BRINGING YOUR BUSINESS TO BRAZIL
Although Brazil is classified as the third most complex business environment in the world, it is still an attractive destination for companies that wish to invest or expand their businesses in South America. Furthermore, the Brazilian government has recently implemented new legislation with the aim of simplifying bureaucracy for foreign companies.
It is worth noting that certain sectors do not allow the participation of foreigners in the company’s share capital; for example, financial institutions, radio and television broadcasters, airlines with domestic flight concessions, among others. In any case, this article aims to provide a step-by-step guide on how a person or foreign company can incorporate in Brazil.
1. Appointment of a Legal Representative and an Administrator
Brazilian law requires that, when holding a stake in a company in Brazil, a non-resident must appoint a legal representative (attorney), a natural person who is a resident in Brazil. Thus, this person must be Brazilian or hold a residence visa in Brazil.
The same requirement applies to the person who will be designated as administrator (in the case of a Limited Liability Company) or director (in the case of a corporation) of the Brazilian company.
If you do not know anyone under these conditions, some companies offer this type of service. If you need more information, please contact us.
2. Registration with the Federal Revenue Service
Registration with the Federal Revenue Service is necessary so that non-residents can possess certain assets or rights in the country. For companies, this registration is called CNPJ (National Register of Legal Entities), while for individuals it is the CPF (Individual Taxpayer Registry), which functions as a tax identification number.
The registration process is simple and quick. The Federal Revenue Service requests documents from the foreign company, a power of attorney, and the documents of the appointed legal representative.
The Central Bank of Brazil monitors and regulates the foreign exchange transactions that move money into or out of the country.
3. Registration of Foreign Documents
Brazilian law requires that, for foreign documents to be valid in Brazil, they must be apostilled, translated by a sworn translator, and registered with a notary. If the country of origin of the documents is not a signatory of the Hague Convention, it will be necessary for the documents to be notarized and then consularized. After registration with a Brazilian notary, the documents can be registered with the competent Commercial Registry.
4. Choosing the Type of Company and Registering the Corporate Documents
The Brazilian Civil Code provides for different types of companies, such as Corporations (S.A.), Limited Liability Companies (Ltda.), associations, among others. The most commonly used are Corporations (S.A.) and Limited Liability Companies (Ltda.). We can assist you in the selection, clarifying the advantages and disadvantages of each model. After the drafting and signing of the articles of incorporation, it must be registered with the local Commercial Registry. The registration process may take about fifteen days.
5. Transfer and Receipt of Funds
However, after the company has been incorporated, it will be necessary to register it, as well as the foreign partner, with the Central Bank of Brazil and to open a bank account at a bank of your choice.
Transfers of amounts equal to or greater than USD 100,000.00 (one hundred thousand dollars) must be registered with the Central Bank of Brazil within 30 days after the transfer, under penalty of a fine.
6. Other Important Aspects for Starting Operations
In addition to the previous steps, some other points should be considered:
a. Definition of the company’s address in Brazil: some cities offer tax benefits depending on the company’s activity.
b. Understanding the labor and tax opportunities and challenges involved in the Brazilian operation;
c. Additional registration after the company’s incorporation: after registration with the Commercial Registry, the company will need to be registered with the municipality (Municipal Registration), with the FGTS, and, depending on the activity carried out, also with the state (State Registration).
For more information on this subject, please contact us.
Created by Gabriela de Ávila Machado
