Security, promulgated in Brazil by Decree 8,358/14:

Article 9 General rule

Without prejudice to Article 10, persons to whom this Convention applies shall be subject exclusively to the social security legislation of the State in whose territory they are active, dependent or independent, which allows them to be included in the scope of that legislation.

From this provision, it is possible to understand that the employee and his employer must contribute to the social security of the country in which the employee carries out his activities.

At a domestic level, however, there may be doubts as to the imposition of social security contributions due by the employer on the wages paid to that employee. This is because Article 22, items I and II, of Law 8,212/91 does not seem to distinguish between people who carry out their activities in Brazil and people who carry out their activities abroad. Notwithstanding, Section 22 of Law 8,212/91 only determines the imposition of the contributions over wages paid to workers that are included in Brazilian social security. As the treaties usually determine that a worker must be included only in the social security system of its residence State, we understand that there are arguments to sustain that the person subject to this general rule should not be subject to social security contributions in Brazil.

Despite the relevance of the issue, there are no clear guidelines from th tax authorities or case law regarding the imposition of social security contributions due by the employer in the case of employees of a Brazilian company who carry out their activities outside Brazil. There are, however, answers to consultations issued by the Federal Revenue Service of Brazil (RFB) on the reverse scenario, in which the employee of a foreign company comes to work in Brazil. In these consultations, there are indications of the social security treatment to be applied in the case where the employee of the Brazilian company starts working abroad.

Issued by the Taxation Division of the Regional Superintendences of the Federal Revenue of Brazil (Disit), the SRRF06 76/13 Consultation Solution (SC Disit SRRF06 76/13), analyzed the case in which workers temporarily moved from Japan to Brazil. Similar to Article 9 of the Ibero-American Multilateral Convention on Social Security transcribed above, Article 6 of the treaty signed between Brazil and Japan, promulgated by Decree 7.702/12 (Brazil-Japan Agreement), provides, as a general rule, that the employee will be subject exclusively to the legislation of the country in which he carries out his activities. In Article 7, however, the Brazil-Japan Agreement provides special provisions, applicable to cases of temporary displacement, in which the employee remains subject to the legislation of his country of origin.

Because it is temporary displacement, tax authorities concluded that there should not be the imposition of social security contributions over the wages paid to them, provided that the requirements of the Brazil-Japan Treaty were met.

Based on The SC Disit SRRF06 76/13, it is worth highlighting two conclusions. The first is that the worker's subjection to the social security legislation of one of the countries implies the need to collect social security contributions in that country. The second, less obvious, conclusion is that both social security contributions due by the employer and by the employee are covered by the agreement. In other words, if the employee is subject to the social security legislation of only one of the countries, his employer must also collect social security contributions only to that country. Another highlight is that SC Disit SRRF06 76/13 also states that there is no imposition of contributions to third parties, based on the understanding that these contributions "must follow the same legal design given to social security contributions, because, in relation to this matter, there are no specific rules".

Subsequently, the General Coordination of Taxation (Cosit) issued Answer to Consultation 360/17 (SC Cosit 360/17), in which it analyzed the application of the social security treaty signed between Brazil and South Korea, promulgated by Decree 9.751/19 (Brazil-Korea Agreement).

The Brazil-Korea Agreement also includes the general rule that the employee must be subject to the social security legislation of the country in which he works and to exceptions regarding the temporary displacement of employees between the two countries. Thus, SC Cosit 360/17 also points out that, provided that the requirements laid down in the treaty are fulfilled, employees temporarily displaced from South Korea to Brazil are not subject to the collection of Brazilian social security contributions.

Like SC Disit SRRF06 76/13, SC Cosit 360/17 recognizes that contributions to third parties (specifically, salary-education and contribution to the National Institute of Colonization and Agrarian Reform – Incra) do not affect the case. However, the rationale is different: SC Cosit 360/17 states that such contributions cannot be charged because employees displaced to Brazil, in the case analyzed, are not included in the General Social Security System. In a very similar sense, Answer to Consultation 454/17, also issued by Cosit (SC Cosit 454/17), presented the same understanding.

SC Cosit 360/17 and SC Cosit 454/17, in addition to analyzing the case of the employee temporarily displaced to Brazil, are dealing with the possibility of requesting the refund of amounts unduly paid as social security contributions on the wages granted to these employees. In both answers, it was concluded that restitution may be authorised. Cosit's Answer to Consultation 278/18 (SC Cosit 278/18) confirms the possibility of offset of improperly collected employer contributions being made against debits of those contributions in later periods.

None of these manifestations of the tax authorities addresses the case in which the Brazilian company employee is moved abroad. They deal only with cases where employees of foreign companies temporarily come to provide services in Brazil.

We believe, however, that it is possible to extend its legal foundations to cases in which the employee of a Brazilian company starts to develop its activities abroad. As seen, Art. 22 only allows the imposition of social security contributions due by the employer in the case of workers who are included in the Brazilian social security. The answers to consultations, however, make it clear that the subjection of the exclusive worker to the social security legislation of one country excludes its link to the social security of the other country.

When the employee moves to a country that has a social security treaty with Brazil, we understand that there may be arguments not to collect social security contributions on the wages paid to that employee. This possibility, however, depends on the terms of the treaty with the country of destination. It should be checked, in particular, whether it contains the general rule of subjection to the legislation of the country in which the services are performed and whether there are exceptions applicable in the case.