Skip to content
IT Ukraine Association
Eng/Укр
  • About the Association
    • About us
    • Our benefits
    • Events calendar
    • Ambassadors of the Association
    • Annual Reports
    • Testimonials
  • Areas of work
    • IT Industry Development & Advocacy Center
    • IT Ukraine Global
    • Companies Sourcing
  • The Association’s Committees
    • The AgriTech Committee
    • The CyberTech Committee
    • The FinTech Committee
    • The EdTech Committee
    • The AI Committee
  • Projects
  • Research
  • Partners & members
    • IT companies
    • Partners
  • Latest news
    • Association’s news
    • Industry News
    • Blogs
IT Ukraine Association
IT Ukraine Association
Eng / Укр
Eng/Укр
Join ITU
  • About the Association
    • About us
    • Our benefits
    • Events calendar
    • Ambassadors of the Association
    • Annual Reports
    • Testimonials
  • Areas of work
    • IT Industry Development & Advocacy Center
    • IT Ukraine Global
    • Companies Sourcing
  • The Association’s Committees
    • The AgriTech Committee
    • The CyberTech Committee
    • The FinTech Committee
    • The EdTech Committee
    • The AI Committee
  • Projects
  • Research
  • Partners & members
    • IT companies
    • Partners
  • Latest news
    • Association’s news
    • Industry News
    • Blogs
Home
/
Blogs
/
Five Legal Mistakes Tech Companies Make When Hiring and Operating in Latin America

Five Legal Mistakes Tech Companies Make When Hiring and Operating in Latin America

Publication date:

  • 10.09.2026

Publication from:

Gilda Orozco, Senior Legal Adviser at Alcor

LATAM is a major talent opportunity, but it is not a single market. Mexico alone has roughly 132 million people, about 40% more than Ukraine, Poland and Romania combined. The most common error is treating the region as one jurisdiction and replicating a hiring model that worked in the US or Europe. Rules vary materially from country to country.

 

Treating a contractor agreement as enough to create a contractor relationship

 

A well-drafted agreement stating the specialist is independent does not eliminate misclassification risk if the relationship operates otherwise. What matters is independence, schedule, supervision, payment structure and proper invoicing. Some jurisdictions go further than the European multi-factor test: Brazil treats control exercised through digital tools as equivalent to in-person supervision, and Mexico and Colombia apply a statutory presumption of employment once personal services are provided. Accordingly, a sustainable model needs three things: accurate documentation, day-to-day management consistent with that documentation, and ongoing monitoring as the engagement evolves.

 

Building a local team without assessing permanent establishment risk

 

“No subsidiary/local office means no taxable presence” is not always true. Depending on domestic law and the applicable treaty, local activity carried out by contractors or other personnel can create a PE. Service PE provisions commonly trigger after 183 days in a 12-month period, and some treaties like the UK–Peru Convention, for example, allows the aggregation of connected activity by closely related enterprises. Companies should track service days, not only payments, and assess exposure at enterprise level rather than per individual.

 

Budgeting the payment instead of the real cost of the engagement

 

Annual cost is rarely twelve times the monthly figure. Colombia’s cesantías plus the 13th-month payment can bring theyear to 14 monthly salaries before employer taxes; Mexico has mandatory profit sharing (PTU) and Chile its gratificación legal regime. Companies should add social security, vacation-related payments, termination exposure, withholding taxes, VAT, and municipal taxes such as Colombia’s ICA. Treaty coverage differs by country pair and cannot be assumed regionally.

 

Assuming your standard IP clause works everywhere

 

The US “work made for hire” concept does not translate one-to-one into LATAM civil-law copyright systems, where authorship stays with the individual and moral rights are strongly protected. In Mexico, ordinary works created under employment default to a 50/50 split of economic rights, while software created by employees generally belongs to the employer; protections that should not be assumed to extend to B2B engagements. Colombia presumes transfer of the economic rights needed for the client’s ordinary activities under a written contract. Choosing foreign governing law does not displace the territorial copyright rules where protection is claimed. In 2025 Mexico’s Supreme Court confirmed that authorship requires human creation, which matters for AI-assisted development and chain of title.

 

Treating data protection as a global policy plus a translated privacy notice

 

GDPR compliance is a starting point, not a finished program. Colombia emphasizes prior, express and informed authorization, and its authority has confirmed that accepting a privacy policy is not equivalent to that authorization; certain companies must also register databases in the RNBD. Mexico’s 2025 private-sector law prescribes the content and delivery of privacy notices and ARCO procedures. Brazil’s LGPD has its own legal bases and extraterritorial reach. 

 

This is acute in hiring, where CVs, ID and banking data, background checks and biometrics are routinely transferred to global HR platforms.

 

Regulators do reach foreign entities; for example, Peru sanctioned Google LLC, and Brazil’s ANPD ordered Meta to suspend the use of personal data for generative-AI training.

 

So, should companies hire in LATAM? Absolutely. Excellent teams can be built and scaled across the region. The point is to avoid copying one market’s model into another. Before entering a country: understand the local rules, structure the engagement correctly, calculate the real cost, protect your IP, and get proper advice. For companies that prefer not to build the full legal, payroll and tax infrastructure themselves, an experienced EOR or COR provider such as Alcor offers a practical route in.

 
 

To learn more, watch the recording of the ITU Legal Talks webinar with Gilda Orozco, Senior Legal Adviser at Alcor: “Five Legal Mistakes Tech Companies Make When Operating in Latin America”:

   
268
FacebookXLinkedInTelegramShare

See also:

tg_image_3514787283
IT Ukraine Association

How Ukrainian business is moving towards an AI economy

Artificial intelligence is already helping Ukrainian companies forecast electricity generation, analyse data, automate processes and cut costs. But to scale...

Read more
  • 12.10.2026
tg_image_2571279631
IT Ukraine Association

The digital hectare: how AI is transforming Ukrainian agriculture

Ukraine’s agricultural sector is moving from standalone digital tools to integrated solutions, where data becomes the foundation for production management....

Read more
  • 09.10.2026
tg_image_607642999
IT Ukraine Association

AI agents or the human touch: what will remain uniquely human?

At one company, AI agents already support employees throughout their journey, from recruitment to management decision-making. At another business, guests...

Read more
  • 09.10.2026
tg_image_1832530003
IT Ukraine Association

Ministry of Economy and Google: partnership in action

What can the government and global technology businesses create together? This was discussed at the Code of Economy conference in...

Read more
  • 08.10.2026
Subscribe to our updates
Contacts

Address: 04071, Kyiv,
str. Yaroslavska, 58 (Astarta
Organic Business Centre)

Phone:+38 099 266 39 03

E-mail:
hello@itukraine.org.ua

Address: 04071, Kyiv, str. Yaroslavska, 58 (Astarta
Organic Business Centre)

Phone:+38 099 266 39 03

E-mail:
hello@itukraine.org.ua

  • Facebook
  • LinkedIn
  • Instagram
  • YouTube
Share to...
BufferCopyEmailFacebookFlipboardHacker NewsLineLinkedInMessengerMixPinterestPrintRedditSMSTelegramTumblrXVKWhatsAppXingYummly