Payroll and Compliance Challenges When Paying LATAM Remote Workers

You found someone great in Colombia.

Or maybe Argentina. Or Brazil.

You’re excited. They’re talented, the rate works, and you’re ready to get started.

Then you think: “Wait, how do I actually pay them?”

That’s when things get interesting.

What Each Country Actually Requires

Every country down there has its own rules. There’s no “Latin America payroll system.”

Mexico

Requires you to register with IMSS (their social security) if you have employees. Employer contributions run 20-30% on top of salary. Contractors don’t need this, but they charge 16% VAT on their invoices.

Brazil

You’re looking at 20% FGTS (a severance fund) plus 8% INSS (social security) for employees. They have this system called eSocial where everything gets reported. Miss a filing and the penalties stack up fast.

And if you have someone working there for more than 183 days, you might trigger permanent establishment taxes—meaning your whole company could owe Brazilian corporate tax.

Argentina

Just updated their remote work law in 2024. Employer contributions hit around 27% total. The twist? If your worker is local, they can demand a hybrid arrangement.

And with inflation running at 200%+ recently, paying in pesos means constant adjustments.

Colombia

Passed a remote work law in 2021. Employer contributions are about 28.5%. They cap the workweek at 47 hours and they’re serious about overtime.

They also have a “right to disconnect” law. That means you can’t expect responses after hours without consequences.

Chile

Has modern remote work laws from 2023. Lower contribution rates (4-7%), but you’re required to reimburse equipment costs. They’re specific about what counts.

Peru

About 9% for social security. Monthly filings through their PLAME system. Less bureaucracy than Brazil, but you still need to get it right.

The pattern? Every country protects workers differently, and the costs add up beyond just salary.

The Currency Headache

This one surprises people.

You agree on a rate in dollars. Sounds straightforward. But then you’re paying someone in Argentina, and the peso loses 40% of its value in six months.

Do you adjust their pay? Do you stick to the dollar amount?

One employer shared, they paid an Argentine contractor directly in pesos for a year. The devaluation ate 40% of the value.

The worker asked for an adjustment. The employer switched to paying in dollars through Deel. Added a 12% fee, but everyone knew where they stood.

Venezuela is another level entirely. Hyperinflation makes normal payroll impossible. Most payment platforms don’t even work there. Workers typically ask for crypto or dollar transfers through specific channels.

Brazil has a better system now with PIX—instant local transfers. But you need a local bank account or a platform that integrates with it.

What Actually Triggers Permanent Establishment

This is the thing that can really hurt you.

Permanent establishment means your company is considered to have a taxable presence in that country. Suddenly you’re on the hook for corporate income tax at 25-35%.

The triggers:

• Having someone work there for more than 183 days in a year
• Maintaining any kind of office or fixed place of business
• Having too many workers in one location

Brazil is aggressive about this. Uruguay and Paraguay are more relaxed. But the risk is real everywhere.

One UK company grew their Brazilian contractor team to 15 people over two years. Never registered anything locally.

Tax authorities came knocking. They owed 27% corporate tax on all income attributed to those workers, plus penalties.

The workaround is to keep your team distributed across countries by hiring through country specific job platforms like HireTalent.LAT , or use an Employer of Record (EOR) that takes on the legal entity responsibility.

Cultural Stuff That You Must Consider

Latin American work culture values relationships.

Rushing into a contract without building some rapport can backfire. People want to know who they’re working for, not just what the job pays.

Work hours typically run 9-6 with a real lunch break. The old siesta culture is fading in cities, but don’t expect instant responses at 1 PM in Buenos Aires or Mexico City.

Communication style tends to be warmer and more personal than in the US or UK. A quick “how are you?” before jumping into tasks isn’t wasted time. It’s how trust gets built.

Student workers are common, especially from top universities like UNAM in Mexico, USP in Brazil, or UBA in Argentina. They’re talented and affordable, but expect flexibility around exam periods (typically February-June and September-January).

One employer mentioned hiring a freelancer from Uniandes in Colombia who was finishing a thesis.

They built in deadline buffers. Worked perfectly. Without that flexibility, the relationship would’ve been stressful for both sides.

What Actually Works

The companies and employers who do this successfully treat their Latin American workers like what they are: professionals in a different country with different laws.

Not “cheap alternatives.”

Not “virtual assistants” who should be grateful for the work.

Skilled people who deserve proper contracts, legal compliance, and fair treatment.

That mindset shift changes everything.

Use the right tools. Respect the local laws. Build in the cultural understanding. Budget for the real costs, not just the salary number.

Latin America has incredible talent. The timezone overlap with the US is perfect. The education systems in countries like Argentina, Chile, and Colombia produce great developers, designers, marketers, and support staff.

The payroll and compliance stuff is manageable once you understand it.

Just don’t wing it.