Company Registration in Brazil

Company Registration In Brazil: Overview

Brazil is the most preferred business destination for entrepreneurs willing to enter the South American market. The primary reason behind this is Brazil’s membership with BRICS. Brazil also possesses numerous scopes in renewable fuel development. A vast market and immense reserve of natural resources make it an ideal destination to do business. If you wish to start or expand your business to Brazil, then reach out to us at Enterslice. We provide quick and hassle-free business setup services. We provide legal advisory services to ensure that the expansion complies with all relevant legal requirements. We support registering and obtaining necessary licenses for the new business operations. We guide you in choosing the appropriate legal structure for the business.

An Overview of Company Incorporation in Brazil

Brazil is one of the biggest economies in the South American continent and the fifth largest country globally. It has a large population with a big consumer market. A base in Brazil will provide access to the entire South American market. It opens a pandora of opportunities for attracting investments and businesses. Brazil offers 100 per cent foreign ownership and thriving infrastructure for businesses. This makes Brazil an attractive commercial destination for foreigners to set up a business. This is a comprehensive guide for foreigners to incorporate a company in Brazil.  

Pre-requisites of Company Incorporation in Brazil

Shareholder

There is no requirement that the shareholder should be Brazilian. , But Foreign shareholders who do not have a permanent residence in Brazil need legal representation with permanent residence in Brazil.

Physical Presence

There is no requirement to be physically present at the time of company incorporation. However, the banks in Brazil may require the physical presence of the principals of the company account opening process as part of their due diligence procedure.

Minimum Capital Requirement

Societada Limitada (LLC) has no requirement for minimum capital.

Eligibility Criteria for Company Incorporation in Brazil

No. of shareholders

The minimum number of shareholders required is two, who can be either Individuals or corporate entities.

No. of Directors

The minimum director required is one.

Local Resident Director

It is necessary to appoint one resident director.

Registered Office

A local registered office address is mandatory.

Procedure to incorporate a company in Brazil

1. Choose the type of company

   The company's founders must decide on the type of company suitable for their business objectives. They must choose from the following business entities, the most common business vehicles chosen by foreigners to set up a company in Brazil: a Corporation, a Limited Liability Company (LLC), and a single-member LLC.

2. Performing a viability study

   The next step after choosing the type of business entity is to perform a viability study in the city’s municipal department in the jurisdiction where the company is being set up. The viability study aims to determine the availability of the name with which the founders want to open their business and the compatibility of the proposed address with the company’s purposes.

3. Registration of the Articles of Incorporation

   The next step after the viability study is to register the Articles of Incorporation with the local commercial board of the state where the promoters want their company to be located. The article of incorporation is a Document containing details of the company and its essential guidelines.

4. Registration with relevant state and federal authorities

   Before starting its business operation in Brazil, the company must be registered with several other State and Federal Authorities. Every company must be registered with the Federal Revenue Bureau and the respective state and municipal authorities, depending on the business operations the company wants to carry out in Brazil. Further, registration with the individual unions is also required based on the company's employees.

5. Registration with the Brazilian Central Bank

   On completion of the formalities with the respective department, the processing of investment of the capital by the foreigner into the Brazilian company begins. The remittances sent by the foreign entity will be sent in the form of monetary resources or through assets, machines, equipment, etc. To receive foreign remittances, the Brazilian company must be registered with the Brazilian Central Bank, which issues a taxpayer ID (CNPJ number) to the company, which is mandatory for receiving remittances to Brazil. Default in compliance with the provision may lead to the imposition of a heavy penalty on the Brazilian company and may even affect the potential investor visa. Registration with the Brazilian Central Bank is crucial to repatriate funds to another company.

6. Open a Bank account in the name of the company

   The final step to set up a company in Brazil is opening a bank account in the company's name. While the bank initiates opening an account in the company’s name, the bank carries out extensive KYC procedures. The Documents required to open an account include i) shareholders' Documents, ii) CNPJ number, and iii) articles of incorporation.

Qualities you will find in the Services provided by Enterslice

Client Focus

Enterslice puts great emphasis on client focus. We prioritise the needs and complaints of our clients when offering any business service.

Timeliness

Enterslice is particular about time management as it is vital on the road to personal success and even more critical in the management of any business. We attend to all client’s needs to surpass the agreed timelines.

Adaptability

Enterslice has a unique quality of adapting to different levels of management and business environments. We believe that the synchrony created by business services catapult an organisation to great success.

