‘Irresistible’ worker fired in Iowa and why this would not happen in Brazil « Brazil Business 101

‘Irresistible’ worker fired in Iowa and why this would not happen in Brazil « Brazil Business 101

iphone brand "stolen" by a Brazilian company. What happened?

Update from June 2014: A Brazilian Federal Court has returned rights over the "Apple" brand to Apple corporation. Please see this link. The matter is still subject to scrutiny by Brazilian regional courts of appeal and by the Supreme Court of Justice. 
____________________________

Everyone probably heard the story. Gradiente, a Brazilian company, has launched a mobile device called iPhone withou Apple's permission.

Moreover, the Brazilian company might sue Apple, for using the "iphone" brand in Brazil.

You may check the story here, here and here.

So, what is true about it?

1) Brazilian brand registration system do no recognize rights to international brands automatically. 

      Notorious brands known abroad may have preference over  Brazilian registration, but only if the brand has been registered at a country that maintains a mutual recognition convention with Brazil (not many).
     And, most importantly, only if the brand has been registered abroad before the Brazilian registration.

2) The first one to file for a brand in Brazil will have rights over it 99% of the time.

3) In this case, Gradiente registered the brand way before Apple launched the "iphone". Thus, the rights over the brand belong to it, as per Brazilian Law.

4) Apple may, indeed, be prohibited of using the "iphone" brand in Brazil for marketing mobile phones.

5) This is not a surprise to anyone.

Brand registrations are public and easily accessible. Apple's lawyers certainly had access to it before Gradiente's launched its device.

 And you can, too. Just check: http://formulario.inpi.gov.br/MarcaPatente/jsp/servimg/servimg.jsp?BasePesquisa=Marcas and type IPHONE.

Why don't you check IPAD, GOOGLE, and FACEBOOK too?

6) Plan to do business in Brazil? Register the brand first and ask questions later. 

For brand registration and any other intellectual property issues, I work closely with Mr. Dolabella, one of the best lawyer in Brazil in this specific area. You may check his website here.

Same sex marriage allowed in São Paulo, Brazil

Note: You may also want to see HOMOSEXUAL  MARRIAGE MADE EASIER IN BRAZIL;
 HOW TO: Getting Married in Brazil. and 
Brazilian Law on Love - marriage, stable union and visas.

Brazil is about to see something that we only heard about from the United States: a massive movement of people going to one specific State, in order to get married there.

This is because São Paulo State (where São Paulo city is located) has updated its registration rules in order to allow the automatic registration of same sex marriages, without the need of a previous court order.

This change has followed, with some delay, a decision from the Brazilian Supreme Court regarding same sex marriage.

Therefore, foreigners who wish to marry same sex partners in Brazil will now be allowed a marriage visa, which is much easier to obtain than the civil union visa for same sex unions, which already existed.

I consider this a triumph  of law and civility. A good thing for Brazil, at last.

The rule will be fully valid only on March, 2013.

The link below is in Portuguese:

Folha de S.Paulo - Cotidiano - Norma do TJ obriga cartórios de SP a registrar casamento gay - 19/12/2012

Foreigners with a working Visa in Brazil, steps to get your documents in order.

This is another post from Nuno Araujo, my co-worker. He writes at Brazil Busines 101.

I'd recommend you to check my post The long and treacherous quest to get a work visa permit in Brazil, if you still have doubts about how to obtain the visa in the first place.

Please also read about easier rules for work visas in Brazil.

Enjoy:

Foreigners with a working Visa on Brazil, steps to get your documents in order.

One thing that every expat suffers when coming to Brazil with a working Visa is, got the Visa, now what?

Well, after you did everything on the Brazilian consulate or embassy on your country, and finally got your working visa, get here (I’m not being humorous at all, your working visa has a deadline, don`t waste time), after that you should follow 5 steps to get all your documentation in order.

Step 1- Go to the Federal Police (Polícia Federal or PF), as soon as you get in Brazil, bringing the following documents:

1-            Passport

2-            Copy of your entire passport

3-            Your visa application

4-            Your DOU* (diário official da união) publication:

4.1- DOU (the official gazette from the Brazilian Republic), to get this ask for someone at your work to provide it for you, it can be found here:http://portal.in.gov.br/ .

