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Opening a Company in Brazil

How to Open 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?

Yes. According to Brazilian law, a new company in Brazil can be opened by foreign individuals, foreign companies, or a mix of both. Some of our clients also choose to maintain most of the ownership while assigning a small or nominal percentage to a local partner in charge of the local management.

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info@oliveiralawyers.com
+55-11-4349-1915 Brazil
+1-212-300-7174 USA
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How Long to Register a Company in Brazil?

The timeline to open and register a company in Brazil is around 30 days. When the opening of a company involves foreign parties, the timeline can be increased to 45 to 90 days due to the following factors:

a) Foreign documents must be translated by a sworn translator in Brazil. Sworn translators are individuals who passed a public examination (concurso publico) with one of the many state board trades in the country. The sworn translator will translate documents such as IDs for the initial stockholders, corporate documents for companies participating as stockholders, proof of address for the partners, and other documents.

b) The review of the company registration by the board trade is usually done by a specific department specializing in procedures involving foreign parties.

The overall timeline for a company opening in Brazil with foreign parties will usually take between 45 to 90 days depending on how expeditely the documents are provided and how effective the law firm in charge of the opening is.

Can I set up a Subsidiary for my Company in Brazil?

The easiest and fastest way to set up a subsidiary for your company in Brazil is to form a brand new legal entity.

Many of our clients will structure their so-called subsidiary as a brand new company in Brazil having as stockholders their main original entity abroad and an additional party that could be one of the directors for the main original entity or a local party (e.g., the local administrator) with nominal ownership (e.g., 0.01%).

The above strategy is chosen by the vast majority of small to mid-size companies entering the Brazilian market. More sophisticated approaches may be better suited for companies ready to invest a substantial amount of capital in Brazil (e.g., 100+ million dollars).

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info@oliveiralawyers.com
+55-11-4349-1915 Brazil
+1-212-300-7174 USA
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What Are the Main Steps to Open a Company in Brazil?

Main Steps to Open a Company in Brazil

Brazil is not for the faint of the heart. Opportunities for making money in the Brazilian markets are many, but foreign players must understand that heavy red tape and regulation are deeply ingrained in the Brazilian culture.

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. Operation Requirements and Licenses

Any company in Brazil requires a Brazilian resident to act as an administrator for the company. If all the partners for your company will be either other legal entities and/or foreign citizens, you will first need to find a Brazilian resident to act as the "local administrator" for your company.

Operation requirements, potential licenses, and the intended location zoning for the company must be evaluated. Most activities will not require special licenses. However, some activities will require special licenses that may require substantial additional steps (e.g., health and financial services).

The operation requirements may also be determined by where the company will be based. There are zoning regulations dictating which types of activities may be run in each area.

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 RGN (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. Although the Bolsonaro administration has been working hard to reduce the red tape, this step and the overall process of opening a company in Brazil is still time and document-intensive.

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. Registration with Social Security

After obtaining the Municipal Operation License, the company should register with Social Security (even if it doesn't have employees). Even if the company operates with only partners, there are still social security taxes to be paid. This registration must be done within 30 days after the beginning of the company operations.

10. Accounting Books and Invoices

In Brazil, companies depend on the government's authorization to issue their accounting books and invoices. In the past, all the accounting books and invoices would be printed in authorized printing shops. Today, most of the books and accounting are done through software. However, the attachment to over-regulation and distrust is still present. Invoices (notas-fiscais) must be issued directly on websites provided by the taxation authorities or at least be integrated with the authorities' system. The concept is that by forcing market players to depend on the government's systems to issue their invoices, such players will not cheat on the tax front.

Our firm helps your newly formed legal entity with other needs such as opening a bank account and additional registration process in case of specialized activities.

Contact Us Now
info@oliveiralawyers.com
+55-11-4349-1915 Brazil
+1-212-300-7174 USA
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Changes for the Better

Given the globalization and internationalization of business, it has become patent that this level of red tape and regulation really hurts Brazil. Fortunately, the Bolsonaro administration has been pushing for a reduction of the red tape and automatization of most of the above procedures.

We Can Help

Need help opening your company in Brazil? We can help. Need help deciding whether or not to open a company in Brazil? We can also help!

Contact Us Now
info@oliveiralawyers.com
+55-11-4349-1915 Brazil
+1-212-300-7174 USA
Get a Quote Today!

What Are the Main Types of Companies in Brazil?

There are five types of business structures in Brazil. However, the two most common are:

Sociedade Limitada (Ltda): it is a private limited liability company in which members enjoy limited liability. This usually fits small and medium businesses since they are not authorized to issue shares in order to raise capital. Its incorporation document is known as “contrato social” (roughly equivalent to an "Operating Agreement" of a limited liability company).

Sociedade Anônima (S.A): it is a public limited company and its shareholders also enjoy limited liability. This is advisable for big companies entering into the market considering they are entitled to issue shares and sell them on the stock exchange. Its incorporation document is known as “estatuto”.

Trick Issues

Although Brazil has established itself as a powerhouse economy in South America, some legislation has not kept up pace with the economic modernization. As a result, foreigners are likely to find it difficult when dealing with:

  • Taxation: the country has of the most complex tax systems in the world. Companies are taxed at the municipal, state, and federal levels. In addition, double taxation is probable depending on where your base is set up.
  • Labor Law: regardless of where a company is willing to invest, it will end up eventually paying twice for each employee it takes on. That is because the Brazilian Labor Code (CLT) sets out a myriad of entitlements, such as Christmas bonuses, social security benefits, maternity leave, and so on.
  • Background check: prior to selecting a local partner in the country, it is advisable to conduct a thorough investigation so as to ensure you are not getting involved with a fraudulent scheme. Some shell companies you contact might attempt to request money in advance and then leave you blindfolded with no real investment in Brazil.

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
  • Filling documentation with companies’ house and any other appointed office
  • 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.

Contact Us Now
info@oliveiralawyers.com
+55-11-4349-1915 Brazil
+1-212-300-7174 USA
Get a Quote Today!