Steps to Establishing an Office in Brazil

Either setting up a company in Brazil or acquiring an existing entity are options for investing in Brazil. Setting up new companies is relatively easy and inexpensive. Acquisitions of existing companies are monitored by the Central Bank (Banco Central).

The more critical issues are usually related to starting a business without a local partner who knows the lay of the land. Selecting the right partner, as in any other country, is also critical. Specific expertise, track record and business ethics are probably the more important issues to be looked at.

Branch offices are difficult to form, whereas corporations (S.A. - Sociedades Anonimas) and limited liability companies (LTDA - Limitadas) are relatively easy to form. Capital registration with the Central Bank is required for access to foreign exchange, capital repatriation and profit remittance.

Office space and personnel is quite expensive in Brazil so we strongly recommend against this exposure, at least in the beginning. Go slowly and carefully. Be absolutely sure you need an office because you will have to staff it.

Brazil's minimal capital requirements are nominal in general, but are significant for establishment of financial institutions. When selecting the site of an investment, potential local investment incentives should be carefully considered, as should tax considerations.

It is important to look at taxes during the evaluation of entry strategies into Brazil. There are several 'waterfalls' of taxes (Impostos em cascata) that need to be applied for the importation, sale and exportation of products in Brazil. Although there are many taxes, they are well-defined and well-known.

It is essential to consider taxes to assess if your products will be competitive in Brazil. Seek help on this, so you can be informed on all specific taxes and find a good customs broker to get products successfully imported. The broker will know or can research what taxes apply, and will fill out all the importation paperwork. Improperly filled out paperwork or the non-payment of applicable taxes can delay products and trigger heavy fines.