5-            The taxes found on the federal police website paid:

5.1-** There are two taxes to be Paid, also I would recommend you to ask for assistance from someone at your work, you can found them herehttps://www2.dpf.gov.br/gru/gru?nac=1 , https://www2.dpf.gov.br/gru/gru-c?nac=1

6- Two 3×4 pictures (don`t worry about the actual dimensions, just go anywhere in Brazil that take pictures and ask for a “Foto 3×4”, my advise, get them here, the people who take them know all the procedures, and because the government institutions in Brazil are quite frisky about how the photo should be like, so let’s not take any chances)

7- Your Brazilian address, with CEP (ZIP code)

8- A form found on the federal police website filled up:

                8.1- This form can be found here: https://servicos.dpf.gov.br/sincreWeb/

*ATTENTION, for you who got in Brazil from São Paulo, the airport of Guarulhos, is in the city of Guarulhos, not São Paulo, the same with Confins in Belo Horizonte.

Once you get everything from above ready, just go to a “Delegacia da Polícia Federal” and say you would like to get register on the Sistema Nacional de Cadastramento e Registro de Estrangeiro or simply  “SINCRE” (quick observation here, you will hardly ever find anyone on the federal police with any substantial knowledge in English, so, ask for help from a Brazilian, learn some basic Portuguese or be prepared for a lot of mimic and writing down stuff).

After some fingerprinting and a lot of waiting they will give a little paper that you have to keep, just put it inside your passport and forget it there.

After a couple of days go back there and ask if the “SINCRE” is ready (this can take from 2 to 20 days, so call in advance), after you have the paper with all your information, the “SINCRE” (FYI: SINCRE means National system of registration of foreigners), go to step 2.

Step 2- After you get your “SINCRE” , go to any big post office (Agência dos Correios), and by big I mean that not all of the post offices do this, so, ask around for the main one, or a big one around you.

Get your “SINCRE”, your passport, address, around 20 Reais, go to a BIG post office and ask to pay the fee to get your CPF (kind of a social security number, you need it for everything), after you pay they will give you a piece of paper.

After that, take everything, SINCRE, passport and the piece of paper you got and go to a “Receita Federal” close to you, once you get there just say that you need to get your CPF number or “CPF para estrangeiro”.

Wait and when someone come to help you just show all the papers and get your own CPF number (hurray), with that go to step 3 (almost done).

Step 3- With your SINCRE, passport, CPF and address, go to the Ministério do Trabalho (Work ministry) closest to you and ask for your “Carteira de Trabalho de Estrangeiro”(foreign workers card), it is free of charge and gets ready in about 2 days normally (Brazilians are not very punctual), with it, you are almost done, just one more Step.

Step 4- After a couple of months (from 1 to 6) go back to the federal police and ask if your RNE (National Foreign Register, kind of a foreign ID card) is done, and when you have it, go to step 5.

Step 5-  After everything you been through, all the waiting and headaches, now it’s time to enjoy the good parts of Brazil, you are DONE, got everything in order… until you have to get an extension on your working visa, then, go back to step 1 and good luck.

10 Advises I give to foreigners about Brazil: « Brazil Business 101

The post is from my co-worker Nuno Araujo, editor of Brazil Business 101.

Worth reading:

10 Advises I give to foreigners about Brazil: « Brazil Business 101

Brazil ports starved of investment, buried in red tape-group | Reuters

Brazil ports starved of investment, buried in red tape-group | Reuters

Proud about tax planning: Google and me

Google's boss has just said that he is proud of Google's tax avoidance strategy (see below)

I'm also proud of Google's strategy to dodge taxes. That is what I do for a living and I must say that Google's lawyers have created a beautiful work of art when doing the company's tax planning. It is all there: offshore companies, subsidiaries, Dutch sandwich, money centers, tax havens. Bravo!

But Google must take UK and America's threats of taxing them seriously. They may look at Brazil and find out that the Brazilian government has seriously limited the use of offshore companies and tax havens by automatically taxing any gains from foreign subsidiaries the moment they are put on the books, and not when they are transferred to the controlling company (this last option would be the most usual in the civilized world).

Vale, the mining company, is waiting for a judgment on the legality of the Brazilian awkward (by awkward I mean unjust and crazy) tax regime. Some 15 billion US dollars are being claimed by the government. (By the way, check the development of a similar case here)

In order to avoid this kind of taxation, Brazilian companies are now making heavy use of the few Non double taxation agreements that Brazil has signed. Austria is a personal favorite, but the Netherlands are very popular.

Google, don't let the government be evil! Dodge the dogs and lions.