Tax Structure of Companies Incorporated in Brazil

Corporate Income Tax (Imposto de Renda da Pessoa Juridica) is levied on the worldwide income of Brazilian companies. The standard rate is 15%, with an additional 10% on annual profits exceeding BRL 240,000. The social contribution on net profits (Contribuicao Social sobre o Lucro Liquido) is levied at a standard rate of 9% on net profits. Value Added Tax (Imposto sobre Circulacao de Mercadorias e Servicos) is a state-level tax imposed on the circulation of goods and services. Rates vary by state and type of transaction. Tax on Services (Imposto Sobre Servicos) is a municipal tax levied on services whose rates vary by municipality. Companies must make social security contributions for their employees. Brazil does not generally tax dividends at a federal level, but individual states may import taxes. Import duties may apply to goods brought into the country. Brazil has a complex tax system, and compliance requires a good understanding of federal, state and municipal regulations.

Different Types of Business Structures in Brazil

1. Limited Liability Company (LLC)

   In Brazil, LLC is also known as Sociedade Limitada. The composition of an LLC in Brazil is similar to that of an LLC in the USA. It is one of the most common types of companies in Brazil. At least two individuals or legal entities are required. There is no bar on foreign ownership. No minimum or maximum capital is needed to set up an LLC in Brazil. The new Brazilian Civil Code regulates an LLC.

2. Limited Liability Corporation

   The corporation is a Limited Liability Corporation or Sociedade Anonima/S.A. and largely resembles US Subchapters C Corporation. Corporations can avail of both voting and non-voting shares. To set up a limited liability corporation, you need two shareholders. Limited liability corporation’s minimum initial share capital should be 100% subscribed. A minimum of 10% of the capital should be deposited to the bank before incorporation.

3. Branch Office

   The branch offices are direct extensions of a parent organisation. In the case of a branch office, its entity in Brazil has to be of a similar name. You must appoint a legal representative to set up a branch office in Brazil.

4. Empresa Individual de Responsabilidade Limitada (EIRELI)

   Most individual entrepreneurs mainly choose EIRELI. Here, only one shareholder who is held responsible for all company shares is required.

Documents Required for Company Incorporation in Brazil

Individual Shareholders are required to submit the following Documents: i) an Application form duly signed by the authorised signatory, ii) a Passport Copy of UBOs/Shareholder/Directors, iii) a Copy of National Identity Card/ Aadhaar Card of the UBOs/ Shareholders/ Directors iv) Most recent utility bill, credit card assessment, bank statement along with name and dwelling address of the UBOs, shareholders and directors v) Curriculum Vitae, profile of the UBOs or shareholders or directors. Corporate Shareholders are required to submit the following Documents, including the above Documents: i) Application forms duly signed by the authorised signatory ii) Certificate of incorporation of the corporate shareholder iii) Memorandum & Articles of Association of the mother company iv) Board resolution giving details of the branch or the subsidiary nominating an authorised manager.

Stable Economic Growth

Brazil has experienced periods of economic growth and challenges in recent years. However, it is a thriving economy. The country is one of the largest economies in Latin America. It has faced domestic and external factors influencing its economic performance. Implementing structural reforms, such as labour market, pension, and tax reforms, has positively impacted economic growth by improving the business environment and increasing efficiency. A stable and predictable economic environment encourages domestic and foreign investment. Policies that promote a business-friendly environment have been implemented to protect property rights, reduce bureaucratic hurdles, and enhance investor confidence.

Benefits of working with Enterslice that you can’t miss

Highly Professional and Reliable Team

When dealing with professional services, having a professional and reliable team is essential for a smooth and successful experience, whether for company incorporation, compliance or other business-related services.

In-depth Knowledge and understanding of local rules and regulations

Enterslice has a profound experience and knowledge of local rules and regulations in company incorporation, compliance, and business consulting.

Strong Connection with Brazilian Authorities

Enterslice has a strong connection with Brazilian authorities, a valuable asset for businesses operating in Brazil. The connection facilitates smoother interactions, enhances regulatory compliance and contributes to positive relationships with relevant government agencies.

Benefits of Company Incorporation in Brazil

1. Large Market Populous

   Brazil is one of the most populous countries in the world. It has a population of over 210 million, making it the sixth most populous country in the world. The population of Brazil is diverse, comprising people from various ethnic backgrounds and regions. The country’s large and diverse population significantly affects its economy, market potential and consumer base. The large population provides a substantial consumer market for various goods and services.

