Subsidiary law changes in Brazil can benefit your company
Regulatory update 2 minute read

Subsidiary law changes in Brazil can benefit your company

01 February 2019

Opening a subsidiary in Brazil just got less complex thanks to a new law affecting business addresses.

Brazil is known for its high rate of bureaucracy which landed it in the top ten most complex countries for business in TMF Group’s Compliance Complexity Index 2018.  But now, it seems like the government is passing laws to ease some of the burdens on new businesses in Brazil.

In the past, businesses looking to open a subsidiary of their company in Brazil had to have an address that was compatible with the activity stated in the bylaws or article of information. For example, if an industrial company wanted to register for a new entity in Brazil for an administrative office or headquarters, they would have to have an address of a factory or in an industrial area. Both the State and Municipal Authorities would have to check to make sure that the address was compatible with the activities of the business. This was very costly for businesses and it was hard for the new companies to comply with these requirements. Businesses had to search for locations that were compatible even if they were further out away from city centres. 

Now, under Normative Instruction DREI nº 50, companies are allowed to specify a different activity for their headquarters and for the branches of the business. They can choose any address without regard to the type of business. There can even be a virtual address assigned for the company for the first year. This allows for a company to have administrative offices at any address in the country that is appropriate for that type of work. 

Easier start for companies in Brazil

Companies looking to open a new entity in Brazil will be able to take advantage of this change. They can choose to set up their business at any address they pick regardless of the main activity of the company. Cutting out the time of searching for a proper location and address will make the incorporation process shorter and easier for companies. The process for registering the address starts with the Board of Trade and once they accept it, the other registries will follow. There will be no contesting of the address anymore due to compatibility with the business’ activity. Companies can even have a virtual address for the first year of incorporation until they become established in Brazil. 

Our experts can help 

TMF Brazil can help with all the steps that come with incorporating a company in Brazil. Business rules are complex and require that anyone thinking of doing business in Brazil must have a clear understanding of the local rules and regulations.  We have the experts that understand how new laws can affect your business and we can support your company with many services, including providing local addresses. In order to succeed in Brazil, it is essential to have a local partner who has experience in operating within the country’s complex business framework. Present in the country since 2006 and working with more than 400 clients, TMF Brazil can provide a full range of services to match your company’s requirements, either while entering the market or streamlining current operations in the country. Talk to us.

Written by

Vanessa Mello

Director Legal and Compliance

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