International investors, corporations and businesses are finding the Brazilian market an exciting destination due to the country’s strong economy. Companies from around the globe are expanding existing operations into Brazil, and some are even starting new ventures here. However, businesses contemplating a move to Brazil must first become familiar with the country’s unique corporate compliance regulations and laws.
Company Formation:
- More than nine different types of corporate entities may be used in Brazil.
- The Brazilian Civil Code and local laws detail the type of business entity permitted.
- The long-term plan for business activities in Brazil is an important consideration in selecting the business classification.
Contract Law:
- Contractual provisions that do not meet Brazilian law requirements may be deemed unenforceable or unlawful.
- A large portion of a party’s obligations and rights are pre-determined by statute prior to any contract being drafted.
- Brazilian general partnership provisions prohibit or restrict replacement of partners, regardless of what is written in the contract.
Filing of Papers:
- The appropriate business documents must be filed with the correct government agencies.
- Documents may need to be filed with several different government agencies, several departments — or filed in a specific order.
- Many regulations applied to foreign businesses are not applicable to Brazilian companies. Often bureaucracy will supersede efficiency.
Tax Laws:
- The tax rates in Brazil are among the highest in the world, making it vital to select the correct tax structure for the specific business.
- Some companies will be required to select a specific tax regime, depending on the nature of the business and gross income.
- Careful evaluation is necessary to avoid being earmarked for the high tax bracket and to minimize the chance of non-compliance with any tax law.
Visa Applications:
- Two separate Brazilian government entities are involved in visa applications — the Department of Labor and the Department of Justice.
- Applying for permanent residency in Brazil involves both agencies and is often a time-consuming process.
- A variety of business visas are available, with varying time limits, limits on activities, and limits on earned pay.
The laws regulating businesses in Brazil can be complicated and may offer disagreeable surprises. Utilizing the services of an experienced law firm will help make the process smooth and enjoyable.
