Setting up company in Brazil

[JAndunes]

Hi, I will need to set up company in Brazil within the next year. Can someone give me an idea of how much (more or less) it would cost to have a reputable Brazilian attorney to take care of it? I've been quoted R$6000 for the setup of the company including all municipal, state, federal and attorney fees. How does that sound?

 

[timatthebeach]

can't remember exactly how much it cost us to have a company set up but it was in the region of R$ 1,000 to R$ 1,500 and it was all done by an accountant.

 

[JAndunes]

thanks for your reply. do you think you'd be able to obtain the accountant's email for me?

 

[JMBroad]

Depends really on how many you open a year and who you get to do it for you. It also depends on how much work is needed to be done. Lawyers are more expensive than accountants but whether they will be easier to communicate or not with is another matter.

Our accountant also charges us around R$ 1.000,00 BUT we have several clients each year that open companies through that accountant and that is also assuming that the person is here in Brazil and has a CPF number (Fiscal Identification Card) already.

If you need a CPF number, it is something which is very cheap and easy and fast to do if you are in Brazil but can take a while and cost quite a lot of money to do if you are outside of Brazil.

Also keep in mind that once the company is open you'll need to deposit R$ 1.000,00 into a bank account to open the account - some people show this as a cost but obviously you then have R$ 1.000,00 in your bank account when you start working.

 

[JAndunes]

thanks guys. well i would only be setting up 1 company to start with... for personal use i.e. not on behalf of clients. Can anyone recommend/give the email of a reputable accountant who will do the job for R$1000? I already have a CPF

 

[timatthebeach]

can give you details but would be better to use an accountant in the area you are setting up the business. the company myself and a friend started is right down south in RS and our accountant is just a small town local one. also need to speak portuguese as he doesnt speak english.

if youre going to be in the north you could ask JMBroad for his contact/help would probably be easier.

CPF is easy and cheap in brazil (as John said) but it can also be done online from outside the country now (see another thread on this forum) but havent done it so have no idea on ease, length of time or cost that way.

one other note about companies - i have seen on this forum that you must have a brazilian administrator who you trust as they will have access to all company powers including bank account - whilst this is partly true, you need a brazilian administrator, you can make a procuracao (like power of attorney) which limits their powers within the company to basically nothing and as soon as the company is started you can be an administrator of the company too with all powers necessary to run the business. I have read on this forum that until you have residency you cant be an administrator BUT THIS IS NOT CORRECT as both myself and my friend are administrators (with full powers) and neither of us have residency.

 

[JMBroad]

Am curious as well as none of the companies which I know of which have been set up in Brazil have had administrators who are not residents in Brazil.

One comment on your description; you said:
"i have seen on this forum that you must have a Brazilian administrator who you trust as they will have access to all company powers including bank account - whilst this is partly true, you need a Brazilian administrator, you can make a procuracao (like power of attorney) which limits their powers within the company to basically nothing and as soon as the company is started you can be an administrator of the company too with all powers necessary to run the business."

That is not necessarily correct. The administrator of a new company has to be a resident in Brazil but does not need to be a Brazilian citizen - he can be from any nationality as long as he has a RNE - I've never heard of someone being the sole administrator of their company without an RNE although I have heard of limiting the powers of the acting administrator - it is in fact quite common but not through a POA, by a private contract - I am of the understanding that a POA can't limit powers, only extend powers to others.

 

[timatthebeach]

Yeah john youre right anyone with residency can be an administrator.

someone told us about the fact that we could be our own administrators without having residency and pointed us to a govt. website i will get the link and post it for people to have a look at.

and you may well be right on the limiting of powers being done through some other form other than a poa i just call it that as that is what i think of it as - and we had to go to the notary to make it official.

 

[debzor]

Am curious as well as none of the companies which I know of which have been set up in Brazil have had administrators who are not residents in Brazil.

One comment on your description; you said:
"i have seen on this forum that you must have a Brazilian administrator who you trust as they will have access to all company powers including bank account - whilst this is partly true, you need a Brazilian administrator, you can make a procuracao (like power of attorney) which limits their powers within the company to basically nothing and as soon as the company is started you can be an administrator of the company too with all powers necessary to run the business."