By the way, if you are a Brazilian individual with more than 40k USD on a bank, I'd recommend you to move your money abroad. Brazilian government has too much control over it, and the online system for money seizure is a real letdown for any businessman.

NOTE: For the pro government intervention readers (which should be none), here is the opposite view: http://treasureislands.org/google-boss-eric-schmidt-takes-a-dim-view-of-capitalism/.

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Google boss: I'm very proud of our tax avoidance scheme

Google's Chairman Eric Schmidt said £2.5 billion tax avoidance 'is called capitalism'

From:http://www.independent.co.uk/news/uk/home-news/google-boss-im-very-proud-of-our-tax-avoidance-scheme-8411974.html

The head of the internet giant Google has defiantly defended his company’s tax avoidance strategy claiming he was “proud” of the steps it had taken to cut its tax bill which were just “capitalism”.

In an interview in New York Eric Schmidt, Google’s Chairman, confirmed the company had no intention of paying more to the UK exchequer. Documents filed last month show that Google generated around £2.5 billion in UK sales last year but paid just £6m in corporation tax.

The Californian based search giant has also been revealed to have sheltered nearly $10bn of its revenues in Bermuda allowing it to avoid some $2bn in worldwide income taxes in 2011.

But Mr Schmidt said such schemes were legitimate and the company paid taxes “in the legally prescribed ways”.

“I am very proud of the structure that we set up. We did it based on the incentives that the governments offered us to operate,” he said.

The Silicon Valley boss went on to suggest that Google would not turn down the opportunity to draw on the big savings allowed under the law in the countries it operates in: “It’s called capitalism. We are proudly capitalistic. I’m not confused about this.”

He also ruled out following Starbucks in voluntarily handing more money over to the UK Government.

“There are lots of benefits to [being in Britain],” he said.

“It's very good for us, but to go back to shareholders and say, 'We looked at 200 countries but felt sorry for those British people so we want to [pay them more]', there is probably some law against doing that.”

Mr Schmidt’s defiant stance is unlikely to find favour on either side of the Atlantic with both the American and European Governments searching to find ways of forcing “stateless” internet companies such as Google to pay more tax.

The issue will be raised by George Osborne when Britain takes over the chairmanship of the G8 and will also be investigated by the Organisation for Economic Co-operation and Development (OECD).

Last week the Chancellor said he was committed to “leading the international effort” to prevent international companies transferring profits away from major economies, including Britain, to tax havens.

“We will put more resources into ensuring multi-national companies pay their proper share of taxes,” he said. “With Germany and now France, we have asked the OECD to take this work forward and we will make it an important priority of our G8 Presidency next year.”

Tonight Margaret Hodge, chairman of the powerful House of Commons Public Accounts Committee, which recently cross examined Google UK on its tax affairs said Mr Schmidt should be ashamed rather than proud of his company’s tax bill

“For Eric Schmidt to say that he is ‘proud’ of his company’s approach to paying tax is arrogant, out of touch and an insult to his customers here in the UK,” she said.

“Ordinary people who pay their taxes unquestioningly are sick and tired of seeing hugely profitable global companies like Google use every trick in the book to get out of contributing their fair share.

Google should recognise its obligations to countries like the UK from which it derives such huge benefits, and pay proper corporation tax on the profits it makes from economic activity here. It should be ashamed, not proud, to do anything less.
”

Border control in Brazil

Today the blog is launching a new weekly column. We will be counting on the invaluable contribution from Ms. Gringa da Silva, a foreigner who lives in Brazil and has some sharp-witted remarks to make about the country. 

The law part of the Brazilian Law Blog will remain under my responsibility. But Ms. Gringa's comments will certainly add some flavor to the usual FDI, IOF, Taxation, Importation and other legal conundrums that we all have learned to love. 

Enjoy!

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Welcome to Brazil - Bem-vindo ao Brasil 

Ah, the first post. It's always so exciting to begin something new.

So, you are about to arrive in Brazil, good for you. Have you got your paperwork in order? Got your vaccinations in order? Is your passport pretty and neat and without marks? Did you fill out your customs declaration form correctly?

You are about to enter the realm of The Brazilian Border (insert Twilight Zone music here), which is controlled by the Federal Police of Brazil. (We will be revisiting them many times as time goes on, so we'll just leave the summaries for later.)

Good things to know:

1) It is illegal to be rude to a bureaucrat in Brazil.

2) You can be denied entry to the country for being inconvenient.

