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Hiring in Cape verde
Cape Verde, officially known as the Republic of Cabo Verde, is an Island Country in Africa. Praia is the capital and the largest city of Cape Verde. Cape Verde’s economy relies heavily on it service sector, whereby commerce, transport and public services are the main contributors of the GDP. Its main trading partners are Portugal and Spain. Global PEO or Employer of Record (EOR) play a pivotal role in providing companies with services related to hiring employees, and ensuring compliance with Cape Verde’s legal and tax regulations. Employment regulations including probation, holidays and termination are covered by the Labor Code. The Labor Code stipulates that all employees are entitled to a minimum of 22 working days paid holiday per year. Cabo Verdean tax resident individuals are subject to income tax on a worldwide basis. Global PEO’s facilitate companies by ensuring compliance with the Labor Code and tax laws
statutory labor requirements
Probation Period
- In case of a non-fixed term employment agreement, the probation period can be extend up to six months if the functions to be performed imply technical complexity and responsibility and if such larger period of time is deemed necessary to evaluate the employee’s capacity to carry out the job.
- With employees performing management and/or senior functions a probation period up to twelve months can be agreed upon.
Annual Leave
- In general, all employees are entitled to a minimum of 22 working days paid holiday per year, though there are some exceptions to this general rule depending on the type of employment agreement.
Public Holidays
- New Year's Day (1st January)
- Democracy Day (13th January)
- Heroes' Day (in Cape Verde) (20th January)
- Carnival (25th February)
- Ash Wednesday (26th February)
- Labor Day (1st May)
- Children's Day (1st June)
- Cape Verde Independence Day (5th July)
- Assumption of Mary (15th August)
- All Saints' Day (1st November)
- Christmas Day (25th December)
Maternity Leave
- Female employees are entitled to take up to 60 consecutive days of initial parental leave where they are entitled to a subsidy equal to 80% of their remuneration.
Paternity Leave
- Male parents are entitled to parental leave equal to the mother in the event of the death of the mother or mental and physical incapacity of the mother and as long it remains.
Sick Leave
- Employees are entitled to a maximum of 30 days of absence from work due to illness, subject to issuance of a medical certificate.
- If illness lasts for more than 30 days, the employee shall be subject to an examination by the Health Board.
Work Hours
- The regular working time cannot exceed 8 hours per day or 44 hours per week.
Overtime
- A worker cannot perform more than 2 hours of overtime per day, and no more than 160 hours of overtime per year.
- In the case there is written consent from the worker, the annual limit can be increased to 300 hours per year.
- Overtime work shall be paid with a compensation not less than 50% than the regular remuneration.
Notice Period
- Depending on the length of service and on the type of agreement in force, prior notice should be given by the employee,
- The minimum notice period is 15 days and maximum is of 2 months
Severance
- Severance payments are calculated according to the seniority of the employee, the ground for dismissal and, if more favorable, the terms of the agreement.
- It should be noted that termination with just cause does not entitle the employee to a severance payment.
13th / 14th Month Pay
- No
- There is no evidence that there is a requirement to pay the 13th or the 14th month.
income tax
- Cabo Verdean tax resident individuals are subject to PIT on a worldwide basis (i.e. resident individuals are subject to tax on all income, regardless of whether it is earned within the Cabo Verdean territory or overseas).
- While taxpayers have the option to include Category A income in their annual tax return, it is mandatory to declare income from Category B (with organized accounting) and Category C.
- The tax rates applicable in the case of the declarative method and on unjustified net wealth increases are the following:
|
Taxable Income (CVE) |
Tax Rate (%) |
|
|
Over |
Not Over |
|
|
0 |
960,000 |
16.5 |
|
960,000 |
1,800,000 |
23.1 |
|
1,800,000 |
27.5 |
|
deductible expenses
Personal Deductions
- Taxpayers may deduct from their taxable income 10% of the following expenses, capped at CVE 25,000:
- Health expenses of the taxpayers and one’s dependents, with medical prescription.
- Alimony payments if determined by a court decision.
- Taxpayers may deduct from their taxable income 10% of the following expenses, capped at CVE 12,500:
- Rent expenses in respect of a tenant's duly substantiated permanent residence.
- Interest and repayment of capital on loans for acquisition, construction, or improvement of private residences.
- Education expenses of a dependent child with positive school evaluation.
- Tax benefits (donations):
- Donations made under the terms and conditions of the Tax Benefit Code, capped at CVE 20,000.
Personal Allowances
- Taxpayers may deduct from their taxable income CVE 5,000 for each dependent, ancestor, and dependent with disability, up to CVE 25,000.
|
Deductible Expenses |
|
|
Personal Deductions |
|
|
Personal Allowance |
|
immigration
- There are different types of visa for the following scenarios:
- Tourist-visa:
-
- For travelers, staying in Cape Verde for a few days or weeks.
-
- Usually valid up to one month, maximum validity up to three months.
- Temporary visa:
-
- For foreigners, coming because of a cultural, scientific or business travel and having a contract with a public or private organization in Cape Verde.
- For example: technicians, students, artists, scientists, athletes, professors, etc.
- The maximum duration of stay is 3 months (with a multiple entry) or 6 months (with a single entry).
- Residence-visa:
-
- with an extended validity up to six months for those, who want to settle in Cape Verde.
