SIPP/Investment Funds

Discussion in 'Brazil Property' started by Vinceded, Jun 25, 2009.

  1. Vinceded

    Vinceded New Member

    Hello all,
    my name is Vincent. Im writing from the UK and lately I have been doing some research about investing in Brazil. I have the following questions which i hope you can help me with as the Brazilian consulate does not provide this kind of information and the agencies I have contacted in Brazil are yet to reply to my messages.

    My plan is to buy a plot of land in one of the many resorts being built in the northeast of Brazil (I have not decided which one yet). The question is: can I use SIPP when investing in a property in Brazil? Would i benefit from tax exemption over capital gains if i invest using SIPP? I thought of investing via a British investment fund but I need to know if they have to register the fund in Brazil to be able to do this. What about this CNPJ? would the fund need one?

    thank you in advance for your help
     
  2. robh

    robh Administrator Staff Member Premium Member

    Hi Vincent,

    The Brazilian government will not recognise a UK fund or a SIPP as tax exempt. The fund will need a CNPJ, but a fund is better off owning a company in Brazil which in turn owns the assets in Brazil.

    A lot also depends on what level of investment you are talking about.

    Regards,
    Rob.
     
  3. Vinceded

    Vinceded New Member

    Hi Rob,

    Thank you for your reply. The investment would be around £15-20k. does that change anything?
     
  4. robh

    robh Administrator Staff Member Premium Member

    It just means you have less options, i.e. opening a Brazilian company isn't worth the expense.

    Is your SIPP trustee ok with you investing in the plot?

    Regards,
    Rob.
     
  5. Grumpy

    Grumpy New Member

    As with the answer supplied to this a lot depends on your SIPP provider.

    If you have a good SIPP you should be able to buy a land plot & put this into your SIPP. Most "High St" SIPP providers won't allow this as they want an easy job & no hassles to collect your fees.

    If your SIPP provider does allow overseas land then it's not a problem, you can purchase the plot & have the title deeds held in your SIPP. Yes you'll have to pay 2% to transfer the deeds when you capitalise but I am not about the 15% CGT but this may be retained at the Brazillian end but certainly no CGT in UK.

    I'm doing some research on this as I want to do the same with plots I am looking at near Jacuma 15 - 20 mins south of Joao Pessoa. Will let you know in the next couple of weeks when I get the time to get definitive answers form my IFA.

    If you like let me know & I'll PM you. I've just joined to get info & any underlying issues on projects I've been looking at in Brazil as although there are problems I think it's the best place in the world right now to look at land for investment. Just make sure you do your own research as I've found a lot of the Due Diligence is a crock & lawyers can be in cahoots with developers.
     
  6. debzor

    debzor New Member

    The relevant law you need to research is Brazilian if investing in Brazil, not British.

    To invest in Brazil you must be registered for tax purposes here in Brazil. That means a CPF as an individual of CNPJ if a company or fiscal entity.

    I would suggest a CNPJ is only viable at high levels of investment, because of the ongoing costs of running and reporting a company or corporate entity.
     
  7. globalinvestor

    globalinvestor New Member

    what's the benefit of buying through a company?

    any tax savings?

    thanx!
     
  8. ojosazul88

    ojosazul88 New Member

    SIPPs

    Well probably not worth doing with a plot of land, more info below

    1. Is the Country you are buying in SIPP compliant?

    This is the most basic consideration. If the answer is no, then making your purchase SIPP-compliant is a non- starter. There is no real definitive list of acceptable countries but as an example Southern Cyprus, Portugal, the Caribbean and Brazil are on the ‘yes’ list.

    There are many more on the ‘no’ list. Examples include Spain, Italy and Bulgaria. It is not allowable for UK citizens to invest directly in in property in these countries through their pension although they can of course invest indirectly through collective instruments like trusts.



    2. Does your property have a commercial element like a hotel?

    The UK government introduced this caveat as it feared losing billions in tax revenue if people began putting their homes into SIPP;s which are liable to inheritance tax and income tax in the case of buy to let.

    SIPP compliant overseas property must have commercial element to it such as a hotel. The difficulty is that commercial property cannot be owned by overseas investors in some countries. A good current example of this is Turkey, where in principle it is an acceptable jurisdiction in terms of trust law but their own title deed restrictions prevent the ownership of commercial property, therefore creating a technicality that may or may not be possible to sort out.



    3. Is your development big enough to make the economics stack up?

    To make your development SIPP-compliant you need to enlist the help of a SIPP provider who will help structure your development into an investment product. The most well known examples are insurance companies like Prudential but these bigger players do not tend to deal with SIPP’s. Smaller, specialist companies like Rowan Moor, HornBuckle Mitchell are the companies you need to approach.

    They will usually provide their services at no upfront fee if your development is big enough. Small boutique developments will often not provide them with enough potential business to make the economics stack up.
     
