An LLC can be established in Brazil with a minimum of 2 shareholders and 1 director

Society Constitution
offshore in Brazil

Country analysis: legal structures

Everything you need to know to set up an operating company with a bank account.

1. Exchange of banking information

β€’ There are prison terms for disclosing customer bank details to third parties (and possibly fines). Banks are partially subject to strict customer due diligence regulations (old FATF recommendation 5 / new FATF recommendation 10).

β€’ Banks are largely required to maintain sufficient records of their customer and transaction data for law enforcement (old FATF recommendation 10 / new FATF recommendation 11).

β€’ Banks and / or other covered entities are required to report large transactions in currency or other monetary instruments to designated authorities.

β€’ The national administration has sufficient powers to obtain and provide bank information on request without qualifications.

β€’ There are undue notice and appeal rights against the exchange of bank information on demand without qualifications.

2. Legal forms

Limited Liability Company / Entities Wholly Foreign Owned

An LLC can be established in Brazil with a minimum of 2 shareholders and 1 director, who can be of any nationality. However, a Brazilian permanent resident must be appointed as the legal representative of the company. The minimum share capital required will be US $ 1 and the company can be incorporated within 20 weeks. Furthermore, a Brazilian LLC faces no restrictions on the type of business activities it can carry out.

Each Brazilian entity must have at least one individual representative who habitually resides in Brazil.

Most of our clients designate one of the local staff members as a local registered representative.

The Brazilian corporation (SA)

The Brazilian corporation requires in the constitution at least 2 shareholders and 3 directors, who can be of any nationality and do not need to be residents of Brazil. However, if no resident director is appointed, the company must have a resident company representative. Brazilian PLCs must also go through an annual audit and must appoint an audit board for that purpose.

A Brazilian PLC does not need to be listed on a stock exchange. For our Clients interested in this option, we recommend choosing BM & FBOVESPA since i) it is the largest in Brazil and the 13th largest in the world, which allows listed companies to raise massive amounts of capital and ii) does not require them to companies are listed on the stock exchange more than 25% of their capital stock, henceforth allowing their initial owners to maintain majority control

Branch or representative office

According to Brazilian corporate law, all branches and representative offices of foreign companies can be 100% foreign-owned, as long as a local agent or sponsor is appointed.

Branches can invoice clients resident in Brazil, sign local sales contracts and receive income from clients. However, prior to incorporation, authorization must be obtained from the Brazilian government and the branch will be subject to local laws.

While Brazilian law allows 100% foreign ownership and control of the representative office, it does not allow the entity to make direct sales within the country. Said office will only engage in activities such as i) promoting the business of the parent company and ii) market research. A permanent resident agent or distributor must be appointed.

Corporation

A corporation is a separate legal entity from its owners, divided into shares in which the owners of this type of entity have unlimited liability for losses. There are two types of corporations; open, which raises funds from public sources or closed, financed by shareholders.

REMEMBER

Nor Director resident in Brazil is required. Holding companies are not available in Brazil.

OFFICES

Foster Swiss helps our Clients secure offices or we provide an office address. Most emerging markets require our Clients to have a 12-month office lease before company registration is approved.

We help our Clients overcome this challenge in the following ways:

Virtual office service

DDepending on the country and city, the rates range from US $ 900 to US $ 2000 and the annual active virtual office services range from US $ 1500 to US $ 4000).

Shared office space

LThe one-time fee is US $ 850. Thereafter, our Client pays the monthly rent directly to the owner).

Permanent office space

D Depending on the country and the city, the rates range from US $ 5.000 to US $ 8.000).

LEGAL ACCOUNTING AND TAXES

Both resident and non-resident companies are subject to an average corporate tax rate of 34%, depending on the volume of turnover.

There are two types of taxes based on gross income: i) a federal tax levied on domestic and foreign manufactured products (PIS) at a rate of 1,65%, and ii) a mandatory contribution to social security (COFINS) with a rate of 7,6%.

There are no tax withholdings on dividend distributions to non-residents, whether corporate or individual. Interest and royalties paid to a non-resident are subject to a 15% withholding tax unless reduced under a tax treaty. The withholding tax at source is 25% of payments to tax havens.

There are two types of Value Added Tax (VAT): i) a federal VAT on the production and import of national or foreign manufactured products (IPI), levied at a rate of 20% and ii) a state VAT on goods and certain services (ICMS), charged at a rate of between 7 and 25%, depending on the state.

Businesses must keep accounting records, the taxable income control record, and supporting documentation and calculations to demonstrate the amount of tax owed. Brazil's fiscal year is the calendar year. Businesses must file an annual paper tax return by the last business day of April each year. Tax return extensions are not possible.

Brazil has signed bilateral tax treaties with 28 countries, including Argentina, Canada, Chile, China, India, Japan, Korea, the Philippines, and South Africa.