That is not necessarily correct. The administrator of a new company has to be a resident in Brazil but does not need to be a Brazilian citizen - he can be from any nationality as long as he has a RNE - I've never heard of someone being the sole administrator of their company without an RNE although I have heard of limiting the powers of the acting administrator - it is in fact quite common but not through a POA, by a private contract - I am of the understanding that a POA can't limit powers, only extend powers to others.

I think one of the main reasons an administrator must be a Brazilian resident (but not necessarily a Brazilian),is because now you cannot have a bank account without a being a resident.

Also I believe costs to set up will depend entirely on what you want, how difficult or complicated the social contract is going to be, how many partners, what the administrator is going to charge, do you need a bank account, is there to be any immigration application later, etc.

Certainly I would recommend not using a back street accountant for this, but an English speaking lawyer who is fully aware of what you need and totally experienced. Otherwise you may encounter problems in the future. I did.

 

[JMBroad]

I think one of the main reasons an administrator must be a Brazilian resident (but not necessarily a Brazilian),is because now you cannot have a bank account without a being a resident.

Also I believe costs to set up will depend entirely on what you want, how difficult or complicated the social contract is going to be, how many partners, what the administrator is going to charge, do you need a bank account, is there to be any immigration application later, etc.

Certainly I would recommend not using a back street accountant for this, but an English speaking lawyer who is fully aware of what you need and totally experienced. Otherwise you may encounter problems in the future. I did.

Has something changed with regards to opening bank accounts which I do not know about? I'm currently in the process of trying to open a bank account for someone who doesn't have residency so will let you know how that turns out.

I wouldn't recommend using a "back street accountant" ever... for anything... not even sure what a back street accountant is but it sounds like something out of a Bram Stoker novel.

The accountant I was referring to who handles the opening procedure of companies for our investors is someone who has set up numerous companies before for all different nationalities, partners, social capitals, etc etc and has been doing so for the past three years or so.

She is very much front street, perhaps even an "Avenida accountant". However I do agree that if you have an experienced English speaking lawyer who comes with a recommendation then you should also do fine.

 

[debzor]

Has something changed with regards to opening bank accounts which I do not know about? I'm currently in the process of trying to open a bank account for someone who doesn't have residency so will let you know how that turns out.

I wouldn't recommend using a "back street accountant" ever... for anything... not even sure what a back street accountant is but it sounds like something out of a Bram Stoker novel.

The accountant I was referring to who handles the opening procedure of companies for our investors is someone who has set up numerous companies before for all different nationalities, partners, social capitals, etc etc and has been doing so for the past three years or so.

She is very much front street, perhaps even an "Avenida accountant". However I do agree that if you have an experienced English speaking lawyer who comes with a recommendation then you should also do fine.

The law about foreigners having a bank account has not changed - it is quite legal so to do - but the banking regulations make it exceedingly onerous on the banks to undertake this. They have to take full responsibility for the conduct of such accounts, and complete a mountain of paperwork for each and every transaction, which they are most unwilling to do.

Apologies if it appeared I was implying a slur on your accountant lady friend - I am sure she is excellent. I was merely trying to discourage the search for the cheapest option that may result in the consideration of an underqualified and inexperienced (at best) person. This is not an option.

 

[flaviopinto]

