Expand Business in Brazil
Global Upside helps businesses expand into Brazil by providing talent acquisition, human resources, accounting, payroll, tax, incorporation, and professional employer organization (PEO)/employer of record (EOR) services. Our comprehensive offerings create an end-to-end solution that helps you establish your business and optimize your operations, all while maintaining compliance with Brazilian laws and regulations.
The hiring and incorporation processes in Brazil are often complex, time-consuming, and involve numerous legal and compliance challenges. Global Upside simplifies these processes and lifts the compliance burden from your business. Our teams have the experience and expertise required to help you establish a legal entity in Brazil. We also offer PEO/EOR solutions to companies interested in hiring employees quickly, without setting up a legal entity in the country.
The largest country in South America, Brazil is a multi-cultural and culturally diverse nation with a population of 211 million. The World Bank has identified Brazil as an upper-middle-income economy. Of late, Brazil has emerged as an industrialized country and has accrued the largest share of international wealth in Latin America.
- Brazil is the world’s largest producer of soybeans
- Brazil’s top export commodities consist of oilseeds, ores, slag, ash, mineral fuels including oil
- Brazil mainly imports manufactured products like machinery, lubricants, fuels, pharmaceutical and chemical goods, accessories for motor vehicles. Additionally, the nation also imports raw materials like crude oil, natural gas, coal, and wheat grain
A limited liability company (“Limitada” or “Ltda.”) is a form of legal establishment that is supervised by the new Brazilian Civil Code under Law 10.406/02. This is the most common form of legal entity in Brazil. Limited liability companies are integrated under the Brazilian Corporate Law and closely resemble US LLCs. Each investor’s obligation is limited to their assigned capital and all the investors are obliged to contribute to the initial capital that the company requires.
A limited liability corporation (S/A) is a type of legal entity setup that requires at least two investors to be established. Any foreign investor interested in setting up a limited liability corporation must have a legal agent in Brazil. The liability on the shareholders is limited. Limited liability corporations are governed by Brazilian Federal Law No. 6,404/76 (“Lei das SAs”) and closely resemble US Subchapter C Corps.
It takes a minimum of 3 to 4 weeks to incorporate a legal establishment in Brazil.
According to Brazilian law, employment agreements must be in writing for apprentices, professional artists, and athletes. In addition to this, it is mandatory that all the employees must hold work and social security papers (Carteira de Trabalho e Previdenciária Social, or CTPS) wherein the details of their employment contracts must be recorded. All employment contracts must include:
- Remuneration and benefits
- Job description
- Working hours
- Job location
- Overtime details
- Employee duties
- Company policies
- Travel and transfer (if applicable)
Employees are entitled to eight national holidays:
- Jan. 1: New Year’s Day
- April 21: Tiradentes
- May 1: Labor Day
- Sept. 7: Independence Day
- Oct. 12: Our Lady of Aparecida Day
- Nov. 2: All Souls Day
- Nov. 15: Proclamation of the Republic Day
- Dec. 25: Christmas
Brazil also recognizes the following non-obligatory holidays and non-obligatory partial holidays:
- Carnival (the two days before Ash Wednesday)
- Ash Wednesday (44 days before Good Friday)
- Good Friday (two days before Easter)
- Corpus Christi (on a Thursday about two months after Easter)
- Oct. 28: Public Service Day (date may vary according to Ministry of Planning ordinance)
- Dec. 24 after 2 p.m.: Christmas Eve
- Dec. 31 after 2 p.m.: New Year’s Eve
Wages are paid on a monthly basis, usually by the 5th day of the subsequent month. However, the specific payment schedule can vary depending on the employment agreement made between both parties. In addition to each payment, the employer must supply the employee with a payslip that provides payment details.
The accounting standards in Brazil are set out in accordance with the Brazilian GAAP. These accounting standards are influenced by Brazilian Corporation Law:
- Law No. 6,404/76
- Law No. 8,021/90
- Law No. 9,457/97
- Law No. 10,303/01
- Law No. 11,638/07
- Law No. 11,941/09
The process of converting financial statements to adhere to International Financial Reporting Standards (IFRS) was introduced by Law No. 11,638/07 and Law No. 11,941/09 after the revision of the Brazilian Corporation Law.
The corporate tax rate in Brazil is 34%.
Value Added Tax (VAT)
There are two types of VAT in Brazil:
- ICMS (Imposto sobre Circulação de Mercadorias e Serviços) / Merchandise and Service Circulation Tax – a state sales tax
- IPI (Imposto sobre produtos industrializados) / Industrialized Product Tax – a central excise tax
While the standard ICMS rate in Brazil is 17%, the rate is 18% and 19% in Sao Paulo and Rio de Janeiro, respectively. The standard IPI rate is 20%. Certain goods like books and food items are exempted from VAT.
Brazil approved the General Data Protection Law – Law no. 13,709/2018, in August of 2018. This law established a framework for the management and storage of personal data – both physically and digitally. This law will come into full effect in January 2021. Any monitoring of employee emails or devices must be communicated to the employee.
Anti-Bribery & Anti-Corruption Law
The Brazilian Criminal Code (Decree Law No. 2,848), Article 333 regulates the bribery of public officials in Brazil. It is only the individuals who are criminally liable for bribery. Meanwhile, the Brazilian Anti-Bribery Law (Decree No. 12,846/2013) forms judicial/legal and administrative authorizations for companies.
1. Bribery of Public Officials:
i) Imprisonment of up to 12 years
ii) Substantial monetary fine
i) Loss of the assets obtained from crime
ii) Suspension of business activity
i) A fine of BRL 6,000 to BRL 60 million
ii) Disclosure of the compromising decision