Global Registration

Foreigner’s Guide to Setting up a Company in Brazil

Brazil, the fifth largest country in the world, carries one of the biggest economies in the South American continent, with a large population making it a big consumer market. Having a base in Brazil provides access to the entire South American market and opens up numerous opportunities for attracting investments and businesses. Additionally, Brazil is open to 100 per cent foreign ownership and provides supporting infrastructure for businesses to thrive, which makes Brazil an attractive commercial destination for foreigners to set up a business in Brazil. This piece of writing lists down the procedure for set-up a company in Brazil. Entities available in Brazil for incorporation

There are 4 types of companies that a foreigner can set-up in Brazil. They are:

1. Limited Liability Company (LLC)^[1]
2. Joint Stock Company or Business Corporation
3. Single member LLC (EIRELI)
4. Branch Office of a foreign corporation

Procedure to set-up a company in Brazil

The following procedure should be followed step-by-step in order to set-up a company in Brazil:

1. Choosing the type of company

The promoters must choose the type of company which would be suitable according to their business objectives. The promoters can choose a business entity from the following business entities: a Limited Liability Company (LLC), a Corporation and a single member LLC. These are the most common business vehicles that are chosen by foreigners to set-up a company in Brazil because, in these types of business entitis, the participants have limited responsibilities. Moreover, the law ascribes a different legal status to the company so formed, which is distinct from its participants.

2. Performing a viability study

Once the promoters have decided on the type of business entity, the next thing which is supposed to be done is performing a viability study in the city’s municipal departments in whose jurisdiction the promoters wish to set up their business. This viability study aims to determine the availability of the name with which the promoters want to open their business and the compatibility of the proposed address with the company’s purposes.

The promoters must be aware of the following restrictions in terms of the sectors/areas that are imposed on foreigners by the government:

• Acquisition or renting of rural property;
• Financial institutions;
• Air transport companies;
• Media including television networks, magazines, newspapers, radio broadcasting stations and
• Mining sector

Further, the following sectors have been prohibited from foreign investment:

• Nuclear energy;
• Healthcare services;
• Mail and telegraph services and
• Aerospace

3. Registration of the Articles of Incorporation

Having selected the type of business entity and performing the viability study, the next process is the registration of Articles of Incorporation with the local commercial board of the state where the promoters want their company to be located. The articles of incorporation are documents which contain the details of the company and its basic guidelines. Following are the details which are contained in the Articles of Incorporation:

• The personal Identification details of each shareholder viz. Their nationality, ID documents, address and Brazilian tax identification number (which must be obtained by the promoters beforehand);
• The business purpose of the company in accordance with Brazil’s CNAE system, where every business has a corresponding code;
• The share capital of the company and the percentage of share of each shareholder in the company and
• The administrator of the entity (who is a Brazilian resident and is answerable for all the business activities taking place in Brazil)

It must be noted that before submission of the above documents, they are required to be translated into Portuguese by a translator and submitted to the Bureau of Deeds and Documents. Additionally, the paperwork must be notarized by the Brazilian consulate located in the country of `origin of the promoter.  

4. Registration with relevant state and federal authorities

The company needs to be registered with several other State and Federal authorities before starting its business operations in Brazil. 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, depending on the company’s employees, registration with the individual unions is also required.

5. Registration with the Brazilian Central Bank

Once the legal formalities with the respective departments are completed, 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. In order to receive foreign remittances, the Brazilian company needs to 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.

Failure to comply with this 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 also crucial in order to repatriate funds to another country.

6. Opening of a bank account in the company’s name 

The final step to set up a company in Brazil is opening a bank account in the name of the company.While the bank initiates the process of opening an account in the company’s name, the bank carries out extensive KYC procedures. The documents that are required to open the account include:

• Shareholders’ documents;
• CNPJ number and
• Articles of Incorporation.

Conclusion 

The above mentioned procedure is the standard procedure to open any company in Brazil. However, depending on the type of business activities, several more permissions and processes may be added to set-up a company in Brazil as a foreigner. To know more about the opportunities in Brazil for foreign investment, get the consultation offered by global incorporation experts at Enterslice.

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