Business entities in Brazil
Different Brazil entities
Foreigners considering Brazil business setup have two options to enter the Brazilian market. They may enter Brazil directly (subsidiary or branch) or through third parties such as distributors or sales representatives. The commonly used entities by foreign entrepreneurs is the Brazil limited liability company (LLC).
Limited Liability Company/Wholly foreign owned entities
- A Brazil LLC can be setup with a minimum of 2 shareholders and 1 director, who can be of any nationality. However, a Brazilian permanent resident must be appointed as a legal representative of the company. The minimum share capital required will be US$1 and the company can be set up within 20 weeks. Furthermore, a Brazilian LLC faces no restrictions on the type of business activities it can pursue;
- Each Brazil entity must have at least one individual representative ordinarily resident in Brazil. Most of our Clients appoint one of the local staff members as registered local representative. If required, Healy Consultants will be pleased to provide your firm with a professional nominee for your Brazil business setup.
The Brazilian public limited company (SA)
- The Brazilian public limited company requires at formation at least 2 shareholders and 3 directors, who both can be of any nationality and do not need to be resident in Brazil. However, if no resident director is appointed, the company must have a resident company representative, whom Healy Consultants will be pleased to provide if needed. 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 by this option, Healy Consultants recommends choosing BM&FBOVESPA as it i) is largest in Brazil and 13th largest in the world, enabling listed businesses to raise massive amounts of capital and ii) does not require companies to publicly trade more than 25% of their share capital, allowing henceforth their initial owners to keep majority control.
Branch and representative office
- In accordance with Brazil corporate law, all foreign company branches and representative offices may be 100% foreign owned, provided a local agent or sponsor is appointed;
- Branch Offices are allowed to invoice Brazil resident customers, sign local sales contracts and receive income from customers. However, prior to incorporation an authorization from the Brazilian Government must be obtained and the branch will be subject to local laws;
- While the Brazil law allows 100% foreign ownership and control of the representative office, it does not allow the entity to make direct sales within the country. Such an 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;
- In order to register a branch or representative office of a foreign company, the incorporation forms of the parent company must be translated to Portuguese by specialist government approved company;
- A foreign company can register a branch in Brazil to invoice Brazilian customers, sign local sales contracts and receive income from local customers. However, a Brazilian agent must be appointed.
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 the losses. There are two types of corporations; open, which raises funds from public sources or closed, funded from shareholders.
Table of comparison between different Brazil entities
|How long to set the company up?||20 weeks||20 weeks||20 weeks|
|How long to open company bank account?||8 weeks||8 weeks||8 weeks|
|Bank signatory must travel||Yes||Yes||Yes|
|Issued share capital required||US$1||0||0|
|Is doing business in Brazil permitted?||Yes||Yes||No|
|Allowed to sign sales contracts with Brazil Clients||Yes||Yes||No|
|Allowed to invoice Brazil Clients||Yes||Yes||No|
|Corporate tax payable in Brazil||34%||34%||0%|
|Corporate bank account||SCB Brazil||SCB Brazil||SCB Brazil|
|Can rent office in Brazil||Yes||Yes||Yes|
|Tenancy agreement required before incorporation?||No||No||No|
|Allowed to import raw materials?||Yes||Yes||No|
|Allowed to export goods?||Yes||Yes||No|
|Can the entity hire expatriate staff in Brazil?||Yes||Yes||No|
|Do you visit Brazil for company registration?||No||No||No|
|Resident director required?||No||No||No|
|Resident shareholder required?||No||No||No|
|Minimum number of directors||1||0||0|
|Minimum number of shareholders||2||0||0|
|Brazil resident company secretary||No||No||No|
|Brazil resident legal representative||Yes||Yes||Yes|
|Individual shareholders allowed||Yes||Yes||No|
|Corporate shareholders allowed||Yes||No||No|
|Corporate director(s) allowed||Yes||No||No|
|Public register of shareholders and directors||Yes||Yes||Yes|
|Brazil employment visa fees||US$3,950||US$3,950||US$3,950|
|How long to get work permit approved||4 weeks||4 weeks||4 weeks|
|Statutory audit required||No||Yes||No|
|Annual tax return to be submitted||Yes||Yes||Yes|
|Access to Brazil double tax treaties||Yes||Yes||Yes|
|Estimate of engagement costs||US$23,430||US$26,930||US$26,930|
Frequently asked questions
Will there be restrictions in ownership if foreigners setup a Brazil company?No. 100% foreign ownership is allowed if you wish to setup your business in Brazil.
Will I be required to get my accounts audited if I setup a small business in Brazil?No. It is not mandatory for a small business setup in Brazil to submit audited financial statements to the authorities.
What are the tax implications for a business setup in Brazil by foreigners?A business setup in Brazil will be subject to corporate tax and other taxes paid by Brazilian businesses. Tax authorities will subject all businesses setup in Brazil to standard tax requirements, even those belonging to foreigners.
Why setup a company in Brazil?A Brazil company is an excellent vehicle to start expanding your business in the rest of Latin America. To more about these aforementioned points, please refer to our Advantages section.
How can foreigners setup a limited liability company in Brazil?Brazil company setup requirements include i) reservation of business name ii) preparation of incorporation documents iii) notarization of the documents and iv) tax and business license registration. Foreign companies willing to setup a business in Brazil may also initially open a representative office in Brazil.