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How to start a foreign capital company in Brazil?Posted 17/06/2022
Setting up a company in Brazil can be a real challenge! Even more so for entrepreneurs who are not familiar with the bureaucracy in the country. Therefore, when starting a business, it is essential to know Brazilian accounting standards for foreign capital companies.
The ideal, first of all, is always to seek guidance from certified accountants in Brazil. Professionals qualified in business accounting have an in-depth knowledge of tax processes and laws.
With adequate support, the incorporation of companies on Brazilian soil will certainly be in line with accounting standards in Brazil.
And most importantly: you will know the main requirements and avoid surprises when opening your company in the South American country.
Brazil in the ranking of the most bureaucratic countries to open a business
Both Brazilians and foreigners are faced with a multitude of rules to set up their own business in the country. The requirements can be even greater for investors and other countries.
According to the Doing Business ranking, produced in 2020, Brazil occupies the 138th place – out of a total of 190 nations – when evaluated in relation to procedures for starting a business.
In 2021, the Brazilian government signed a provisional measure (MP No. 1040/2021), aiming to elevate Brazil to 20 positions in the Doing Business ranking.
Some changes to the company formation process include:
- No need for a previous location feasibility study;
- End of the need for prior research of business names;
- Unification of tax registration numbers;
- Removal of non-registration inactivation;
- End of notarization requirement;
- End of the ban on similar corporate names.
Opening of a Brazilian company with foreign capital
Opening a company with foreign capital is considered a quick process. This is because foreign capital circulates freely in Brazil, with very limited restrictions.
But it is interesting to know that, in Brazil, foreign participation is not allowed in activities related to:
- Production of nuclear energy;
- aerospace services;
- Postal and telegraphic services.
In addition, prior authorization is required to participate in mining, communication (TV and radio) companies, financial institutions, air transport companies, among others.
Steps to open a foreign capital company in Brazil
First of all, start the process by seeking professional guidance from specialists in corporate accounting in Brazil. Consulting is essential to avoid errors, solve problems and mitigate delays in opening and operating the business.
With the appropriate information on Brazilian accounting standards, investors must appoint a representative in Brazil.
Appointment of Representative
The appointed attorney-in-fact may be appointed as administrator, director and/or legal representative of the new venture. The legal representative must meet the following requirements:
- Be Brazilian (by birth or naturalization);
- Be a foreigner with a permanent visa and fixed residence in Brazil.
Organization of documents issued abroad
There are two situations here: the investor from a country that has ratified the Hague Convention and the investor from other regions. In the first case, the documents need validation through the Hague Apostille service.
In the second case, the documents are authenticated through the consulate of the country of origin. They can also be authenticated by a Brazilian diplomatic representation and undergo a sworn translation.
The next steps are the registration of the National Registry of Legal Entities (CNPJ), the filing of the articles of association and the entry of investment.
It is worth remembering that foreign legal entities must register in the Non-Resident Declaratory Registry – CDNR before requesting the CNPJ.
In addition, the entry of foreign capital into Brazil requires official registration, which is done in the traditional banking system.
Now that you know how to proceed, count on the expertise of the Europartner team to help you set up your company in Brazil. Get in touch with our representatives!Author's post: Europartner Accounting