How do you engage contractors in Cape Verde in 2026?

The Cape Verde Labour Code defines an employment contract plainly: an agreement by which a person undertakes to perform intellectual or manual work for another, under that person's authority and direction, in return for pay [art. 26, Código Laboral]. The dividing line is that authority and direction, the control over how the work is done. Carry it, and the relationship is employment.

The Code then sets out indicators that trigger a presumption of employment. The presence of these facts means the law assumes an employment contract, and the engaging party has to prove otherwise [art. 33, Código Laboral]. The named indicators are:

• Continuous, regular presence at the company, its premises, a branch, or another site the employer controls, in a way that suggests the person is at the employer's service.
• Dealing with the employer's clients to offer the employer's goods or services, receive documents, obtain signatures, fill in forms, or otherwise serve the employer's interests.
• Knowledge of facts the person could only have within an employment relationship.

One point catches buyers used to other markets. A service contract that in substance creates economic dependence of one person on another is treated as an employment contract for the purposes of the Code, even where personal subordination is weak [Código Laboral]. Economic dependence on a single client is enough to pull the arrangement under employment-law protection.

Cape Verde gives you a way to remove guesswork on tax treatment before you start. A binding advance ruling, the informação vinculativa, is requested in writing by the interested party or their legal representative from the Director-Geral das Contribuições e Impostos, with the facts whose legal-tax qualification you want confirmed [art. 57, Código Geral Tributário]. Once the ruling is given, the tax administration cannot act differently from it, except under a court order. That gives an engaging company a way to fix the tax treatment of an arrangement in advance.

This is the part that catches companies out. In Cape Verde the bill for misclassification is built from layers, and it runs backwards rather than capping at a fixed sum.

Back social security to INPS. Where the breach of a social-security duty causes economic harm to INPS, the Labour Code fines it up to the equivalent of the harm caused, so the fine is tied to the unpaid contributions [art. 405, Código Laboral]. The underlying contributions stay due. INPS adds late-payment interest (juros de mora) plus a fine (coima) for each month of breach [INPS obrigações]. A reclassified worker is treated under the general regime, where the total monthly contribution is 23 percent of pay, against the 19.5 percent a genuine contractor pays on their own account.

The two prescription windows. Worker credits from the employment contract prescribe over 5 years from the end of the contract [art. 6, Código Laboral]. Tax obligations prescribe over the longer window of 10 years [art. 51, Código Geral Tributário]. A multi-year engagement can sit inside both.

A clean Cape Verde contractor engagement follows a simple sequence, set out in the steps below. Read the planned arrangement against the employment indicators first. If it leans toward employment, treat it as employment from the start rather than dress it up as a service contract.

When EOR is the safer route than a contractor

Use an Employer of Record when the engagement is employment in substance: full-time or long-term work, a person who keeps a continuous presence at your site, deals with your clients on your behalf, takes direction on how and when to work, or earns most of their income from you. Those are the named presumption indicators. Engaging the person as an employee through an EOR removes the classification question completely. Teamed becomes the legal employer in Cape Verde, runs payroll and INPS contributions correctly from day one, and you direct the work. The same starting rate of from $599 per employee per month applies, with statutory employer cost passed through at cost and zero FX mark-up.

1. Assess the status before you sign

   Hold the planned arrangement against the employment indicators: continuous presence at your site, dealing with your clients, knowledge only an employee would have, and economic dependence on you alone. If it leans toward employment, stop and treat it as employment [art. 33, Código Laboral].

2. Request the binding tax ruling where it is close

   For any engagement you are unsure about, ask the Director-Geral das Contribuições e Impostos in writing for an informação vinculativa on the tax qualification. A binding answer in advance is far cheaper than a reassessment later [art. 57, Código Geral Tributário].

3. Contract for a result, not a routine

   Define deliverables or an outcome. Avoid requiring a continuous, regular presence at your premises, dealing with your clients on your behalf, or day-to-day direction. A contract that describes managed, on-site, integrated work is itself evidence of employment.

4. Keep the contractor independent in practice

   Let them use their own method and equipment, set their own schedule, and keep serving other clients. The reality has to match the contract, because the presumption is triggered by the facts, not the title.

5. Pay against invoices

   The contractor issues an invoice and you pay it. You do not run them through payroll or withhold their tax. They handle their own income tax, their own IVA, and their own self-employed INPS at 19.5 percent.

6. Keep the evidence

   Hold the contract, the invoices, any binding ruling, and the record of how the work actually ran. If the Inspecção-Geral do Trabalho ever asks, that file is your defence against the employment presumption.

Classification asks whether the working arrangement was employment under authority and direction. If you take a contractor who already looked like an employee and put them onto an EOR, you make the employment explicit. The Cape Verde authorities can read that as evidence the relationship was employment from the start, which is the finding you were trying to avoid.

And it does nothing for the past. Worker credits still prescribe over 5 years [art. 6, Código Laboral], and tax obligations over 10 years [art. 51, Código Geral Tributário]. Switching someone to employment today does not erase the months or years they were treated as a contractor.

VAT is separate from the classification question, but buyers ask, so here is the short version. A self-employed contractor generally charges IVA at the standard rate of 15 percent and shows it on the invoice [art. 17, Regulamento do IVA]. Smaller contractors qualify for the exemption regime, charging no VAT, where their taxable base in the prior calendar year did not exceed CVE 180,000 and they are not in import, export, or connected activity [art. 47, Regulamento do IVA].

The IVA Regulamento sets no withholding mechanism on a contractor's service invoices: you pay the invoice, and the contractor accounts for their own VAT and income tax. On the social-security side, a genuine self-employed contractor pays INPS at 19.5 percent on their own account, and an employer registering a new worker must notify INPS within 15 days of the work starting [INPS obrigações].