Payroll processes are different in every country, from tax laws to severance funds. When you expand internationally, you need a plan for managing payroll — and you’ll also need to consider the regulations you need to meet to operate legally. At Globalization Partners, we offer payroll outsourcing to take the guesswork out of your global employees’ paychecks.
Taxation Rules in Venezuela
Venezuela has a progressive income tax based on gross salary. The first tax bracket for residents is 6%, and the highest rate is 34%. Non-residents pay 34% regardless of their income.
Employers are responsible for withholding social security tax from employees’ monthly pay, ranging between 13% and 15%. The employee always contributes 4%, and the employer contributes 9 to 11%. The social security tax covers all health and retirement funding.
Other mandatory contributions include:
- Employment Benefit Regime: Employer – 2%, Employee – 0.5%
- Housing Regime: Employer – 2%, Employee – 1%
- Employee Training (INCES): Employer – 2%, Employee – 0.5%
- Workplace Prevention, Conditions and Environment (LOPCYMAT): Employer – 0.75 to 10%
Venezuela Payroll Options for Companies
When you set up payroll, you have a few options for management. It would be best if you looked at your resources to decide which method works well for you. Options include:
- Internal: If you set up a subsidiary in the country, you can create an internal payroll department. This option takes time and money to establish, and if your team faces any issues with compliance, your company will be liable.
- Payroll processing company: You can use a subsidiary to work with a payroll company within the country. While this approach takes less time and money, your company is still liable for legal concerns.
- Remote: If you don’t have the resources to set up a subsidiary, you can manage your international payroll with your paychecks at home. This method is accessible, but you run the risk of confusing employment laws and running into noncompliance.
- Global PEO: When you work with Globalization Partners, we hire your team through our subsidiary and put them on our payroll. You give us all the compliance risk, and we ensure all payroll concerns are timely and legal.
How to Set Up a Payroll in Venezuela
If you choose to set up a subsidiary in Venezuela before handling payroll, you need to register with various departments and earn permits and licenses. This process can be lengthy, especially when you include building an office and setting up a bank account.
Regardless of whether you own a subsidiary or not, you’ll need to register your employees with the Instituto Venezolano de los Seguros Sociales. This department is the country’s social security office, and it will allow you to deduct social security tax from your employees’ paychecks. When they’re registered with this department, they receive financial support for sick days, parental leave, and retirement.
Venezuela has two termination concepts — Job Stability and Bar Against Dismissal. All employees have a right to these titles. If an employer tries to terminate an employee, they must have a labor judge confirm their dismissal. Bar Against Dismissal allows employees to contest terminations and earn reinstatement if they were incorrect or inappropriate.
Entitlement comes from the guaranteed severance packages initiated upon employment. Employees contribute 15 days of salary to the severance fund every quarter. After the first year, the employer contributes two extra days of pay every year until they accumulate 30 days.
When an employer terminates a worker, they must provide 30 days of salary per year of service or per portion greater than six months. The employee has a right to earn the greater of those two options.
Payroll Processing Company in Venezuela
Globalization Partners will handle the ins and outs of payroll so you don’t have to. Learn more about what we can do for you by reaching out to us today.