Opening a Company in Brazil

Many companies and clients worldwide ask us ‘how to open a company in Brazil’ or ‘how to register a company in Brazil’? Opening a company in Brazil takes considerably more steps, paperwork, and money than what is required in other countries.

Can a foreigner open a company in Brazil?

Foreign individuals and companies can generally participate in a Brazilian company, subject to the rules applicable to the activity and ownership structure. A Brazilian limited company (Ltda.) may have one or more members. A nominal local shareholder is not automatically required simply because the owner lives abroad.

Ownership, management and representation are different roles. We review the proposed business, its owners and the required representation before recommending a structure.

How long does company formation take?

The timeline depends on the structure, location, business activity and readiness of the documents. Our earlier estimate of 45 to 90 days for matters involving foreign parties should be treated as a planning estimate, not a guaranteed deadline. Document legalization, translations, registry requirements, licensing and bank review can change the schedule. We assess the likely stages and timing for your case before engagement.

Subsidiaries, branch offices and representation

A foreign company may consider establishing a Brazilian subsidiary. The ownership and management arrangements should reflect the business objectives and applicable requirements, rather than automatically adding a nominal second shareholder.

Subsidiary formation, branch-office setups and standalone legal-representative engagements are reviewed on a case-by-case basis. Tell us the proposed activity, ownership structure and support you need so we can assess the arrangement and scope of work.

What Are the Main Steps to Open a Company in Brazil?

The formation process involves legal, registration, tax and operational decisions. The roadmap below is an overview; the steps and their sequence depend on the proposed business.

Take a look at this roadmap with the main steps required to open a company in Brazil.

1. Name Availability

A search should be completed at the trade board to confirm if the desired name is available.

2. Management, representation and operating requirements

An administrator of a Brazilian limited company may reside abroad, provided the required representation in Brazil is established. This differs from appointing a resident administrator or giving a local person an ownership interest. We assess the appropriate structure and powers for the proposed engagement.

The activity and location also need to be checked for zoning and licensing requirements. Requirements vary, particularly in regulated sectors.

3. Registration Process

The legal registration of a company in Brazil is recorded at the State Trade Board (Junta Comercial do Estado) or in the Business Entities Registry (Cartório de Registro de Pessoa Jurídica). After such recording, the company is effectively in existence although there are other steps required for the company to operate. Some of the documents required at this step are:

• Operating Agreement or Articles of Incorporation (Contrato Social)
• Initial Stockholder’s RG (Brazilian ID) or Passport
• Initial Stockholder’s CPF Tax ID if individuals (required even for foreign citizens)
• Initial Stockholder’s CNPJ Tax ID if companies.

Except for the smallest business entities, there is a requirement that the Operating Agreement is reviewed and signed by a licensed Brazilian attorney. There are also forms to be completed and fees to be paid at this stage.

You will know that the company was effectively registered upon receiving the NIRE. The NIRE (Número de Identificação do Registro de Empresa) is an ID for the recording procedure, and it is stamped or attached as a seal to one of the original copies of the Operating Agreement (Contrato Social).

4. CNPJ

The CNPJ is the Tax ID for the company and it is issued by the Brazilian Revenue Service (Receita Federal). The CNPJ is conceptually similar to the FEIN used in the US (Federal Employer Identification Number). Both the CNPJ and the FEIN are used not only as identifications for taxation purposes but also as unique IDs that identify the company for a variety of purposes.

During the application for the CNPJ, the applicant will have to select the business activities for the company. In Brazil, there are specific codes for each activity, and a selection is a must for the CNPJ to be issued.

5. State Registration

Some companies like those involved in manufacturing, sales, and transportation services must also enroll in the State Registration. The purpose of this registration is to give notice to the State authorities of the beginning of activities of the company and also allow the newly formed company to collect and pay the State taxes on certain activities like the already mentioned manufacturing, sales, and transportation.

The name of the tax to be paid to the State is ICMS – Tax over Circulating Goods and Transportation Services (Imposto sobre Operações relatives à Circulação de Mercadorias e sobre Prestações de Serviços de Transporte Interestadual e Municipal).

A number of forms and documents are required at this stage. Requirements and processing times should be checked with the relevant authorities for the proposed activity and location.

6. Municipal Registration

For service companies, it is also required registration with the municipal authority in charge of the company’s location. This registration will give notice to the municipal authorities of the beginning of business activities by the company, and it will also allow the company to pay the municipal taxes (in Brazil, service taxes are traditionally paid to the towns).

In most states, municipal registration is done automatically by the trade board. However, rules may vary depending on the state and town.

7. Other Licenses

Firefighter Authority. The Firefighter Authority’s License (Alvará do Corpo de Bombeiros) is issued after an inspection at the premises is conducted by the state’s firefighter authority (Corpo de Bombeiros Militar do Estado).

Municipal Operation License. The Municipal Operation License (Alvará de Funcionamento) is one of the last pieces of the long road to get a company fully operational in Brazil. The requirements for this license vary according to the town in charge of the location where the company will operate.

8. Special Licenses

Special business licenses may be needed depending on the activity and will usually involve costly and time-consuming requirements and sometimes bonds. Some of the activities that may require such a special business license:

• Health
• Environment
• Construction
• Transportation

9. Payroll and social-security obligations

Before operations begin, confirm the payroll, social-security and reporting obligations applicable to the company, its administrators and any employees with the professionals responsible for its accounting and compliance.

10. Accounting, invoicing and banking

Plan the accounting, invoicing and reporting setup with the company’s accountant. Banking and additional registrations should be coordinated with the formation process. Bank acceptance, documentation requirements and timing depend on the institution and the company’s circumstances.

For advice on your proposed structure, book a consultation or request a professional-fee estimate.

Choosing the company structure

A Sociedade Limitada (Ltda.) and a Sociedade Anônima (S.A.) are different legal structures with different ownership and governance arrangements. The choice should follow the company’s activities, owners, funding plans and compliance needs. We discuss the suitable options for your case.

Issues to assess before formation

• Tax and accounting: assess the Brazilian and cross-border obligations with the relevant advisers.
• Employment: budget for applicable employment costs and compliance rather than assuming a fixed multiplier for every employee.
• Local partners and representatives: review their role, authority, responsibilities and background before entering an arrangement.

Startup Companies

We understand their needs, especially in a globalized and interconnected world. The Internet has also changed the way people and businesses interact and it is crucial to know how to set up a business model in a certain area and then replicate it throughout the world. In this process, understanding startup companies’ needs and goals are important for us.

Our Services

Since Brazil is a major player internationally, companies can no longer afford not to invest in the country. However, in order to avoid incurring unnecessary costs, it is necessary to retain lawyers and professionals experienced and able to provide advice and be in charge of the steps to set up a business in Brazil. Therefore, our services include:

• Drafting incorporation documents
• Conducting background check
• Providing advice both on tax and labor matters
• Filing documentation with the appropriate registry and authorities
• Obtaining the necessary certificates for your company to start operating

Our team will provide you with all relevant information and be at your disposal to answer any questions you might have involving setting up a business in Brazil.

• Helpful links