3) No one (you actually need to speak English) speaks English.

4) No one at the border cares who you are; though they might care what your football team is.

5) It will take a while, so make friends in the line, stay calm and whatever you do, don't be iconvenient.

6) The line will be long, the instructions will be confusing, and the pressure of your bladder will be annoying.

You cannot escape the visa requirements, the paperwork, the possible fees incurred and customs regulations while entering Brazil and if you try, you might be denied entry.

Don't be an idiot by attempting to buy your way in or insult your way in, unless you fancy spending time in jail and a swift deportation with a possible clause prohibiting your return.

Know what is needed before you land. Have it all ready and at hand, and for heavens sake, if your mother packed a salami in your luggage (they have salami in Brazil, mom) tell them about it, don't try to import it illegally.

The Federal Police have no obligation to let you in and the particular flavour of bureaucrat you are about to meet is just looking for reasons to say the dreaded words: Falta! (error/ offence/ irregular/ not allowed)

So, when you find yourself all smelly from that billion hour plane flight, full of the delicious food you were served on the plane and dreaming of a bathroom that is larger than a carry-on bag, stay cool, be calm and for heaven's sake, be polite.

On the caipirinha scale, the border crossing rates a 1.

Until next week, yours in the spirit of cachaça,

Ms. Gringa da Silva

All rights reserved © 2012 by Ms. Gringa da Silva (http://msgringadasilva.orgfree.com/)

Brazil's economy: A breakdown of trust (from The Economist)

I'd recommend you to read this article from The Economist. I agree with it completely, specially when it mentions the government inclination to interfere in business through authoritarian legislation.

You may check it here or here.

A Roundabout Route To Brazill - Palisades Hudson Financial Group

A Roundabout Route To Brazil « Palisades Hudson Financial Group
by Larry M. Elkin, CPA, CFP® Palisades Hudson Financial Group.

CAMPINAS, Brazil – It took nine hours to fly from Newark International Airport to São Paulo, and another 90 minutes to drive to this city of 1 million for a brief post-Thanksgiving business trip. But my journey actually began weeks ago, in an office tower in downtown Miami.

My previous Brazilian visa had expired not long after my last trip, forcing me to go through the costly and cumbersome application process for the fourth time since I began visiting 15 years ago. (Brazil’s multi-entry tourist and business visas are typically valid for five years.)

First, I had to go to the consulate nearest my principal residence, in Fort Lauderdale, which is why I went to the consulate in Miami. Applications are accepted by mail, but the turnaround time is at least one month, which was too long for this trip. So I made sure to show up at the consulate at the requisite hour – applications are accepted only between 10 a.m. and noon on weekdays – with my U.S. passport, a set of recent photos, a letter from my firm explaining the purpose of my trip and $161 in cash. I fed the cash into an ATM-like machine in the consulate lobby. The machine regurgitated a receipt, which completed the necessary paperwork.

After dropping off the papers, I then had to wait five days before returning to the consulate, precisely in the designated time period of 3-4 p.m. on a weekday, to pick up my passport with the newly affixed visa.

The entire process is a pain in the tuchas, a word which, while neither English nor Portuguese, is understood by speakers of both. It would be easy to blame the Brazilians for this inconvenience. It would also be wrong.

My need for a visa, and the $161 price tag (less a $1 dollar service fee to the Banco do Brasil), is the result of policies rooted in Washington, not Brasília. If I were visiting Brazil from any European Union country, or from a long list of other nations including Israel, Romania, Russia and Turkey, I could have entered with no visa at all. The United States, however, has refusedto include Brazil in its own visa-waiver program, which allows leisure and business travelers to come to America for up to 90 days with only their home country’s passport, as long as they do not accept employment during their visit. Brazil’s visa policy is simply a mirror of our own. As soon as we drop our visa requirement for Brazilians, Brazil will open its borders to Americans.

From an American viewpoint, Brazil is easily the most politically compatible of the four rapidly developing BRIC countries. I have written here in the past about the corruption that remains prevalent in the other three: Russia, India and China. Brazil also has a Gross Domestic Product of $2.2 trillion, making it the sixth-largest economy in the world. But despite Brazil’s proximity compared to the growing Asian economies, the United States continues to hold the country at a diplomatic distance.

