Brazil is the biggest economy in Latin America. As part of the Southern Common Market and BRICS (Brazil, Russia, India, China, and South Africa) trade groups, Brazil allows for trading and commercial opportunities.
A Brazilian company is an ideal vehicle to start expanding your business in the rest of Latin America and setting up a company in Brazil can be finalized even without physically visiting the country. The process can be carried out remotely through a Power of Attorney.
Both foreign people and companies may set up a business in Brazil and the general rule is that such businesses may encompass any legal business aim.
If you want to become resident in Brazil, you need to get a visa to start your local business in Brazil
Citizens of most European and Latin American countries, as well as specific other countries, do not need a visa to enter Brazil for business visits of up to 90 days and a foreigner doesn’t need a Brazilian visa to be a shareholder in a Brazilian company. The foreign investor could assign a Brazilian resident to be the company’s manager and only come to Brazil frequently to supervise the investment. The foreign investor can do so on a tourist visa or limited business visa.
But it is required that the foreigner applies for a permanent visa if he plans on moving to Brazil to personally oversee the company. To obtain a permanent visa in Brazil, a foreigner has to prove that they have invested a minimum of R$600,000 in the Brazilian company.
In any case, investors intending to visit Brazil are advised to check with the Brazilian consulate in their country on whether they need a visa before finalizing travel plans.
Types of Companies in Brazil
There are many options for those interested in opening a company in Brazil, the most common types are the following;
- Limited Liability Company (Limitada/LTDA.): LTDA is the most popular form of company in Brazil. It is a private limited company considered a separate legal entity by the Brazilian authorities where business owners are not liable for the company’s debts and liabilities It is governed by Articles of Association (Contrato Social) and its capital is divided into shares. There is a minimum requirement of 2 shareholders and 1 director of any nationality. And the legal representative assigned must be a Brazilian resident if no resident director is appointed. There are no minimum capital requirements and no restrictions on the type of business conducted.
- Corporation (Sociedade Anônima/ SA): this form of company is not as adaptable as an LTDA and is proposed for larger companies seeking to raise funds from the general public as it is rather more expensive to run and more transparent since all corporate ordinances and its annual financial statements must be published in newspapers. It is governed by By-laws (Estatutos) and its capital is divided into one or more categories of shares. There is a minimum requirement of 2 shareholders and 3 directors of any nationality, and the legal representative assigned must be a Brazilian resident if no resident director is assigned. If an SA is listed on the stock exchange, it must also have a Board of Directors, comprised of shareholders.
- EIRELI: Brazil has initiated a newer company option called ‘EIRELI’, which is a type of corporation with lower share capital requirements and comprising just a single shareholder. The liability of the company director is limited in the sense that the company’s finances are diverse from personal finances and assets. Limited company directors are not liable for any debts run up by the business, although directors may need to ensure loans or credit taken out in the company’s name.
Tax treatment of Limitadas and SAs in Brazil is similar.
Setting up your company in Brazil
Once you have decided on starting a business in Brazil as a foreigner, you may proceed with the following steps:
- Planning your business idea
You have to think of a business idea that is unique and reasonable, and the address selected for the business to operate from must be similar to the activity of the business.
- Choosing the ideal corporate entity
The SA and LTDA are the two major types of companies that are used for most business operations in Brazil. Setting up an LTDA is simpler and less expensive than incorporating a SA and is frequently recommended for first establishment. The company can later be transformed into a corporation. There is also an alternative to set up a branch in Brazil, however, the procedure is bureaucratic and lengthy in comparison to the SA or LTDA, and also expensive. Thus, a branch establishment is only proposed under unique circumstances.
- Reserving the company name with the Brazil Junta Commercial
The corporate name assigned for your business must be unique and must also include the type of activity your business will conduct. The owner of the company may check the company name with the State Commercial Registry Office (Brazil Junta Comercial) to make sure that the name chosen is not already registered.
- Registration with the Board of Trade
Submission of the Certificate of Incorporation, Memorandum & Articles of Association is the next step. Once you are done with reserving the company name with the Brazil Junta Comerciais, you should prepare all the essential information in the Articles of incorporation. And once the Articles of incorporation are ready, you can get them registered through the Trade Board. Your Articles need to contain the entity name, the business address, the shareholder details, the company activities and capital, the company name, and details of the company administrator (who must be a resident of Brazil)
The whole process of incorporating a new entity in Brazil can take 60-90 days.
- Opening a corporate bank account
A corporate bank account is recommended for a business. The documents from the shareholders, articles of incorporation, and taxpayer ID are required for this.
- Tax Registration
- Obtaining a business license and permit
There are some options in which business licenses are not needed but most of the time, it is required. The documents required are:
- real estate clearance certificate,
- a formal request for registration for Business License,
- statement of responsibility,
- approved Articles of Association,
- confirmation of the Cadastro Nacional de Pessoa Juridica registration,
- copy of the Identification Document for the Company Administrator and
- payment of the registration fee for the Business License application.
Unless the foreigner plan to be physically present in Brazil when the incorporation documents are signed, they can give their Brazilian lawyer a Power of Attorney comprising powers to incorporate the company in their name. This pertains to either foreign people or companies.
Self-employed Workers in Brazil
Individuals who wish to set up as self-employed need to apply for a Cadastro de Contribuintes Mobiliarios, which is the taxpayer’s reference number for an individual who carries out self-employed work without any relationship to a salaried position. Applications for the Cadastro de Contribuintes Mobiliarios are made to the Secretaria de Financas do Municipio de São Paulo (the Local Authority). Self-employed individuals are referred to as profissionais Autônomos in Brazil.
Brazil’s outstanding business infrastructure and huge consumer markets make it a highly desirable spot for entrepreneurs. If you want to register your company in Brazil, let’s go ahead and contact your Damalion experts now.