Monthly government tax reporting obligations include i) payroll reporting and ii) federal VAT return IPI and iii) ICMS returns VAT return to the Brazilian government.

All Brazilian companies are subject to i) corporate income tax ii) value added tax and iii) social security contributions. They also have to withhold personal income tax paid by their employees.

Legal and compliance

BAccording to the Corporations Law, a Brazilian company must have at least one director and two shareholders of any nationality.

There is no minimum share capital requirement for a Brazilian LLC.

Each company is mandated to file annual statements verifying the relevant details of the company for public record, including the names and addresses of all directors, the address of the principal place of business, and details of the shareholders and their holdings.

A private Brazilian company is required to maintain a local registered address.

Each foreign company must designate a legal representative from Brazil to act as a sponsor. This representative can be Brazilian or permanent resident.

Not all sectors in Brazil allow 100 percent foreign ownership. Foreign ownership is restricted in health services, postal services, aerospace and nuclear power industries.

Employers in Brazil may need to provide additional benefits to employees. These include health benefits, meal allowance, life insurance, dental plan, employee loans, pension funds, medical checkups, prescription drug benefits.

Public companies in Brazil must publish annual financial statements in a national newspaper, although they do not need to be audited. Brazilian LLCs are not required to publish annual financial statements.

Foreign investors are protected by Brazilian law and specific organizations such as i) the Brazilian Agency for the Promotion of Exports and Investments (Apex), ii) the National Association of Financial and Capital Markets (Anbima), iii) Cetip, iv) Junta Market Information Organization (Codim) ov) Brazilian Institute of Investor Relations (IBRI).

For the company cancellation process, the company must maintain a resident company secretary and a legal address in Brazil.

According to the Brazilian Corporation Law, each Brazilian entity must have at least one individual representative who habitually resides in Brazil. Most of our clients designate one of their local staff members as a local registered representative.

Country problems

Lhe companies resident in Brazil suffer high taxes. The average corporate tax rate is 34% and VAT can be as high as 25%. The income tax ranges from 8% to 28%.

The government applies protectionist import taxes that range from 2% to 20%, depending on the product.

In addition to corporation tax, there are also taxes on gross income that include i) a 2% federal tax on domestic and foreign manufactured products and ii) a mandatory 7,6% social security contribution tax.

Brazil's transportation infrastructure is poor, making it difficult to export goods to other Latin American countries.

Government agencies are inefficient.

Employers will find it difficult to find business partners and employees who speak some English.

The Brazilian economy is highly dependent on China, the largest consumer of Brazilian exports. With the slowdown in the Chinese economy, the Brazilian economy slowed dramatically in 2014.

To do business in Brazil, entrepreneurs must speak Portuguese or hire a translator.

Office rental in the city of Brazil is expensive, the average monthly rental price is US $ 55 / m2.

Brazil lacks a well-educated workforce and the available skilled labor is more expensive than other South American countries.

Although Brazil has not had terrorist attacks for many years, it is one of the most dangerous countries in the world in terms of street crime, with a homicide rate 4 times higher than the US. People planning to move to Brazil will have to spend additional money. in security and private transport.

Brazilian foreign-owned companies generally have a higher paid-up capital requirement than other Latin American countries.

For the registration of companies in Brazil, it is necessary for a foreign company to have a Brazilian permanent resident as legal representative.

Setting up a foreign company in Brazil is time-consuming and complex, bogged down by government bureaucracy. Company registration can take up to 20 weeks, including the time required for all Client supporting documents to be translated into Portuguese.

Taxes are punitive in Brazil, and our Clients should expect to pay a massive 68% tax on net profits, including i) 34% corporate tax, ii) 20% average VAT rate, and up to 45% on products distributed in the Brazilian provinces and iii) employer social security contributions of 37% of gross salary.

Depending on your exact business activities, applications to register a company in Brazil must be referred to various departments and ministries.

MORE CONFIGURATION SERVICES SOLUTIONS

  • Shareholders and Agents
  • Office permits
  • Protection of trademarks and copyrights. - Market study.
  • Legal support
  • Proportion of details of temporary unions or associations
  • Fusions and acquisitions.
  • Internal control.
  • Group restructuring.
  • Financial management consulting.
  • Buy a business.
  • Valuation of companies.
  • Credit recovery
  • Job solutions
  • Due diligence search on existing companies and individuals

3. Commercial register

The national business registry includes the identity information of the legal owner.

Information on legal owners is not always available online (up to 10 EUR / GBP / USD).

4. Transparency of society

β€’ All businesses require the registration of all legal owners.

β€’ All names plus countries of residence plus addresses or NITs or dates of birth, passport or personal identifications, or incorporation numbers are always registered.

β€’ Updating of the information on the identity of the legal owners is not mandatory.