Our visa requirement is supposed to help us keep tabs on travelers who might illegally overstay their welcome in the United States. Brazilians, however, are not overly eager to put down roots in the north. As Paulo Sotero, director of the Woodrow Wilson Center’s Brazil Institute in Washington, told Time, Brazilians prefer their native soil when it comes to long-term residency. The United States “is considered a less attractive place for economic migrants in Brazil, which has almost full employment and a lot more economic opportunity,” Sotero said.

Brazilians come to America to spend money far more often than to make it. In 2010, 1.2 million Brazilians visited the U.S., putting Brazil fifth worldwide in terms of the number of tourists it sends to our shores. Those Brazilian visitors collectively spent $6 billion in the States.

Two years ago, I took my family along for my first vacation trip to Brazil. We had a memorable two weeks seeing the sights in Rio de Janeiro, enjoying the beaches near the northeastern city of Recife and exploring a bit of the Amazon rain forest. As our trip demonstrated, Brazilians and Americans have similar reasons for visiting each other’s countries: to sightsee, to relax, to shop and to dine in venues that can hold their own with rivals anywhere in the world.

When it comes to doing business, however, there are other obstacles that are even more of a hassle than the visa requirement: The U.S. has neither a tax treaty nor a free-trade agreement with Brazil. Both mechanisms play crucial roles in facilitating cross-border business in the 21st century.

Neither the U.S. nor Brazil is categorically opposed to such treaties. For trade, Brazil is a member of the Mercosur bloc (Mercosul in Portuguese) with its neighbors Uruguay, Paraguay, Argentina and Chile, as well as Venezuela. We are part of the North American Free Trade Agreement with Canada and Mexico, and we have a variety of bilateral trade treaties as well. On the tax side, Brazil has agreements with 28 countries, and the U.S. has even more. Many countries, including our NAFTA partners Canada and Mexico, have tax treaties with both the U.S. and Brazil. Brazil is, in fact, the only nation in the world with an economy of $1 trillion or more with which the U.S. lacks a tax treaty. But despite calls for stronger ties from the administrations of both President Obama and his Brazilian counterpart, Dilma Rousseff, no agreements have emerged.

Given our visa and tax treatment of Brazil, it is no surprise that as Brazil’s role in the world has grown, America’s role in Brazil has not. In 2009, China became Brazil’s top trading partner – a position Americans had previously held for eight decades. Meanwhile, the U.S. continues to impose tariffs on two key Brazilian exports: orange juice and ethanol. Brazil, in turn, has announced an array of investment and tax incentives to develop its domestic automobile industry, seeking to reduce the number of cars it imports and, by extension, to cut down on a key area of trade with the U.S. Even so, two-way trade between Brazil and the U.S. totaled $74 billion in 2011, making Brazil our eighth largest trade partner.

Brazil is not likely to ever account for as much of our foreign trade as countries such as Canada or China, nor is it likely ever to be as much of a political and military ally as countries such as the United Kingdom, Israel and Japan. It definitely will never be as physically close a neighbor as Mexico. But none of this means that we shouldn’t strive for a stronger, diplomatically closer relationship.

When it comes to deciding where to do business, shared fundamental values ought to be as important as economic potential. Brazil happens to offer a healthy measure of both.

A comparative analysis of the patent systems of the BRICS countries

Nice presentation from the Brics Policy Center:


http://bricspolicycenter.org/homolog/arquivos/Apresentacao112.pdf

Brazil: A User’s Guide

This post is not the complete legal guide to doing business in Brazil (such thing does not exist and would be outdated in 24 hours if it did).

It is the deliciously humorous article published by Granta magazine, about what Brazil looks like from an extraterrestrial pespective.

It is very funny, specially for the foreigners who have lived or visited Brazil, and who will be able to understand all the jokes.

Enjoy...

Following on from the first and second dispatches from the newly appointed Ambassador to São Paulo back to his home planet, Juan Pablo Villalobos offers a guide to surviving life in Brazil.

Identity crisis (1). São Paulo and Manaus are as similar as Wales and China. Comparing Rio de Janeiro and Palmas is like comparing a shoe with a rocket. Porto Alegre and Rio Branco like a frog to a cup of coffee. Belo Horizonte and Salvador like an Other-Human hair to a constellation. The sum of these differences is called Brazil.

Tips that can save your self esteem (1). You don’t want to play in that football game on the beach, believe me.

Bureaucratic stuff (1). The Brazilian banking system was created by a Czech writer called Franz Kafka.

Ways of saying Hi (1):

– Hi, all ok?

– All ok and you?

