The corporate legislation of Brazil allows setting up enterprises of various organizational and legal forms, but for a foreign investor, the following two could be considered as the most attractive for incorporation in Brazil:

• Sociedade Anônima - joint stock corporation
• Sociedade por quotas de responsabilidade limitada - limited liability company

Sociedade Anônima

A joint stock corporation has the following features:

• a corporation can be closed or open;
• foreign shareholders (individuals and legal entities) have the right to own 100% of the corporation's shares;
• two shareholders could establish a corporation (the maximum number is unlimited);
• shareholders of the corporation are limited in liability;
• there is no minimum required authorized capital for the establishment (except for insurance companies and financial institutions), but 10% of the declared capital must be fully paid at the time of registration;
• the corporation is governed by a board of directors (at least two). Directors have to be residents of Brazil;
• a publicly traded corporation is required to form an administrative board of at least three members, who may be shareholders, residents or non-residents of Brazil;
• a public corporation must also form a fiscal council of at least three members who can be shareholders but must be resident in Brazil;
• The corporation is required to publish copies of annual financial statements and minutes of general meetings in the open press in Brazil. The accounts of a public corporation must be certified by an auditor in Brazil;
• the corporation is obliged to allocate 5% of its income to the reserve fund until it reaches 20% of the authorized capital;
• the corporation can be transformed into a limited liability company;
• a publicly traded corporation must be registered with the Brazilian Securities Commission;
• an open corporation has the right to freely offer its shares to third parties;
• a closed corporation does not have the right to freely offer its shares to third parties without the approval of the majority of the corporation's shareholders;
• The publicly traded corporation is required to appoint a licensed financial institution in Brazil as the guarantor for the sale and purchase of shares;
• The corporation has the right to issue shares of various types and rights, but bearer shares are not permitted in Brazil.

Sociedade por quotas de responsabilidade limitada

A limited liability company has the following features:

• the company is a closed company;
• foreign participants (individuals and legal entities) have the right to own 100% of the company's shares;
• two members are enough for the establishment, whose names are entered in the statutory documents of the company;
• members of the company are limited in liability within the limits of their shares in the enterprise.
• there is no minimum required authorized capital for the establishment (unless the company is going to obtain a work permit and a permanent visa for a foreign manager), but 10% of the declared capital must be paid at the time of registration;
• the company can be managed by a single director. The director must be a resident of Brazil;
• the company is not required to publish copies of annual financial statements and minutes of general meetings in the open press in Brazil;
• the company is not required to appoint auditors;
• the company can be transformed into a corporation;
• Companies do not have the right to freely offer their shares to third parties without the approval of the majority of the company's members.

The Brazilian tax system, in addition to its complexity, is considered one of the most expensive in the world. Almost 18 different taxes (federal, state, municipal and others), which bring about 40% of GDP to the treasury.

For all forms of legal entities in Brazil (with the exception of private entrepreneurs and a number of partnerships that are taxed at the rates for individuals), the standard federal income tax rate is imposed. In addition, in Brazil there is an additional income tax if the company's annual income exceeds a certain level.

Brazil is not an offshore destination, but there is no state tax on income earned outside Brazil. Dividends to non-residents are also tax deductible in Brazil.

There are two types of VAT in Brazil: federal (IPI) and state tax (ICMS).

Brazil Double Taxation Agreements

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