5. Shareholders publications

All companies require the registration of all final beneficiaries at a threshold of more than 25% (FATF).

All names plus countries of residence plus addresses or NITs or dates of birth, passport or personal identifications are always recorded.

Updating of the information on the identity of the final beneficiaries is mandatory

Real property is not always available online (up to 10 EUR / GBP / USD).

6. Publication of the company account

β€’ It is mandatory to keep accounting data.

β€’ There is an obligation to present annual accounts for all types of companies.

β€’ Business accounts are not always online (up to € / US $ 10)

7. Country-by-country financial reports

No country-by-country public reporting at all.

8. Corporate tax return

β€’ The secondary mechanism is subject to the restrictions imposed by the OECD model legislation; or no secondary mechanism (only the ultimate national parent entity has to present the CbCR).

β€’ Unilateral cross-border tax rulings (eg advance tax rulings, advance tax rulings) are available in laws or regulations, or administrative practice.

β€’ All unilateral cross-border tax rulings are published online for free, but without the name of the taxpayer in question

9. Identifier of legal entities

β€’ The use of an annually updated Legal Entity Identifier (LEI), developed under the guidance of the Financial Stability Board, FSB, is not mandatory.

β€’ The use of an annually updated Legal Entity Identifier (LEI), developed under the guidance of the Financial Stability Board, FSB, is not mandatory.

β€’ The use of an LEI updated annually for the identification of reporting financial institutions (in accordance with the Common Reporting Standard (CRS) is not mandatory

10. Measures to avoid tax evasion

β€’ Payment of dividends: Unilateral double tax relief through a tax credit system for all three payment scenarios (beneficiaries always receive a unilateral tax credit, regardless of whether it is an independent or related legal person, or a natural person).

β€’ Interest payments: Unilateral relief for double taxation through a tax credit system for both payment scenarios (recipients always receive a unilateral tax credit, regardless of whether it is a legal person or a natural person).

11. Tax matters judicial secrecy

None or restricted access to both criminal and civil tax procedures.

Public access to both criminal and civil tax judgments / verdicts.

12. Opaque structures

β€’ The jurisdiction does not issue or accept the circulation of large notes / cash notes of its own currency (with a value greater than 200 EUR / GBP / USD).

β€’ Unregistered bearer shares are available / outstanding or registered by a private custodian.

β€’ Series LLC / Shielded Cell Companies are not available

13. Anti-money laundering legislation

In February 2016, the FATF issued a statement expressing its deep concern over Brazil's continued failure to remedy the serious deficiencies identified in its June 2010 mutual evaluation report, especially those related to terrorism and the financing of terrorism. terrorism.

The FATF reiterated its concern on several occasions and in June 2019, raised this as a member concern for consideration by the October Plenary.

Following the approval of Law No. 13.810 in February 2019 and Decree No. 9.825 in June 2019, the FATF revised Brazil's new framework to identify and freeze terrorist assets.

Overall, the FATF is satisfied that Brazil has made substantial progress and addressed most of its specific financial sanctions deficiencies, which concludes the process. The FATF no longer considers this to be a concern for FATF members.

However, the FATF expresses its serious concern regarding Brazil's ability to comply with international standards and combat money laundering and terrorist financing resulting from the limitation imposed by a recent provisional court order issued by a judge of the Supreme Court of Brazil on the use of financial intelligence in criminal investigations. The FATF is also concerned that the court decision is affecting the Brazilian FIU to share information with law enforcement authorities.

The FATF is closely monitoring this situation and looks forward to receiving timely updates and assurances from Brazil in this regard.

Overall Non-Compliance Score of FATF Standards in Percentage: 52,5%. (100% = all indicators rated as not met / low level of effectiveness; 0% = all indicators rated as met or highly effective)

14. Automatic exchange of information

You signed the MCAA and committed to sharing information on or before 2019.

Number of significant activated AEOI relationships (under MCAA) published by the OECD as of October 2019: 95.

What type of private banking exists in Brazil?

International Banking
Local banking

Central bank security ⭐⭐⭐

The banks international and digital They're available.

CRS: SI.

Real bank operations: 90%.

Type of visa: BRL R $, US $, €.

Joint accounts.

Remote management account: To consult.

Asset management Depending on the rating of the company.

Rates: It depends on the type of account.

Credit / debit cards in local currency

Why with Foster Swiss?

Foster Swiss is an international company registered in Switzerland aimed at providing financial and compliance advice on a variety of topics related to company formation
and commercial banking internationally. We are specialized in the implementation of businesses in different jurisdictions, which means that we offer value-added services helping our clients in their expansion abroad.

Some of these services include:
Advice and consultancy,
visas, offices, nominated director / shareholder / secretary,
accommodation if necessary… to name a few.
Check with your assigned consultant for more information.

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