Brazil Branch Office
Setting up a branch office in Brazil is actually more complex, expensive and beaureacratic than setting up your own company, and for this reason we highly recommend incorporating a limited company instead. A foreign company wishing to set up a branch in Brazil needs to apply to the Brazilian government using a ‘federal executive decree’. The branch is subject to local laws.
Opening a Brazil Branch of a Foreign Company
The disadvantages of a branch office are:
- The parent company is fully liable for the liabilities of the branch.
- The branches representatives may be held jointly and severally liable for tax debts.
- The financial statements of the parent must be lodged at the Companies Registry.
- The branches obligations are the same as the parent, including filing VAT returns, employees returns and corporation tax returns, so there are few savings in administering a branch.
- Banks and clients may prefer dealing with a Brazil company rather than a foreign branch.
- A branch is rarely ideal for substantial projects because the parent company runs the entire risk.
- Upon registration of a branch, evidence has to be provided of the legal existence of the parent.
- Any public act by the branch, is likely to need ratification by the board of the foreign parent. A company that signs contracts in front of a notary on a regular basis, should incorporate for administrative ease.
The advantages are:
- Less obligations to present accounts than with corporations.
Features of a branch office in Brazil
A branch is one way for a company to set up a business in Brazil. Opening a branch has many drawbacks, mainly that the foreign parent carries full liability for the branches operations and that lengthy and complicated dealings with the tax authorities may be needed regarding the branches tax obligations.
After publication in the official press and filing of the constituent documents with the public register of companies and all other formalities have taken place a branch will be be allowed to start up its activities.
The branch office must have a Brazilian resident designated to represent the company, though they do not have to be a national.
Capital must be set aside for business undertaken in Brazil by the branch. This capital is treated as a foreign investment and as such must be paid up and registered with the central bank of brazil. Registering in this way allows for remittance of profits abroad, repatriation of capital, and registration of reinvestments.
From a tax point of view, branches are permanent establishments of non-resident companies and a Brazil branch is not a separate legal company from its parent.
The branch must have the same name as the parent company.
A branch of a non-resident company must appoint a resident individual or a company to represent it in its dealings with the tax authorities. The representatives may be held jointly and severally liable for the tax debts of the branch they represent.
To register a branch, evidence has to be provided of the existence of the parent, certified copies of the Articles or Statues, the names of the directors, the share capital, the registered office, and the names of the representatives who will act for you.
Various documents will need to be officially translated to Portuguese , the documents include:
- Your parent’s registration certificate
- Your company’s articles of association
- The names of the company’s directors and secretary
After your branch is registered
All stationery, order forms and similar documents used by your branch are required to show:
- The place of registration of the parent
- The number with which it is registered
- The legal classification of the company
- The address of its registered office
- The place of registration of the branch, and its registration number
Also the following particulars must be shown at the branch office:
- The company name
- The name of the country in which the company is incorporated
- The parent of the branch has limited liability