This content is from: Local Insights

Hiring foreign personnel in Peru

Liliana Tsuboyama Shiohama

Foreign investment has brought many executives from abroad to Peru. Beyond the specific requirements provided by law there are some issues that must be taken into account when hiring a foreign employee.

A foreign employee is authorised to work once he/she obtains a working visa. The whole process may take between six weeks and two months.

First the employment agreement must be approved by the Labor Authority. It is important to bear in mind that if the employment agreement is executed abroad, certain benefits granted by the employer in the contract will be not deemed as taxable income such as: (i) airfare tickets upon termination of the employment relationship; (ii) nourishment and housing expenses incurred during the first three months of residence in the country; (iii) annual airfare tickets during vacation leave to the employee’s country of origin; and (iv) moving expenses of household goods upon termination of the employment agreement.

If the employment agreement is executed within the country, the foreign individual must have a business visa or a special authorisation for signing contracts issued by the Migration Office.

For the approval of the employment agreement, a work certificate or a diploma professional degree of the foreign individual may be required. Documents issued by foreign authorities must be apostilled or legalised by the corresponding Peruvian Consulate.

Contracts entered into with foreign employees are fixed term agreements. The term of the agreements may not exceed three years. They can, however, be extended for equal or shorter terms. Before establishing the term of the agreement, it should be considered that the indemnity for anticipated termination of the employment is equivalent to one-and-a-half-times the monthly salary per month due to the expiration term of the agreement, with a maximum of 12-times the monthly salary.

Once the employment agreement is approved by the Labor Authority, the foreign employee may apply for the working visa which can be temporary – less than one year – or permanent. If it is permanent it must be extended every year.

Foreign citizens may enter the country with a tourist visa and change their migratory status (resident visa) within the country. However it is advisable for foreign individuals to come with a business visa.

Foreign citizens are usually considered non-domiciled taxpayers. Their income is therefore subject to a flat rate of 30% for the first fiscal year. If the foreign citizen has stayed in the country for more than 183 calendar days within 12 months, he or she may require his or her employer to be treated as a domiciled taxpayer for the following fiscal year.

Liliana Tsuboyama Shiohama

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