A U.S. company has four realistic options when it decides it wants a Brazilian contractor permanently: keep the contract and change its terms, employ the person through an employer of record, open a Brazilian entity, or sponsor a visa and relocate them. There is no fifth option where a U.S. company puts someone living in Brazil on U.S. payroll as a W-2 employee. That structure does not exist, and assuming it does derails most of these conversations in week one.
The question tends to arrive around month six: the engineer turned out to be excellent, and "contractor" starts to sound temporary attached to someone you do not want to lose. The instinct is right; the conclusion it jumps to — convert them — often is not.
What are you actually trying to fix?
Three different problems hide behind "I want to hire them properly," and they have different answers.
- Retention. You are worried they will leave. Real, and almost never solved by the employment structure.
- Control. You want exclusivity, a longer horizon, or the ability to move them between projects. That is contract language, not employment law.
- Policy. Legal, security or finance has a rule about contractors — a SOC 2 control, a customer-agreement clause, a board preference. Often the real driver, and the one nobody states.
Only the third reliably requires a structural change. The first two are cheaper to fix inside the arrangement you already have.
What does each option cost, and how long does it take?
| Option | Who employs them | Extra cost | Time to stand up | Main trade-off |
|---|---|---|---|---|
| Keep the contract | Their own company, or your supplier | None beyond the rate | Already done | No employment relationship to point at |
| Employer of record | The EOR, as a Brazilian employee | Typically $500–700 per person monthly, plus statutory employer costs | Two to four weeks | You inherit Brazilian employment terms, severance included |
| Your own Brazilian entity | Your subsidiary | Incorporation, then monthly accounting and payroll | Months | A permanent obligation for one or two people |
| U.S. visa and relocation | You, in the United States | Counsel, filing fees, relocation, a U.S. salary | Months to years, largely outside your control | Category availability, timing, their willingness to move |
That cost column carries a trap: a flat contractor rate and a salary are not the same kind of number. A senior engineer contracted through a studio is one invoice — $4,900 a month at our published rate, with nothing underneath it. A Brazilian salary sits under a stack of statutory items: a thirteenth salary, vacation with a one-third bonus, FGTS deposits, notice protections. Get the loaded figure from the EOR in writing before comparing.
Option 1: Does keeping the contract lose you anything?
Start here, because it is the option people skip and it solves more than they expect. Most of what a buyer wants from "employee" can be written into a services contract: a minimum term, exclusivity, symmetrical notice, an annual rate review, defined time off, IP assignment that survives the engagement. What you do not get is the offer letter, the equity grant, the badge — which matters to some engineers and not at all to others, so ask rather than assume.
The caution here is misclassification. Contract the individual directly, set their hours, supervise them like a manager and take their whole working week for two years, and a Brazilian labour court can look past the contract at the substance of the relationship. The exposure depends on who signed what, which the piece on PJ contractors covers properly. Where a studio contracts the engineer and you hold a business-to-business services agreement, that relationship is not yours.
Option 2: What does an employer of record actually change?
An EOR legally employs the person in Brazil on your behalf while they work day to day for you. It removes the misclassification question and gives the engineer a Brazilian employment contract with the statutory entitlements, for a market range of $500 to $700 per person per month on top of salary, with setup in two to four weeks. The definition page covers what an EOR is and what it is not: it does not find or screen anyone, so it solves employment, not hiring.
Two things surprise buyers. Converting usually costs more, not less, once loaded salary and the EOR fee are added. And you acquire Brazilian termination rules along with the employee — the entire point, and also the opposite of the thirty-day exit that made nearshore attractive in the first place. The side-by-side comparison runs both structures row by row.
Option 3: When is your own Brazilian entity worth it?
Almost never for one person, occasionally for ten. Incorporating means a registered company, a legal representative resident in Brazil, local accounting, payroll, and tax filings that continue every month whether or not anyone is employed. The obligation does not end when the engineer does.
The test is headcount and horizon. If a Brazilian engineering office is in your five-year plan, the entity is the destination and an EOR is the bridge. If your plan has one engineer you like, the entity is a permanent cost created to solve a temporary feeling. Get a quote from a Brazilian accounting firm first: setup is the small part, recurring compliance is what gets underestimated.
Option 4: What does relocating them to the U.S. involve?
This is the only option that makes them your employee in the ordinary sense, and the slowest. Four things to know before raising it with the engineer:
- TN does not apply. That category comes from the North American trade agreement and covers Canadian and Mexican citizens. A Brazilian engineer is not eligible.
- The cap-subject H-1B is a lottery. An annual registration window, selection by chance rather than merit, and a new selection cannot start work until the following October. Plan on a start date more than a year out, and on the possibility that it never comes.
- L-1 presumes an entity you may not have. Intracompany transfer requires a qualifying foreign affiliate and roughly a year of prior employment there. With no Brazilian entity, this route starts with option three.
- O-1 is uncapped but narrow. It turns on documented extraordinary ability — publications, awards, press, judging, significant roles. Excellent engineers routinely do not qualify, and that is no verdict on their work.
Permanent residence is a multi-year process on top of any of these. None of this is legal advice; immigration counsel will answer your facts better in one call than any article can. The point of knowing the shape: do not promise a timeline you do not control.
Would the engineer even say yes?
The step most buyers skip. At the senior end of the Brazilian market, engineers commonly invoice through their own company under a simplified tax regime, and the effective burden on that income is materially lower than personal income tax on the equivalent salary. A formal employment offer is often a net pay cut wearing the clothes of a promotion.
Relocation has its own arithmetic. A U.S. salary buys less than it looks like once housing and health insurance are priced in, and moving a family across a hemisphere is a life decision, not a compensation one. Ask before building a plan that depends on a yes.
Which clause should you read first?
If the engineer came through a vendor, read the conversion language in your agreement before talking to anyone else. Buy-out fees are common across staffing, usually a lump sum or a multiple of monthly billing, and some agreements carry non-solicitation terms that survive termination. Nothing improper about either, but finding one mid-negotiation is worse than finding it now. Ask for the clause in writing, and ask what happens if the engineer resigns and approaches you directly.
For reference from the other side: engagements through HireBrazilDevs are month to month with thirty days notice either way, at a flat all-inclusive rate with no recruiting fee.
A short decision path
- Name the problem — retention, control, or policy. If it is one of the first two, fix the contract and stop.
- If it is policy, get the loaded monthly cost of EOR employment in writing and compare it with today's invoice.
- Read your vendor agreement for conversion and non-solicitation terms.
- Ask the engineer what they want, in net pay rather than gross.
Deciding that nothing should change is a legitimate outcome, not a failure to act — and the practical side of keeping it that way is in the guide to paying Brazilian developers.