We are considering closing down one of our offices in Brazil, and moving some key resources to another office. We do not have an intra-Brazil relocation policy. Can we use our US domestic policy to move these individuals?
Dear Global Mobility Professional,
Great question! The short answer is no, you should never use your US domestic relocation policy to relocate employees or new hires from city to city, within other countries outside of the US.
Most US domestic relocation policies were designed to leverage US tax benefits related to home sale transactions. Also, in the US, many relocation-specific expenses are either not taxable or excludable according to US Internal Revenue Service guidelines, assuming the relocation meets certain parameters related to distance and time. Relocation-specific expenses in other countries will likely be taxed differently.
How you address the needs of your Brazilian employees with regard to their relocation packages should take into account how many people you are moving, their family status, the distance they are expected to move, and their willingness to relocate for their job. It is also important to recognize that due to cultural norms in Brazil, it may be more common to share personal information between employees, such as job offers, benefit packages, etc. So what you offer must be perceived as equitable for everyone. Finally, expect to negotiate. While things are slowly changing, it is less common in Latin America for people to sell their homes than it is in the US.
If you have an HR business partner in Brazil, engage them early in the process and ensure they are on board and willing to be an advocate for your plan.
Your relocation service provider can assist you in putting together a basic intra-Brazil relocation Letter of Understanding, which can either be delivered alone to the impacted employees, or attached as an exhibit to an offer letter.
TRC Global Mobility partners frequently with Premier Destination Services for on-the-ground mobility solutions in Brazil. Here are some best practices Premier has provided for intra-Brazil relocation benefits, to be incorporated into a Letter of Understanding:
Relocation allowance: Subject to company discretion; often calculated as a percent of base salary and paid upon signing the relocation letter of understanding.
Home Search: Two or three day accompanied trip for the employee and spouse only (travel, hotel, car rental and reasonable meals).
Transportation of household goods: This includes packing, loading, transportation and unpacking, as well as 30-60 days of storage in between homes as necessary.
Car: Includes the shipment of vehicles (a maximum of two, and sometimes there is a mileage restriction).
Pet allowance: This is not commonly included by can be offered at the company’s discretion.
Interim living expenses: This normally covers 30 days at the host location.
Final Move: Includes final travel costs; i.e., a one-way airfare for all family members. Sometimes this has a mileage restriction as well (driving might be feasible for shorter distances).
Home sale: This includes the real estate commission plus closing costs.
Intra-country Move Supplement Fee: As per Brazilian labor law , Artigo 469, if the company transfers any employee to another state within Brazil and the work contract remains home-based, the employer must pay a work contract supplement (minimum of 25%). If the work contract moves with the employee to the new location then this does not apply.
If you would like more information on taxability of relocation expenses in Brazil, TRC recommends that you consult with your expatriate tax provider or internal corporate tax partner.
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