CLT vs PJ: Which Pays More? Calculate your Net Salary

CLT vs. PJ: How does each regime work?

In Brazil, the choice between the Consolidation of Labor Laws (CLT) and payment of services as a Legal Entity (PJ) goes far beyond the nominal comparison of salaries. CLT offers legal guarantees and mandatory benefits that add a significant amount to the gross salary, while the PJ model guarantees lower tax burden and more freedom to bill.

CLT Rules (2024 Tax Tables)

In CLT hiring, the employee bears social security (INSS) and withholding income tax (IRRF) deducted at source. In return, they are guaranteed by law:

Social Security (INSS): Progressive social security contribution of 7.5% to 14%, limited to the ceiling of $908.86 in 2024.
Withholding Income Tax (IRRF): Income tax deducted from the payroll with an effective progressive rate of 0% to 27.5%, considering a fixed deduction per dependent ($189.59).
Severance Fund (FGTS): The employer is required to deposit 8% of the salary amount into the employee's severance fund (FGTS) account, which yields 3% per annum + TR.
13th Salary and Vacation: Full 13th salary and one month of paid vacation leave with an additional 1/3 of the salary (constitutional third).

PJ Rules & Taxation

Working as a PJ means opening a company (usually a ME or MEI) and issuing invoices. Taxes vary according to the chosen regime:

MEI (Microentrepreneur): Extremely low and simplified monthly tax cost through DAS MEI (~$75.90 for services, including fixed social security (INSS)). There is a strict billing limit (currently $81,000 per year).
Simples Nacional: Framed in Annex III (common for intellectual services, software development, etc.), the initial taxation is 6% of the billing, progressing as the company bills more than $180,000 per year.
Profit Presumido: Consolidated tax burden of approximately 13.33% to 16.33% of the gross billing, recommended for companies that exceed the initial ranges of Simples Nacional or do not fit into MEI.

Frequently Asked Questions (FAQ)

Financially, the general market rule in Brazil is that the PJ amount should be 1.5 to 1.8 times the gross CLT salary to offset the loss of legal benefits (13th salary, paid vacation, severance fund (FGTS), health plan, termination fine, stability). If the PJ proposal is only slightly higher than the CLT, the CLT regime usually wins in the total annual calculation.

The PJ can contribute to Social Security by paying social security (INSS) voluntarily through the payment of Labor Fees from their company or as an Individual Contributor. The rate is commonly 11% (on the minimum wage) or 20% (on a defined labor fee amount). The most common and recommended approach is to use private pension or own investments to build independent retirement.

No. Professionals hired under the PJ regime do not have a signed work card and, therefore, do not accumulate a severance fund (FGTS) balance and are not eligible to receive unemployment insurance in case of contract termination. Therefore, maintaining a personal emergency reserve equivalent to 6 to 12 months of fixed expenses is essential for the PJ professional.

CLT vs PJ: The Real Cost-Benefit Comparison

CLT Regime

PJ Regime

CLT Composition (Monthly)

PJ Composition (Monthly)

Annual Gross/Net Income Comparison All-in

CLT vs. PJ: How does each regime work?

CLT Rules (2024 Tax Tables)

PJ Rules & Taxation

Frequently Asked Questions (FAQ)