Incorporating a Foreign Company in Brazil: Challenging, Yet Achievable
Brazil is known for many reasons, like the Amazon, Rio de Janeiro, the carnival, and the Samba. Home to over 200 million people, this nation has great potential for business. However, the challenges companies face in establishing their brand can be truly daunting. It’s even harder if you are an outsider and planning to extend your foreign company in Brazil. Having said this, Brazil is a multilingual country, and it’s now opening its doors for foreigners. There’s actually nothing to lose if you give it a try.
But before drafting anything, you need to consider the requirements you need to accomplish since you’re traversing the unknown land. In other words, you need to equip yourself with reliable legal and accounting support and knowledge. Hiring local experts is crucial especially in the early stages of a new business venture. This ensures that you comply with to local law and financial regulations. Eventually, you will avoid or minimize future complications.
Brazilian legislation may be somehow complicated and difficult to interpret for those who don’t fluently understand the native language. There’s good news though. At present, the government is pushing several legislative changes in relation to commercial and labor law which is important for businessmen and investors.
Basically, to incorporate an extension of a foreign company in Brazil, there are some basic requirements you need to meet and steps you have to accomplish. We will lay down some of these basic details to guarantee a smooth process in your journey.
The Process of Setting Up Foreign Branch Office
The steps you need to undertake in establishing a foreign company in Brazil are as follows:
- The company shareholders (minimum of 2) have to obtain their CNPJ (Cadastro Nacional da Pessoa Jurídica) for companies or CPF (Cadastro de Pessoas Físicas) for individuals. This is simply a local Brazilian tax identification number.
- You need to register this tax identification number before the central bank and the Federal Revenue of Brazil.
- The court will issue a Power of Attorney, appointing a Brazilian Legal Representative.
- Draft your company bylaws.
- Register your branch before the local Trade Board and other local establishments.
- Open a corporate bank account for your company.
- Register the social capital of your branch office with the Brazilian Central Bank System.
- Deposit the initial company capital into the Brazilian corporate bank account. This amount will depend on the Especial Secretary.
Appointment of a Prosecutor
You need to appoint a corporate and tax attorney or prosecutor to act as the company’s Legal Representative of your foreign firm. The individual may be either:
- A Brazilian citizen
- A foreign prosecutor with a permanent visa and fixed residence in Brazil
The prosecutor plays a significant role in the company, fulfilling both legal and fiscal responsibilities before the Brazilian authorities.
Once you have chosen your legal representative, you have to select someone who’s capable of administrating the company. Similarly, this person must also be a native Brazilian or have a permanent visa and a fixed residence in Brazil.
Legalization of Foreign Partners’ Documents
The Brazilian Consulate in your country of origin shall approve the original documents you produced there. Whoever conducts this step must be a diplomatic representative of Brazil.
Meanwhile, all documents issued in Brazil shall be legalized by the Ministry of Foreign Affairs – MRE (Itamaraty).
You have to take note that some Brazilian Government agencies or departments necessitate sworn translations by an official translator.
Company and Individual Registrations
As stated earlier, all companies created in Brazil must obtain an identification number or CNPJ. The Secretariat of the Federal Revenue of Brazil (Secretaria da Receita Federal) will issue this document.
You also need to register in the PEMP500 Of Cademp Sisbacen. The Central Bank will approve this document and send it to the Federal Revenue of Brazil. The FRB will then assign a number (CNPJ) and return it to the Central Bank.
Meanwhile, all foreign partners must attain the CPF to fully incorporate a foreign company in Brazil. You can fill out an online form on the Federal Revenue of Brazil website. Deliver the form along with copies of your personal documents to the Brazilian Consulate or Embassy.
Company statutes are vital for any business. You must draft this document based on all the legal standards obligated by the Brazilian law. These statutes include social reason or object, registered company address, corporate capital, management or administration, and further contractual clauses.
After finalizing these statutes, you must register them by the public authorities. This record allows the collection of taxes and duties by the Federal Revenue of Brazil.
Opening a Bank Account in Brazil
For financial movements, such as investments, loans or capitalization, you must open a bank account with the Central Bank of Brazil. The agency will then keep these records through the Electronic Declaratory Record (RDE).
Interested in Establishing a Foreign Company in Brazil?
For more legal information and guidance on the process of incorporating a foreign company in Brazil, reach out to Biz Latin Hub. Our team offers personalized business services to help you achieve your business plans in Brazil and Latin America. Reach out to us and find out how we can assist you and your endeavors.
If you are looking forward to starting a company in Latin America, it is prudent to team up with qualified local specialists. We will guide you with your accounting and financial needs.