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Open a Branch vs. a Subsidiary in Brazil - Main Features and Requirements

Open a Branch vs a Subsidiary in Brazil

Updated on Saturday 16th April 2022

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Open a Branch vs a Subsidiary in Brazil.jpgThere are two ways in which a foreign company can start its business activities and the decision to open a branch vs a subsidiary in Brazil should be based on factors such as the level of liability and the desired level of control the foreign company will have.
 
Both the branch and the subsidiary have particularities and advantages. In this article, our team of lawyers in Brazil offers a summary of their characteristics.
 
For more in-depth information, as well as for assistance during the registration of each of these two business forms, we invite you to reach out to our local attorneys specializing in company formation.
 

The main differences between the branch and the subsidiary in Brazil

 
The table below presented by our team of lawyers in Brazil highlights the main general differences between a branch and a subsidiary.
 
 
Branch
Subsidiary
Parent company liability
The parent company is fully liable
The company abroad is not liable for the actions of its subsidiary
Parent company control
Full control
To the extent of its shareholding
Registration
Needs to register in Brazil
Needs to register as a local company
Taxation
15%/34% including surtax
15%/35% including surtax
Tax compliance
Files annual return
Files annual return
 
 
Both options are valid ones, depending on the parent company’s objectives. If you would like complete legal assistance when you open a branch or a subsidiary in Brazil, our team can help.
 
Our English-speaking team can also provide complete services related to tax laws for each of these business forms and offer details about the regulations imposed by the Brazilian Revenue Service.
 

Documents for branch and subsidiary registration

 
The branch in Brazil is registered upon receiving a special approval. Part of the key documents that are submitted when opening a branch are the following:
 
  • Application for registration, addressed to the Ministry of Industry, Foreign Trade and Services (the Special Secretary thereof);
  • The foreign company’s resolution to open a branch in Brazil, complete with information about the activities that will be performed and the capital for the Brazilian operations;
  • The foreign company’s Articles of Association, as registered in the country of origin;
  • A list of members and shareholders, with relevant identification information;
  • Proof of conformity for the foreign company, a document issued by the authorities in its country of origin;
  • Branch representative appointment resolution, as well as the appointed representative’s statement of accepting the conditions.
 
The appointed representative is a Brazilian resident. The person can be a foreign national with the right to reside in the country.
 
The requirements for opening a subsidiary include the following:
 
  • Prepare the documents for registration: the Articles of Incorporation,  the application form, other documents;
  • Register: the documents are submitted with the National Companies Registry Office and then the company receives the NIRE identification number;
  • Obtain the license: the next step if to obtain the national company registration number and then obtain the operating license from the City Hall;
  • State inscription: mandatory for companies in certain business fields and it is done with the State Department of Finance;
  • Other registrations: these are for social security purposes (within 30 days), for value-added tax, and for the purpose of printing tax invoices and authenticating fiscal records.
 
Our lawyers in Brazil can help you with more information about these requirements to open a business.
 

Company formation statistics presented by our lawyers in Brazil

 
According to the Geography and Statistical Institute of Brazil, the number of companies in the country in 2019 was 4,683,840. Our of these:
 
  • 1,793,449 were operating in commerce and the repair of motor vehicles and motorcycles;
  • 390,378 were activating in the processing industries;
  • 319,303 were offering administrative activities and complementary services.
 
For more information on company formation in Brazil, including how to open a branch or a subsidiary in Brazil, you can contact our lawyers.