Can we still reimburse employee expenses directly when using an employer of record service?
We recommend expenses be paid through us. Just to be clear if expenses are reimbursed by the client directly to the employee, Establish Brazil will not be responsible for ensuring it is done compliantly. There are three risks. These are worst case scenarios and we cannot say the probability of these situations occurring. It is for the client and employee to assess the risk and decide their actions. 1. Without the local employer of record reviewing the expenses, it is possible that the client may reimburse something that should actually be treated as a taxable benefit. 2. During an audit, the employee may be required to justify why payments they received from a foreign entity are not income. 3. The tax authorities may become alerted to the client having business activities in the country.