2. International Trade and Business Alliance

   Brazil is actively engaged in international trade and business alliances, leveraging its position as one of the largest economies in Latin America. The country has been involved in various trade agreements and alliances to enhance economic cooperation, reduce trade barriers and foster international partnerships. Further, Brazil is the founding member of Mercosur, a regional trade bloc which aims to promote economic unification and coordination among its member states.

3. Openness to foreign investments

   Brazil has been open to foreign investments. Further, the government has also implemented policies to attract foreign capital. The country has a diverse and extensive economy, abundant natural resources and various sectors that offer investment opportunities. The government has actively promoted itself as an attractive destination for foreign investments. It has welcomed foreign direct investment across multiple sectors, including energy, infrastructure, agriculture, technology and services. The government encourages FDI to contribute to economic growth and job creation.

Challenges of Incorporating a Company in Brazil

1. Complex Tax Systems

   Brazil has a complex tax system with federal, state and municipal taxes. Understanding and complying with tax regulations can be challenging for foreign investors.

2. Bureaucracy and Administrative Procedures

   Brazil has historically been known for its bureaucratic processes, making setting up a company time-consuming. Various administrative procedures and Paper works requirements must be met, involving multiple government agencies.

3. Infrastructure Challenges

   Some regions in Brazil may face infrastructure challenges, affecting logistics, transportation and resource access. Infrastructure disparities between urban and rural areas can impact business operations.

4. Political and Economic Instability

   Brazil has experienced political and economic instability, impacting business confidence and predictability. Monitoring the political and economic climate is essential for strategic planning.

Company Incorporation Services provided by Enterslice

1. Business Set-Up Services

   Our team will assist you in the business registration process, in opening a bank account for the business, and in post-registration compliance.

2. Consultancy on Managing Business

   Our consultants formulate a strategic plan for establishing and operating the business depending on your needs. We provide advisory on issues related to the management of the company.

3. Legal Advisory Services

   Our legal experts provide legal advice on business operations, finances, IP protection, etc. We also ensure that all legal and regulatory compliance are duly complied with.

4. Employer on Record Services

   Our team can act as an EOR and help in onboarding employees for our clients, with the best part being that you shall have control over the daily activities and responsibilities of the employees.

Extensive Manufacturing Base and raw materials

Brazil has an extensive manufacturing base and is rich in raw materials, making it an essential player in global markets. The country’s diverse geography and abundant natural resources contribute to its strengths in both manufacturing and the availability of raw materials. Brazil has a well-developed automotive industry, producing many vehicles annually. Major international automobile manufacturers have a presence in the country. Brazil is a significant producer and exporter of agricultural products, including soybeans, sugarcane, beef, poultry and coffee. Food processing and agribusiness are substantial components of the manufacturing sector. The country has a well-established chemical industry producing a range of chemicals and petrochemical products. The country has significant oil and gas reserves contributing to its petrochemical capabilities.

Our Commitment to Excellence

1. Quality Service

   At Enterslice, we are committed to providing our clients with top-notch services, ensuring that their business needs are met with precision and accuracy. Our team of dedicated professionals go above and beyond to deliver exceptional results.

2. Client Satisfaction

   Your satisfaction is our priority. We aim to meet your expectations by understanding your needs, addressing your concerns and providing personalised solutions. We value your trust and work tirelessly to ensure your complete satisfaction.

3. Continuous Improvement

   We believe in constantly evolving and improving our services to stay ahead of the curve. Our team continuously aims to stay updated with the recent industry trends and best practices to provide you with innovative solutions that drive success.

Good Infrastructure for Doing Business

Brazil has vast transportation network includes a well-developed road system and extensive air and maritime connections. Highways connect major cities, and several international airports handle passenger and cargo traffic. Brazil has significant ports, such as Santos and Rio de Janeiro, facilitating maritime trade. These ports handle a substantial portion of the country’s imports and exports. Brazil has several international airports with modern facilities, facilitating air travel and cargo transportation. Brazil has a diverse energy matrix, including hydroelectric power, contributing to a relatively stable and abundant energy supply. In rural areas, there is infrastructure to support the agriculture sector, which is a crucial component of Brazil’s economy.

Attractive Government Schemes

The Brazilian government offers incentives for research and development activities. The Law of Innovation (Lei do Bem) provides tax benefits for companies investing in innovation projects. The BNDES (Brazilian Development Bank) is a crucial financial institution financing various projects. Programs like the Export Financing Program (PROEX) aim to support Brazilian companies engaged in international trade by offering financing options and insurance for export transactions. Free zones offer tax incentives and exemptions to companies.