John is right.
No company survives with a legal administrator in Brazil and I do not think it is different abroad.
One can find extremely cheap administrators to respond for their new Brazilian company meanwhile waits for his permanent visa (which now costs R$ 150.000,00 per shareholder, or around US$ 81,000.00, not that US$ 50,000.00 anymore). I have heard about foreigners who use their brazilian girlfriends recently met in the beach of Fortaleza as their legal administrators. So these girls will be responsible for a brazilian company with foreign shareholders among the Brazilian Central Bank, the Internal Revenue Service and even the Federal Police, just to start. It is a risk for the girl and the shareholders...
Even with all that unpleasant things people use to repeat about Brazil (including some brazilians who cultivate a morbid habit of constantly talk bad things about their nation, painting with even more stronger colors...) here the government is really concerned about international money laundry and we live under strong and straight rules for money ins and outs. What seemed to be a thing of a backward country, now, during this whole world financial crisis, is acclaimed as the wall that is keeping Brazil apart from getting involved in another crisis.
If you want to use a company just to own property as land bank or to rent you should register your overseas company here, an easier and cheaper way for the case. There will not be any tax advantage to set up a Brazilian company just to own property for later sale or rent in most of the cases.
Brazilian companies are more for whe in you want to develop or offer a product or service.
However, in both cases you will still need to engage a resident legal administrator, who would charge less for locally registered foreign companies.
Both companies will need to have an accountant, but is still cheaper for a foreign company, which will not need to have a real address in Brazil (BR companies at least will need to rent or own a small office).
Foreign companies will need to have their acts translated to Portuguese by legal translators, a cost paid just once.
I would like to remind that that fees are always related to the amount of service and legal responsability involved. Considering the same situation, fees for legal administrator and accountant are cheaper for foreign companies locally registered.
People use their LLCs to buy property in Brazil and can even have a bank account in Brazil foor their LLCs (again a representative will full power is required, in this case Brazilian banks want a public POA!).
So, you will need to set up a Brazilian company when:
- You will develop, produce or sell something or some service here.
- You desperately want a permanent visa in Brazil.
For the other cases you can buy using a foreign LLC (please avoid companies registered in tax havens!),or (cheaper!) as an individual and can still use American Self-Directed IRA accounts or retirement plans resources. And UK citizens are probably able to use their SIPP plans to invest in Brazil (it is an issue I will soon discuss with John).
Best regards from Fortaleza, Brazil.

 

[mikesmith]

Hi JAndunes

I had a chat with my accountant here in Natal yesterday about company set-up and here is his break-down of charges/fees;

138rs Power of attorney
138rs Social contract
138rs To amend social contract after infusion of capital
21rs Registration fee
510rs His fee(1 minimum salary)

945rs TOTAL

He said that if you are transferring capital into the company account from overseas he will need to register the company with the cental bank.He will need to do this in person at the headquarters in Recife.For this he charges 600-800reals(depending on the flight cost)
He has carried out the same procedure many times for foreign clients.Please let me know if you need any further information and I will be glad to help.

 

[flaviopinto]

There are different prices for different services, charged by different professionals. There are the fair and unfair fees too.

A professional has his own fee, based on his experience, knowledge, time to be spent and complexity of the service. Considering services made in a country on foreigners' behalf the first and necessary step in the direction of fairness is having the same net fee for locals and foreigners, considering the same service (since you are the same pro that serves locals and foreigners...).

In my case, besides the normal government taxes naturally charged, my accountant charges R$ 1.500,00 to set up a company and one Brazilian minimum wage for taking care of the company accounting, considering a small startup company basic accounting.

The agent that requires Investors' permanent visa for my clients charges R$ 6.000,00 for each shareholder that wants a visa but delivers the company completely set up, including the Brazilian Central Bank registration. So, in this case there will not be the R$ 1.500,00 setting up cost charged by the accountant. After this you will have the accountant monthly cost, because I strongly advise everyone who set up a Brazilian company to engage an accountant. No Brazilian company lives without an accountant! Without your company accounting updated soon you will be face-to-face with an IRS or a State or City Hall Taxation inspector. If not you, your resident legal administrator will...

Depending on the case there will or not have some legal advisory involved. Normally it happens on advising on the better option of activity to put in the company object (it may result in less taxation) and in some Joint Venture contracts and other agreements, when necessary. So, attorney fees are just in case.

Beyond this, there is the resident legal administrator monthly fee, because the only people I already saw accepting to accomplish it and assuming legal and tax liability among the Central Bank, the IRS and all the involved federal, state and city government bodies for free were some foreigners' brazilian girlfriends. So, it is possible to have a resident legal administrator for free here. You take the risks.

