Under Brazilian Labor Law, awards or other benefits routinely granted to employees in addition to base salary may be considered fringe benefits. In such cases, the total amount of the employee’s earnings, including fringe benefits, must be included in income for payroll purposes.
In prior years, the Brazilian Labor Courts (Courts) decided that housing and car allowances granted to employees, as well as to foreign individuals working in Brazil, are fringe benefits and should be included in income for payroll purposes (Súmula 367). However, the Courts' precedent, Súmula 367, provided an exception for situations where the car and/or housing allowance is necessary for the performance of work. In such instances, Súmula 367 provides that car and housing allowances paid to employees when essential for the performance of work are not in the nature of a salary. Two recent Court decisions have extended this exception to work performed offshore.