- Everyone, who files for an application, gets a permit of residence for 5 years.
|
Type of Visa/Permit |
Documentation |
Validity |
Eligibility |
|
Tourist Visa |
|
Maximum 3 months |
|
|
Temporary Visa |
|
3 to 6 months |
|
|
Residence Visa |
|
6 months |
|
value added tax
- The VAT system in Cabo Verde closely follows the European Union (EU) VAT system and is assessed at the standard rate of 15%.
- A special consumption tax is imposed at rates ranging from 10% to 150% on goods that are deemed superfluous, luxurious, or undesirable for economic, social, or environmental policy reasons.
|
VAT |
|
|
Standard Rate |
15% |
withholding tax
- Payments between resident companies are generally subject to withholding tax.
- The rates vary between 10% and 20%.
- The following types of income are subject to withholding tax, according to the table below:
|
Type of Income |
Rate |
|
Bank deposits interest, with the exception of emigrant deposits |
20% |
|
Dividends and other income derived from capital investment including shares in profits of companies, profits and capital gains anticipation |
10% |
|
Royalties |
20% |
|
Revenue from games gains, lotteries and betting |
15% |
termination
- Depending on the length of service and on the type of agreement in force, prior notice should be given by the employee,
- The minimum notice period is 15 days and maximum is of 2 months
- Only fixed term employment agreements can be terminated by the employer on notice.
- Termination can be mutually agreed upon between employer and employee at will and under the correct conditions.
- Severance payments are calculated according to the seniority of the employee, the ground for dismissal and, if more favorable, the terms of the agreement.
- It should be noted that termination with just cause does not entitle the employee to a severance payment.
statutory benefits
- These are mandatory benefits as postulated by law
- These include probationary period, annual leave, public holidays, sick leave, maternity leave, paternity leave, overtime pay, notice period, and severance pay
- Statutory benefits also include social security benefits
|
Statutory Benefits |
|
Probationary Period |
|
Annual Leave |
|
Public Holidays |
|
Maternity Leave |
|
Paternity Leave |
|
Sick Leave |
|
Overtime Pay |
|
Notice Period |
|
Severance Pay |
|
Social Security Benefits |
payments and invoicing
- As a rule, the tax year coincides with the calendar year (i.e. 1 January to 31 December).
- The deadline for filing the annual return is 31 March of the following year for taxpayers earning employment and pension income (Category A) who opt to do so (it is not mandatory to file a tax return in this case).
- Non-resident individuals do not have the option to file an annual PIT return.
- The tax assessment is made by the local tax office.
- In the remaining cases in which the declaration-based method is required, taxpayers must compute the tax due and file a tax return by 31 May of the following year.
- Where WHT is final, there is no further tax liability.
- Advance WHT is credited against the final tax liability.
- Any outstanding tax liability must be paid by 31 August of the year in which the return is due.
ease of doing business
- The ease of doing business index is an index created by Simeon Djankov, an economist at the Central and Eastern Europe sector of the World Bank Group.
- Higher rankings (a low numerical value) indicate better, usually simpler, regulations for businesses and stronger protections of property rights.
- According to the World Bank Cape Verde (Cabo Verde) ranked 137th in the World in 2019 in terms of ease of doing business.
employee accruals
| Christmas Bonus% | 0% |
| Christmas Bonus Over Vacations % | 0% |
| Severance per Year % | Employees are entitled to severance pay equal to one month's pay after completion of one year of employment (8.33% of annual salary) |
| Vacations % | In general, all employees are entitled to a minimum of 22 working days paid holiday per year (6.04% of annual salary) |
| Notice % | Employees are entitled to 30 days of notice period for one year of service or more (8.24%) |
| Christmas Bonus Over Notifications% | 0% |
| Vacations Plus% | 0% |
| Total percentage of Salary (yearly) | The total employment accruals as a percentage of salary per anum are equal to 22.61% |
employer accruals
Additional information (Country Accruals)
| Social security |
15.00% |
| Vacations |
6.03% |
| Description |
Coverage Private- and public-sector employees (including civil servants first employed after December 31, 2005); and certain business owners, cooperative employees, and self-employed persons.Special systems for civil servants (first employed before January 1, 2006), central bank employees, and municipal agents (first employed before January 1, 2008); and certain business own. |
Employer Accruals Additional information
| Employment Accruals | ||
| Annual Leave | In general, all employees are entitled to a minimum of 22 working days paid holiday per year | This equals 6.02% (22/365 days) of annual income |
| Maternity Leave | Female employees are entitled to take up to 60 consecutive days of initial parental leave where they are entitled to a subsidy equal to 80% of their remuneration. | This equals 80% of 16.4% of annual income |
| Sick Leave | Employees are entitled to a maximum of 30 days of absence from work due to illness, subject to issuance of a medical certificate. | This equals 8.22% (30/365 days) of annual income |
| Overtime | Overtime work shall be paid with a compensation not less than 50% than the regular remuneration. | Normal hourly rate is around 1275 CVE. Overtime is paid at an additional 637.5 CVE. |
| Severance | Severance payments are calculated according to the seniority of the employee, the ground for dismissal and, if more favorable, the terms of the agreement. | Subjective |
| Social Security | Social security contribution due by the employer is 15%. | This equals 15% of annual income |
