New Bilateral Treaty on Social Security between Brazil and Mozambique

The Federative Republic of Brazil and the Republic of Mozambique entered into an International Treaty on Social Security. The Treaty was named  Social Security Agreement (the “Agreement”) and executed on May 11, 2017.

The main purpose of the Agreement is to protect the benefits of expatriates who divide their working careers between the two signatory countries, as well as to avoid situations in which workers or employers are required to pay Social Security contributions to both of the countries on the same earnings.

The Agreement follows another recently signed bilateral Treaty between Brazil and Mozambique named “Cooperation and Investment Facilitation Agreement – ACFI”.

The ACFI Treaty aimed to promote the internationalization of companies between Brazil and Mozambique, by offering greater security for investors in both the signatory countries.

The signatures of both Treaties reflect the exponential growth of relationship between the Latin American country and the African country over the last decade, both through trade and through investments. The two countries are the most populous among the Portuguese-speaking countries and, according to the World Bank, had a combined GDP (PPP) of approximately US$ 3.2 trillion in 2016.

In relation to Mozambique, Brazilian investments (executed or planned) exceed US $ 9.5 billion, according to the Brazilian Government. The destination of these investments are generally associated with the following sectors: mining, construction & engineering, energy, water resources, agriculture and services. These expressive figures placed Brazil among the main sources of foreign investment for the Mozambican economy in the last years.

Pursuant to the Social Security Agreement, the workers will be subject, as a general rule, to the Social Security legislation of the country in which they carry out their labor activities; particularly in relation to the following benefits: (i) disability retirement; (ii) old-age retirement; (iii) death pension; and (iv) sickness aid, provided that the conditions set out in the Agreement are met. As an exception, a worker who is temporarily assigned from his country of origin to the other, will remain subject to the Social Security legislation of his country of origin (and not to the relevant legislation of the host country) for a period up to 24 months, extendable for the same period if authorized by the competent authority of the country of destination.

The Agreement must still be submitted to both National Congresses to be ratified and then published in the respective Official Gazettes. However, the Agreement provides that any period of contribution completed before its entry into force will be considered in determining entitlement to the benefits recognized under the terms of the Agreement.

Article by Paulo Rage, Partner of Mayer Brown and Director of Brazil-Mozambique Chamber of Commerce – CCIABM.

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