Bank account for a non resident in Brazil

[Golfingworld]

Getting a bank account is very difficult for an individual non resident in Brazil...this is the crux of the problem for property owners that want to receive rental income. As far as I know it is only possible to get a bank account if you become resident or citizen through marriage, long term residency or by forming a Compay and investing in Brazil over USD$50k. You can get a bank account but like many things in Brazil the rules chop and change depending on who you know and who does what for you. To my mind these are things that all investors in developments should be pressuring their sellers on. As a block of 100 buyers they should get together and ask real answers from the developers on this question. It is claimed that the Companies managing these developments in a "pool" system will hold your revenue for you and pay you out (allegedly) in cash. They could in theory transfer the funds abroad but this will be costly and no regular. If you rent yourself (if they allow you to) then you need a local administrator to do this and pay bills receive funds etc..or you charge rents offshore before the money gets to Brazil. All these matters are very important issues, especially if you need an ncome to pay for your investment. I am the official "profit of doom" on here and thisis exactly why my view is that these off plan developments are over priced, risky and will not yield anything like the rentals that people are hoping for. Even if they do, you can't get your hands on the money. Frankly, the developers should help you resolve this issue as it is in their interest to do so, if they don't then what does this tell you?

 

[robh]

The developers we deal with and the lawyers we have talked to all have said that any rental income from a foreign owned property will be taxed at source (i.e. in Brazil). So when anyone says differently you should probably ask a few questions.

This means that your rental income will be taxed about 16% by the Brazilian government when it is sent to you in the UK. Once you get this back to the UK you can ask for a tax credit, which means that IR will not tax you on that money twice.

The rental income can be sent offshore at any time, but most rental schemes usually set an interval like 3 or 6 months. These payments need to be transparent in Brazil, so they are not likely to be in cold hard cash but will need to be transfered to an account in the name of the person who owns the property, whether the account is in Brazil or overseas doesn't matter.

As usual you should read the conditions of the rental scheme carefully as they can differ markedly, making sure that the one you choose suits you and your financial situation.

Regards,
Rob.

 

[Golfingworld]

So, if I understand this correctly, when you buy a propert in a development in Brazil there is a 16% deduction at source..what Tax Deduction documents will be provided. Then funds will be remitted overseas in Reis. This means there is an exchange rate risk and that one has to accept the likely unfavourable rate offered by The Banco do Brasil. Plus there will be charges for remitting funds overseas. Add to this manaagement charges and community fees I wonder what the nett result will be? Again this is my point as to why there is a need for care when considering these matters as once you start looking at the nitty gritty, how profitable are these deals really going to be? The simple answer is that developers find a solution to getting Bank accounts for their clients in Brazil and this is the question that should be asked. All rental guarantees really are, are pre-paid discounts, which the buyer funds for himself. He gets that discount back, but it is discounted as per the above. So, you pay say 25% over the market price, then get it back less tax, bank charges and currency fluctuations. Not a great deal in my book.

 

[robh]

So, if I understand this correctly, when you buy a propert in a development in Brazil there is a 16% deduction at source..what Tax Deduction documents will be provided. Then funds will be remitted overseas in Reis. This means there is an exchange rate risk and that one has to accept the likely unfavourable rate offered by The Banco do Brasil. Plus there will be charges for remitting funds overseas. Add to this manaagement charges and community fees I wonder what the nett result will be? Again this is my point as to why there is a need for care when considering these matters as once you start looking at the nitty gritty, how profitable are these deals really going to be? The simple answer is that developers find a solution to getting Bank accounts for their clients in Brazil and this is the question that should be asked. All rental guarantees really are, are pre-paid discounts, which the buyer funds for himself. He gets that discount back, but it is discounted as per the above. So, you pay say 25% over the market price, then get it back less tax, bank charges and currency fluctuations. Not a great deal in my book.

GW,

First of all I am not talking about guaranteed rental schemes here, I am talking about all rental schemes whether guaranteed or not.

I am also not talking about rental schemes where the rent is paid outside of Brazil, say in the UK. That has nothing to do with the Brazil tax system.

To answer some of your questions:

1. You should always be provided with tax certificates from the Brazil govt. so you can get a tax credit with IR. The Brazil govt. is obliged to provide them to you.

2. The 16% is deducted from your rental income by the Brazil govt before it is sent to you. This has nothing to do with the purchase of a property.

3. As a foreigner you will always pay the 16% on rental income whether you have a bank account there or not. If you are resident in Brazil then the story is different of course as you would be filing a tax return there.

4. There will always be currency fluctuations, you are after all buying in a foreign country. If the payment is sent in reais to you then it will be your bank that receives the reais and does the conversion for you.

5. There will always be transfer fees to get your money out or in, this is pretty normal and I haven't found Brazil to be outrageous for bank fees.

I have seen all sorts of rental schemes work very well, guaranteed and not. I understand your qualms with guaranteed rentals, but if a developer added 25% to the cost of their units to cover say 5 years rent at 5%, then they would instantly price themselves out of the market?

As for the rest of what you are saying, you need to look at the rental scheme contract carefully as they all differ, so some deals may work for you and some wont. So yes you are right, look before you leap.

Rob.