Brazil is known as a country of many opportunities, due to its large consumer market, but it also bears the burden of being one of the most complex countries to open and maintain businesses. Mainly due to the bureaucracy established by Brazilian legislation and the multiplicity of contexts for opening and maintaining a business.
Even though part of the process can be carried out over the internet, it is essential to follow some steps and, if possible, have partners to guarantee the regularity of the procedure with maximum efficiency and cost reduction.
Therefore, we created this material to clarify the main issues involved in setting up a branch in Brazil.
The main procedures for opening a foreign company in Brazil
To open a company in Brazil, in accordance with current legislation, it is essential to follow a few steps. And, for foreign investors not residing in Brazil, this moment requires some preliminary steps. This is all because, according to article 1134 of the Civil Code, foreign companies can operate in Brazil as long as they have the proper consent granted by the Executive Branch.
Furthermore, it is common for there to be doubts related to the process of opening a foreign organization in Brazil, and what steps are necessary to complete this process.
Check out how to open foreign companies and find a way to expand your business.
Have a trusted Legal Representative and specify the legal administrator
It is mandatory for foreign investors not residing in Brazil to have an attorney with the function of representing the foreign partners here in Brazil, the legal representative. This activity is carried out meeting some basic requirements, such as: being a native Brazilian, with a permanent visa in Brazil, or naturalized and having a permanent residence.
The person responsible for exercising the role of the legal representative of a company will have tax and legal obligations with the Brazilian authorities regarding the organization’s operation.
In addition, a person must be appointed as the responsible for the company. The Legal Administrator. This, as well as the legal representative, must have a permanent residence in Brazil (in addition to having no convictions that make it impossible for him to hold the position.
Want to know more about the difference between Legal Representative and Legal Administrator? Click here to find out more
Documentation of foreign partners
All original documentation of foreign partners must be approved by the consulate in the country responsible for the issue. In this case, it takes place with the authorization of the Ministry of Foreign Affairs and the Brazilian Consulate.
These documents must undergo a sworn translation by a registered office at the Board of Trade, authenticating the originality of the foreign documentation in Brazil. That said, it is necessary to obtain a CNPJ and a CPF for foreigners, and each has a different procedure:
For the CPF: for foreign partners, obtain the Register of Individuals (CPF), a form must be filled out in English, Portuguese, and Spanish, available on the IRS website, printed check it out, and deliver copies of personal documents to the Brazilian Consulate. The request will be processed and if there is any inconsistency, the IRS will carry out an analysis. If there are no disagreements, authorization takes place immediately.
For the CNPJ: in order to register for a National Register of Legal Entities (CNPJ), foreign partners must register with the CDNR (Declaratory Registration of Non-Residents). This is the registration of individuals and legal entities residing or not in Brazil and participating in foreign capital. After approval by the Central Bank, the request is forwarded to the Federal Revenue of Brazil, and the CNPJ number is issued within one business day.
Development of Social Contract and other applications
This step requires the assistance of a company with expertise in paralegal activities. It is possible to find this solution in law or accounting firms. They will contribute to the drafting of a social contract, following rules established by law, ensuring agreement on the inclusion not only of legal representatives and legal administrators but also of foreign partners.
This contract establishes the company name, headquarters, address, corporate purpose, board of directors, share capital (domestic and foreign), contractual clauses, among other information. After the drafting of the articles of incorporation – which must be signed –, public agencies at the federal, state, and municipal levels must validate the document, qualifying the company to carry out activities legally and with all the necessary licenses. In addition, of course, to allowing the collection of taxes and compliance with ancillary obligations to the Federal Revenue.
In addition, it is essential to have the support of accountants and lawyers for the correct adaptation to labor issues (for hiring employees).
Choosing a bank and opening a bank account
Opening a bank account is the next step for the company to be able to operate. But opening a bank account is not just for the acquisition of loans, investments, capitalization, and bank transactions.
The bank account has the purpose of electronic registration of transactions at Central White. These records imply reports standardized by the Electronic Declaratory Record Module (RDE). This module, especially for companies with foreign capital, involves the declaration of all financial resources coming from abroad. The RDE has a periodicity for foreign companies, which can vary between annual or quarterly deliveries.