Company Registration in Brazil

BRAZIL is the South American country known for its hometown to the lungs of the earth i.e. Amazon forest and for its beautiful beaches and diversified culture. Brazil is the fifth most-populous country on Earth and accounts for one-third of Latin America’s population. • In 2022, according to International Monetary Fund (IMF), Brazil has the 10th largest gross domestic product (GDP) in the world and has the 8th largest purchasing power parity in the world. OECD has projected its Real GDP to grow by 1.7% in 2023 and 1.2% in 2024. Brazil is the best place to start a company.

One of the most common company types in Brazil is the limited liability company, known locally as a limited society or SRL.

No minimum or maximum capital required unless the entity is involved in trading or hiring foreign individuals as managers or directors. This type of entity is incorporated through an Article of Association which needs to be registered with the Board of Trade.

SRL can be incorporated with only one shareholder. They don’t need to be a resident and there’s no minimum or maximum percentage of interest ownership. Though, the Non-residents in n SRL, must be represented by an individual resident in the country

EIRELI is limited liability entity and requires a minimum capital stock of a minimum of 100 times the highest minimum wage in force. The EIRELI is governed by the same rules as the SRL, in terms of the obligation of the shareholder but only individuals can be the shareholder of such company.

Only Brazilians or foreigners with permanent residency (PR) are allowed to create this type of company.

This type of entity can issue different classes of shares (voting and non-voting), with the liability of shareholders being limited to the payment of shares to individual subscription of the shareholders.

It requires at least two shareholders which can be a natural or legal person, irrespective of their residence. The corporation’s capital must be completely subscribed and 10% must be deposited in a bank account as part of the incorporation process. It must set aside at least 5% of annual net income in a legal reserve until it reaches 20% of capital. Though, an SA must have a board of directors (who are fiscal residents of Brazil or hold residency) and administrative council (who can be non-resident foreigners).

A consortium is the gathering of corporations of other companies with the aim of performing a particular operation or activity. Consortiums are unincorporated entities where two or more members take part in trade, business, financial operations or ventures, and share profits.

A consortium is established through a consortium agreement where each partner is responsible for their own obligations and liabilities, as set out in the consortium agreement.

The consortium agreement must be filed with the local board of trade in the same jurisdiction as the main office. A consortium is not regarded as a tax payer, like other types of companies in Brazil.

In order to set up a branch office in Brazil, it’s necessary to demonstrate the existence of a legal entity in another jurisdiction, including a copy of the articles of incorporation and list of shareholders, among other documentation.

In case of a Branch office the remittances of profits are exempt from withholding tax. One must attain a special authorization to open a branch of a foreign corporation, by the Ministry of Development, Industry and Trade. The foreign branch office can only start operations post registration and authorization of documentation has been published.

Brazilian resident companies are taxed on worldwide income whereas non-resident companies are taxed in Brazil through a registered subsidiary, branch, or PE, based on income generated locally.

Corporate income tax is taxed at a fixed rate of 15% on annual taxable income, using either actual profits method or presumed profits method. This is levied at Federal level as opposed to the state level registration requirements. Also, profits of branches of foreign corporations are taxable at the normal rates applicable to Brazilian legal entities.

VAT is a state tax on the rendering of interstate and intermunicipal services, even when the transaction and the rendering of services start in another country. The internal VAT rates vary according to each State of Brazil, ranging, as a rule, from 17% to 20%.