What global businesses need to know about payroll in Venezuela
Venezuela’s economy has been in a state of turbulence for more than a decade now. Its spell of hyperinflation from around 2018 – when it reached 80,000% at one stage – has subsided, but inflation still measures over 70% as of 2025, making financial planning difficult.
It has also had an enormous impact on the population of just over 28 million. In February 2024, the United Nations found that over 80% of Venezuelans were living in poverty, and more than half of the population found it difficult even to buy basic food items. Unemployment and corruption were also major issues, and the large quantities of oil that Venezuela produces and exports around the world did not generate any kind of economic prosperity for the country as a whole.
If you are considering an expansion into Venezuela, it’s important to proceed with extreme caution. This guide covers the latest information on payroll and employment regulations, but make sure to check for updates on a regular basis. You should also track exchange rates between the new Venezuelan bolivar (VES) and other major global currencies extremely closely, as these are likely to change almost continuously.
Getting Started
There are a lot of rules that businesses need to follow in Venezuela that aren’t necessarily standard in other countries. For example, a company’s articles of association must be published in the newspaper prior to commencing operations. However, foreign ownership of businesses, including foreign directors, are permitted for both private and public limited companies (LLCs and PLCs). The minimum share capital for an LLC is US$400.
To get started, companies can visit the Commercial Registry to find and reserve a company name. All companies will need to have an in-country bank account, which can be set up in one business day. Company documents must be prepared by a lawyer before submission.
Businesses must register with a number of different institutions and undergo inspections for employment safety (e.g., fire, health, etc.). Some of the major organizations involved are Social Security, the Ministry of Labor, the National Institute of Socialist Cooperation & Education, and the National Bank of Housing and Habitat. There are also a range of licenses that you may need to apply for, depending on your sector, such as construction, tourism, retail, import/export and financial services, as well as local business licenses and zoning permits.
With so many things to apply for, business registration in Venezuela can be complicated and take several months, so working with local expertise is important.
Employment Considerations
Employment contracts are required in Venezuela, but they can be oral if both employer and employee agree to it. Collective bargaining is allowed in Venezuela, and unions are commonly seen in larger industries, such as oil or steel. However, it is important to note that collectively agreed demands are not always supported by the government.
The standard working week in Venezuela is 40 hours, spread across five shifts of eight hours each. For employees under 18, these limits are reduced to 30 hours per week and six hours per day. Supervisors and managers are often exempt from these limits, as long as they don’t average more than 40 hours a week; never work more than 11 hours a day; and get two consecutive days of paid time off each week. Overtime is normally paid at 150% of salary, but this can be varied by collective bargaining or contractual negotiation.
There are no statutory requirements around probation periods or notice periods, and these should be negotiated and agreed in employment contracts. However, most employees can be dismissed without notice or justification within the first 30 days of their employment, which makes this a kind of probationary period by default.
Compensation, Bonuses and Severance
After dramatic increases in recent years, the minimum wage rate in Venezuela has remained stable recently. At the time of writing, the rate of VES 130 a month (approx. £1.60; $2.00; €1.90) that was introduced in 2022 remains in place. However, as with any finance-related issues in Venezuela at present, further changes cannot be ruled out.
As with most Latin American countries, it is mandatory to pay a 13th-month salary bonus known as the Aguinaldo. Generally speaking, this is paid at the end of the year, but political developments should be watched closely – for example, in 2024, President Maduro moved Christmas forward to October 1, which brought some of the payment dates forward as a result.
Severance pay depends on the amount that employees and employers have paid into a severance fund. The terms of this severance fund are agreed in employment contracts.
Tax and Social Security
Income tax is levied progressively in Venezuela. As of March 2025, the first VES 9000 earned per year (approx. £110; $140; €130) is taxed at 6%, the first of eight bandings. The highest of 34% is applied to all earnings over VES 54,000 per year (approx. £650; $840; €770).
Corporation tax is levied at 15% on the first VES 18,000 (approx. £220; $280; €260) of profits, 22% on the next VES 9,000, and 34% thereafter. VAT rates can vary between 8% and 16.5%, and are reviewed on an annual basis – as of 2025, the general rate is 16%.
Corporation tax is levied at 15% on the first VES 18,000 (approx. £220; $280; €260) of profits, 22% on the next VES 9,000, and 34% thereafter. VAT rates can vary between 8% and 16.5%, and are reviewed on an annual basis – as of 2025, the general rate is 16%.
There are five main social security contributions in Venezuela:
- Social security: 9%-11% employer, 4% employee
- Employment benefit: 2% employer, 0.5% employee
- Employment benefit: 2% employer, 0.5% employee
- Employee training: 2% employer, 0.5% employee
- Workplace accident prevention: 0.75%-10% employer (according to risk)
Holidays and Leave
Leave entitlement in Venezuela is relatively generous. It starts at 15 days after one completed year of service, but employees accrue one further day each year, up to a maximum of 30. There are 14 days of public holidays each year, although holidays that fall at the weekend don’t normally generate a day off in lieu.
Sick leave can run for as much as a year. For the first three days of a medically certified absence, employers must cover the employee’s full salary. From day four onwards, social security covers two-thirds of the total, with employers liable for the remaining third.
Maternity leave is 26 weeks, starting six weeks before the due date. Social security covers maternity pay at 66.6% of the normal salary. Paid paternity leave is two weeks at full salary, also covered by social security.
Paid leave entitlement also extends to weddings (three days), family bereavement (two days), and when studying or on military service.
In Summary
As this guide demonstrates, any expansion into Venezuela needs to be planned incredibly carefully, in order to deal with the effects of hyperinflation and the prospect of further changes in legislation. In this country more than most, the value of local expertise to help you stay on the right side of compliance is enormous. Working with a global payroll partner can help you access that essential Venezuelan know-how.
This article is for informational purposes only and not intended to convey or constitute legal or any other advice. It is not a substitute for advice from a qualified professional. Click here to see more country payroll guides from CloudPay.