A resident legal administrator is not some gracious thing, it is legally required in Brazil for any company, Brazilian or local registered foreign one, and he must have powers to manage all company assets: wells, bank accounts, properties, etc., and, last but not least, he is solidary liable for all legal and tax obligations.

Kind regards from Fortaleza, Brazil.

 

[Frank_London]

Cheap company formation services can cost you more in the long run.

Please check fees with other accountants and lawyers before you proceed.

 

[JMBroad]

Well the bank account I was trying to set up for someone without a residency visa was finally denied without giving a reason - the answer was simply "no" regardless of how much money was going to be placed into the account.

 

[flaviopinto]

Here in Fortaleza we are accomplishing bank accounts for non-residents in first-line Brazilian banks. We have a special agreement for it, strictly following the Brazilian laws, mainly the Central Bank rules for the case. It takes sometimes more than a month and has some requirements but we normally succeed. In Brazil, like in most of all countries, banks may reject proposals without justification.
After having his account, the non-resident client can hedge his investiments in Reais and make profits that can reach 10 to 12% yearly in low to moderate interest bearing funds.

The financial market expects high fixed-rate returns in bank funds in 2010 and 2011 as a result of the SELIC (the inter-banks interest rate) increase process being conducted by the Brazilian Central Bank to keep the inflation numbers low in spite of the strong economy growth we are living.

 

[debzor]

Here in Fortaleza we are accomplishing bank accounts for non-residents in first-line Brazilian banks. We have a special agreement for it, strictly following the Brazilian laws, mainly the Central Bank rules for the case. It takes sometimes more than a month and has some requirements but we normally succeed. In Brazil, like in most of all countries, banks may reject proposals without justification.
After having his account, the non-resident client can hedge his investiments in Reais and make profits that can reach 10 to 12% yearly in low to moderate interest bearing funds.

The financial market expects high fixed-rate returns in bank funds in 2010 and 2011 as a result of the SELIC (the inter-banks interest rate) increase process being conducted by the Brazilian Central Bank to keep the inflation numbers low in spite of the strong economy growth we are living.

Out of interest, Flavio, are these bank accounts corrente or poupanca?

 

[flaviopinto]

Hi Debzor
They are "conta corrente". The bank may not give the non-resident a checkbook in the very first beginning but will allow him to choose among its funds to invest his money. There are some requirements, like a public POA granted by the non-resident to a resident accredited by the bank to be his local assets manager and representative among the bank, the Central Bank, the IRS, the Federal Police and other government bodies (this POA must be done under a Brazilian Notary). The bank gives the non-resident their V.I.P. account with many services but requires a minimum balance (which can be left in a fund or annuity making money for the account owner).
For the ones who are buying property in installments this is a good thing because they can do this here in Brazil, without going every month to their bank abroad to wire transfer.
You see there are some requirements but it is a true bank account, a "conta corrente".

 

[debzor]

Hi Debzor
They are "conta corrente". The bank may not give the non-resident a checkbook in the very first beginning but will allow him to choose among its funds to invest his money. There are some requirements, like a public POA granted by the non-resident to a resident accredited by the bank to be his local assets manager and representative among the bank, the Central Bank, the IRS, the Federal Police and other government bodies (this POA must be done under a Brazilian Notary). The bank gives the non-resident their V.I.P. account with many services but requires a minimum balance (which can be left in a fund or annuity making money for the account owner).
For the ones who are buying property in installments this is a good thing because they can do this here in Brazil, without going every month to their bank abroad to wire transfer.
You see there are some requirements but it is a true bank account, a "conta corrente".

Interesting - usually the banks require proof of employment before allowing a conta corrente.

But then again, if you are granting a Brazilian resident complete control of your bank account (through a POA),perhaps it is that person who satisfies the bank's requirements?

I would also assume that not only must there be a sizeable deposit left in the account, (over which the resident would have complete control),but the resident would also be responsible, in the eyes of the bank, for the conduct of the account?

Many foreigners might find this a bit too much to accept, but many congratulations on finding a way round the system!