  9. Sunnyshores

    Sunnyshores New Member

    Hi Vincent

    Can I ask what your reasons for investing in Brazil, and through a UK SIPP are?

    Please feel free to make contact.

    Regards, Debbie
     
    Last edited by a moderator: Jul 12, 2010
  10. InvestinBrazil

    InvestinBrazil New Member

    SIPP is a minefield in Brazil as Brazil does not recognise trusts as a legal entity, therefore trusts cannot hold directly title to land an property. The route to invest legitimately via a SIPP is in a UK managed and regulated fund, and to structure the Brazil end in a company structure. However this involves valuations that are legitimate on both the asset and the company set up to hold it. This is why so few Brazil investments are actually SIPP approved. It's one thing to say SIPP compliant however you would need to individually go to your SIPP provider and pay for them to examine the project/structure/etc to make sure it fits the FSA rules. SIPP providers are very cautious now about what they approve as it is their butt on the line if it doesn't fully comply with an FSA audit.

    Richard
     
    Last edited by a moderator: Jul 12, 2010
  11. MaccaB

    MaccaB New Member

    Brazil Land In Trust?

    Im pretty sure that Trusts are recognised in Brasil?..

    Here you go - Source: Moneywise

    Trusts Are Recognised In Brazil -

    JPMorgan is launching a Brazil focused investment trust, saying the country is in a "stronger position than other highly cyclical emerging markets".

    The arrival of JPMorgan Brazil Investment Trust will give investors focused exposure to the country in the form of an investment trust for the first time.

    An initial £50 million is being raised for the London-listed trust. The offer period is expected to start this week.

    "Brazil is a very exciting investment opportunity and since it achieved investment grade in April 2008 it has transformed from inflationary boom-bust cycles. 2009 stress-tested this when the country experienced a normal recession with a swift recovery," says Sebastian Luparia, who will jointly manage the trust with Luis Carrillo.

    "The investment opportunities we are finding in the region are focused on the domestic growth of the economy and we are selecting opportunities with a two to three year investment horizon so as to capitalise on investing in this growth."

    The trust will hold between 25 and 50 holdings and be benchmarked against the MSCI Brazil 10/40 index.

    According to JPMorgan, the South American nation is widely tipped as the growth story of 2010 but historically investment has been lower than in other emerging markets.

    The firm says the more stable business cycle, lower interest rates and 2014 World Cup and 2016 Olympics should boost productivity and growth in Brazil.

    Investors that subscribe to the ordinary shares at launch will be offered a bonus issue of subscription shares, on a one for five basis. Investors can register at jpmbrazil .co .uk to receive further information when available.

    Up until now investors looking for Brazil exposure in an investment trust would have had to invest through an emerging markets trust or in BlackRock Latin American.

    JPMorgan manages three other single country investment trusts: Russia, India and China. In addition to Brazil, it also enjoys a monopoly with its Russia and China trusts.

    However, Fidelity will soon be elbowing its way into the China sector with Anthony Bolton’s hotly-anticipated investment trust.

    The trust’s offer period is open until 5 April. For more information, go to idelity . co . uk .

    What is the better way to buy? Is there any way you can get the deeds transferred into my own personal name although investing in my SIPP?

    Thanks,

    MaccaB

    ----------------
     
  12. InvestinBrazil

    InvestinBrazil New Member

    While there are many trusts that invest in brazil as rob says they haven legal status so trusts invest by buying into a corporate entity. When it comes to property and legal title no notary will issue a title deed to a trust. A trust cannot acquire a cpf or cnpj number therefore would never be legally allowed to hold title deeds. This is why sips for property are such a challenge. . It's not the same as picking a property you like and buying it freehold. If this was possible via trust there would be very many more sipp approved products in brazil than Tambaba's or one or two others on specific projects. If in doubt ask a Brazilian lawyer.

    Hope that helps

     
    Last edited by a moderator: Apr 2, 2011
  13. debzor

    debzor New Member

    The problem, put simply, is that funds to buy property here can come from pretty much any legal source, but to register that property in a particular 'name' requires the 'name' to be registered for tax here - with either a CPF (person) or CNPJ (company).

    The first is easy; the second can be complicated and expensive in the long run, and the costs would certainly outweigh the potential benefits unless you are investing on a grand scale.
     
    Last edited: Aug 26, 2010
  14. jamphi24

    jamphi24 New Member

    Hi, Sorry for late revival of this. But does anyone know any SIPP providers that would allow me to purchase a Pousada in Natal through a SIPP.
    Or indeed if this can be done?
    Cheers
     
  15. jamphi24

    jamphi24 New Member

    Thanks Rob, don't suppose you have any names of ones that have done things in Brazil before. So far searches have just shown they will only do within Europe.
     
  16. jamphi24

    jamphi24 New Member

    The ones we have talked to so far aren't interested.
    But will continue trying.
    Cheers
    James
     
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