– All ok.

– Then it is ok.

Security controls. If you want to enter to a condominium, relax. Have you ever gone to Pluto with a Green Planet passport?

For the rest, go to Granta's website.

BRAZILIAN JUDICIARY EMERGES STRONGER AFTER "CASH FOR VOTES" CORRUPTION TRIALS.

I suggest  a very good article by Mr. Noronha, an outstanding Brazilian lawyer, founder of Noronha Advogados, a Brazilian law firm with a truly international practice (they have office in London, Shangah and Lisbon, among other places).

 I had the honor to be a member of Noronha Advogados a few years ago.

The article comments on the Mensalão scandal.

BRAZILIAN JUDICIARY EMERGES STRONGER AFTER CASH FOR VOTES CORRUPTION TRIALS. 

Twenty five people have been found guilty earlier October 2012 by the Brazilian Federal Supreme Court (STF) in the trials of the accused of vote buying in the Brazilian Federal Congress. Amongst the defendants, there were some of Brazil's top politicians, such as José Dirceu, President Lula's chief of staff between 2003 and 2005, and José Genoíno, president of the Worker's Party. The 11 judge's members of the panel were in their majority appointed by President Lula, as was the General Prosecutor, responsible for pressing the charges.

For the rest, please check http://www.tipnews.info/posts/1213/brazilian_judiciary_emerges_stronger_after_cash_for_votes_corruption_trials

Debt Collection in Brazil - Non Receipt of Overdue Payments

Note: This is a reply I've sent to a client many years ago.  The client sold DVD players to Brazil, but did not receive payment. 

The client neither elected arbitration in his agreement with the Brazilian party, nor asked for a negotiable instrument as an additional collateral for the payment.   Mortal errors to his claims.  

Dear Mr. Goodwill

 After going through your case, I'm happy to present you some considerations.

Please allow me to make a brief introduction to the relevant aspects of your case:

Had you a negotiable instrument signed by the importer, such as a promissory note, it would allow us to file a debt collection lawsuit (execução). This would take less time,  2-3 years maybe. But, unfortunately, this is not the case. 

In your case, we must file a lawsuit in order to obtain a judicial declaration of the debt, and only later move on to the phase of debt collection.

 Such court procedures in Brazil can, unfortunately, take long years to be completely settled. In the Sao Paulo State, above all, court procedures usually take at least 3 years, even the relatively simple ones. Usually, they will take no less than 5 years.

 Thus, I believe that the amicable composition is the best option right now. This can be achieved through negotiation, with the aid of some pressure mechanism made available by Law, such as the public registration of the company's debt before public notaries (Protesto).

 It should also be noted that many Brazilian companies have defaulted their import payments due to the Real (the Brazilian currency) devaluation before the dollar.  

 After all, the dollar appreciation causes the merchandise to become more expensive and makes the taxes due over the imports automatically become higher.

 This has lead many buyers to simply leave the goods at the port, unclaimed. 

 If this is the situation, the debt collection may be simpler, for we may obtain a warrant to seize the goods at the port.

 On the other hand, if the default has been made on purpose or due to financial difficulties, then the Judicial Claim of the debt may be the next necessary step.

 After the initial contact with the debtor, we will have a more clear definition of which situation they are in.  Even if we choose the amicable way as a starting point, your right to claim the debt before the courts remains unaltered.

 In case you have any other doubt, please contact me through e-mail or phone. 

Adler

Reader asks: Can a Foreigner be the administrator of a Brazilian company?

Adler,

Bom dia. 

Can an American with a pedido de permanência (permanent visa request filed) and a carteira de trabalho (a Brazilian work document)  assinada (signed by and employer) open an S.A. in Brazil on behalf of an American company?

Jack Sparrow

___________

Dear Jack Sparrow,

Thank you for the message.

You may be a partner (shareholder) of the company, or act as a representative to the foreign partners.

However, before your permanent visa is actually granted, you cannot act as an administrator (director) of the company.  (By the way, you also shouldn't be able to work before the visa is granted. How come you already have a work document ["carteira de trabalho"]?)

If your pedido de permanência were derived from marriage, the situation would be a little uncertain (the receipt of the request, in case of marriage, grants some special rights). But, being conservative,  I'd still say that you wouldn't be able to be an administrator until the permanent visa is definitively issued.

At the end of the day, I believe your worries are unfounded.

