Do you intend to make a money transfer to Brazil?
Transfering funds to Brazil proves to be considerably more complex than many international citizens would anticipate. The country has a longstanding tradition of rigorously regulating the flow of money into and out of the country.
Financial operations are no exception and need to be followed with great attention to detail.
Financial institutions are subject to substantial fines, often amounting to hundreds of thousands of reais, if wire transfers to Brazil fail to undergo meticulous scrutiny and documentation. Consequently, it is not a surprise that, when faced with uncertainty, Brazilian banks consistently demonstrate an abundance of caution.
In this article you will find the best information about money transfer between businesses:
- How to do it;
- What type of bank can carry it out;
- Which companies in Brazil can help you with this process.
In addition to that, the focus will be on explaining the steps required for bank transfers between foreign companies wishing to send money to companies in Brazil.
While Brazil stands out as an attractive destination for foreign investment, bureaucracy and foreign exchange regulations can create complex barriers that require knowledge and market experience to resolve.
This article explores the steps in this process, from choosing a foreign exchange bank to the essential legal considerations, offering insights into effective strategies to mitigate the difficulties and ensure the best possible transfer of funds to companies in Brazil.
Differences between a wire transfer to Brazil of individuals or businesses
The difference between the two is basically the degree of complexity: while the wire transfer between individuals tends to be less complex, the same operation between businesses requires extra caution, especially when the amounts are over ten thousand dollars.
In addition, when transferring between companies, the Central Bank of the countries involved requires a series of registrations to ensure compliance with exchange and tax regulations.
Another important point is that, regardless of the nature of the transfer to be carried out, there is one thing in common for all of them: it is necessary to have professional guidance to facilitate the process and ensure that the whole process runs smoothly and regularly.
The legal framework for foreign exchange market
In December 2021, the Brazilian government published Law 14.286, stablishing a new framework for:
- The Brazilian foreign exchange market;
- Brazilian capital held abroad;
- Foreign capital held in Brazil.
The law aims to modernize, simplify, and enhance the efficiency to the Brazilian foreign exchange market by consolidating the applicable rules into a single normative instrument. These modifications form part of the necessary adjustments that Brazil must undertake to become a member of the Organisation for Economic Cooperation and Development (OECD).
In the past, Brazilian legal entities and individuals were allowed to maintain foreign bank accounts in foreign currencies, but they were prohibited from holding foreign currency in a domestic Brazilian bank account. This restriction extended to foreign entities and individuals as well.
With the enactment of Law 14,286, both legal entities and individuals now have the option to establish bank accounts in Brazil that can hold foreign currency.
Now, Brazilian banking institutions may carry out payment orders in Brazilian currency received from abroad and sent abroad through the use of foreign bank accounts holding Brazilian reais.
The eligibility criteria for applying for such accounts will be determined by the Brazilian Central Bank (BACEN).
After this introduction, which dealt with historical and legal aspects, it’s time to find out how to transfer money to Brazil.
How to send money to Brazil
Does your company need to send money to Brazil?
Here are the general steps that can be followed, always remembering that it is very important to consult specialized professionals and be aware of the specific regulations applicable in both countries:
1. The choice of the transfer method
Decide which transfer method to use. Options include international bank transfer, online payment services, international check, among others.
The choice will depend on the convenience, costs and preferences of the parties involved, however, bank transfer is the method most commonly used.
2. Choosing a foreign exchange bank
Choosing a foreign exchange bank is crucial. Choose a financial institution that has experience in international transactions and offers services suited to your remittance needs.
There are common bank agencies and foreign exchange banks. Some companies manage to get common banks to act as foreign exchange banks, but this is not a type of service open to everyone.
For these and other reasons, a specialized consultancy can help you make the best choice.
3. Checking the necessary documentation
Provide all the necessary documentation. This can include commercial invoices, shipping documents, contracts and any other paperwork related to the transaction. These documents may vary depending on the nature of the transaction and current regulations.
4. Currency conversion
Calculate the conversion of the local currency to Brazilian reals, taking into account the current exchange rate. This process may involve negotiating with the exchange bank to get the best possible rate.
5. Brazilian Company Bank Details:
Get the full banking details of the Brazilian company, including account number, SWIFT/BIC code of the Brazilian bank and other relevant information.
The SWIFT code is a unique identifier used by financial institutions around the world to communicate with each other.
Make sure this information is correct to avoid routing problems.
It is especially relevant in international transactions, allowing the unique identification of banks and financial institutions, ensuring that the shipment is directed to the correct bank and avoiding delays.
This code makes transactions safer and more efficient by providing a standardized, global means of identifying financial institutions.
6. Registration with the Central Bank of Brazil (Sisbacen)
The foreign exchange bank must register the operation within Brazil’s Central Bank Information System (Sisbacen).
Registration is a legal requirement for international transactions and contributes to transparency and regulatory compliance.
At this stage, a foreign exchange contract must be drawn up before the Central Bank. This is the document signed between buyer and seller that defines the terms and conditions under which a foreign currency purchase and sale operation is carried out.
There are still many details involved in this important document. For this reason, to avoid mistakes and future problems, it is recommended to have the support of a specialized consultancy to help with this step. It is essential and a specialized consultancy should help with this step.
7. Compliance with Tax Regulations
Make sure you comply with all applicable tax regulations, both in the country of origin and in Brazil. This includes correctly filling in forms and paying any taxes, if necessary.
8. Transaction follow-up
Maintain regular communication with the exchange bank and the Brazilian company to follow up on the status of the transaction. This is essential to ensure that both parties are aware of progress and can address any problems quickly.
9. Fee Negotiation
Negotiate exchange rates and associated fees with the exchange bank, if possible, to ensure that costs are minimized. At this stage a specialized consultancy can provide quotes to help you.
10. Processing time
It’s important to understand the time it takes to process the money transfer to Brazil. International transfers usually take a few working days, so take this into account in your planning.
By following these steps you have a better chance of making a successful, efficient and compliant international shipment.
Best ways to transfer money to Brazil: how can a specialized consultancy help you?
If the shipment is to be made to a Brazilian company, the ideal is to have a specialized consultancy to facilitate the necessary procedures.
In this case, Europartner is the best option to help you.
How does it work? By facilitating and simplifying this operation for your company, so that you run fewer risks.
Transfers to Brazil need a very clear reason for being made: investments, payment of invoices, among others.
Each nature of transfer has a number of documents and potential tax consequences, so it is complex and should be done by a company that knows the process and has experience.
While the exchange banks are the intermediaries, i.e. you send them the money, they close the exchange and transfer it in Brazilian currency (Reais), Europartner is at the end of the chain, working to release the money so that the company in Brazil can receive it.
In addition, Europartner works to find out which company has the most competitive rates for the client, making the client’s job easier while they can focus on their business.
No matter the nature of the transfer, the amount or your type of business: Europartner can help you.