The most usual solution for this situation is to hire a local accountant, lawyer or executive (with a business major) to act as a provisional administrator, while you, as the foreign partner's representative, would retain the powers to approve the administrator's decisions on the most relevant subject.

Please share your plans with me, so that I can offer you better guidance.

 I stress that you need a lawyer or an accountant to help you with this operation, since the help of either of them is mandatory when incorporation a new company.

 Many foreigners are prone to doing things by themselves in Brazil, which is not always possible, and never advisable. (I know that this advice may seem a little biased, but you will have to trust the all the other foreigners writing about this at internet forums like gringoes.com, etc.)

Regards,

Adler

_____

Adler,
Thanks.  However, I would be able to be hired as the general manager if I have work authorization in Brazil, correct?

Jack Sparrow

_______

Dear Jack,

Not exactly.

Your work authorization is valid exclusively for the company that hired you first. You would have to apply for a change of employer before becoming the administrator of a company (this is my interpretation of the law. I do recognize that the Commercial Registry might miss this detail and end up allowing you as an administrator. But this could later be considered as reason to cancel your visa).

If the investment is of at least 600 thousand Brazilian Reais, you can obtain a Director's Visa, which is a kind of permanent Visa.  This route is faster and more certain.

Regards,

Adler

Can the matrix company pay for the goods purchased by the Brazilian subsidiary/affiliated company?

One more of my series of e-mail replies:

Hello,

I was doing a search on a type of tax in Brazil, and I came across your blog. It is very helpful-- thank you for sharing! I have a tax question that I can't seem to find the answer to, and I was hoping that maybe you knew the answer. I left this question as a comment to one of your blog entries, but I also thought I should email just in case.

I am trying to find out the tax consequences for the following scenario:

A U.S. company has a subsidiary located in Brazil. The subsidiary engages in some sort of sales transaction with a vendor (say, for office supplies), also located in Brazil. The goods purchased are to be used by the subsidiary located in Brazil, but the goods will be paid for by the U.S. parent company.

Do you have any idea what the tax consequences would be for the U.S. parent, Brazilian subsidiary, and vendor on this type of transaction? I am aware of taxes for a loan from a foreign company, but I need to know the tax consequences for a transaction like the one above that doesn’t involve a loan.

Thank you very much for your help!

Best Regards,

Isolde

_________________

Dear Isolde,

Thank you for your comments.

I have replied your answer in the blog, but thought that a direct email would also be a good idea.

The right thing to do is to send the money directly to the Brazilian subsidiary. The money shall be declared before the Brazilian Central Bank either as capital or as a financial loan.

For a series of reasons, a local vendor in Brazil cannot receive foreign payment for goods sold inside Brazil. In this case, the vendor would be obliged to export the goods, which is not what you want.

I would be glad to help you with the capital registration.

By the way, what kind of subsidiary is that? A Brazilian company with foreign capital?

Warm regards,

Adler

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Adler,

The Brazilian company is a wholly owned subsidiary of a foreign parent. Does this answer your question? The foreign parent wishes to directly pay a vendor in Brazil who provides goods or services to the wholly owned Brazilian subsidiary. If this is not permitted, can you please explain why? 

Thanks again for your help!

Best,

Isolde

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Dear Isolde,

This is, how can I say, legally awkward due to tax declaration procedures.

In your example, the supplier in Brazil would be donating goods to a local company and receiving a payment from abroad.

Or, in other terms, the local supplier would receive payment from abroad with orders to deliver the goods to a local company.

The local supplier would have to issue an invoice. The invoice cannot be issued against the local company, because it is not the real buyer. It would have to be issued against the foreign company.

If the foreign company orders the delivery to be made in Brazil, then OK, this might work.  But it would indicate that the foreign company has an office in Brazil, which is not the case.

Also, how would the local subsidiary declare this in its books? As donation? It cannot be declared as foreign capital, because it has not come though the Central Bank.

On the other hand, declaring it as a donation is incorrect (not true), because I'm sure the matrix company will declare that this expense is an investment.

So, to sum it up: this might work to purchase 2 thousand dollars in office supplies once, but it is a completely irregular arrangement that cannot be used for regular operations, or at all.

Regards,

Adler

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Adler,

I am just getting your emails. Thank you very much for your help.

I greatly appreciate it! I have forwarded this information to my boss, along with your contact information. Because there are many complications, I am not sure if he will decide to pursue the situation further, but if he does, he may be emailing you. 

Thank you again!

Take Care,