quinta-feira, 30 de julho de 2015

Never open a branch or representative office in Brazil. Incorporate a new company instead.

The option for incorporating a new company is almost always the best one. 

This happens because the oppening of a branch is burdened by several difficulties. The main ones being: 

i) branches are subject to previous authorization by the Federal Government, which must be obtained in Brasilia;

ii) the foreign entity that owns the branch must print, in an official newspaper in Brazil, all its financial statements and main board decisions. This is not required when a new company is incorporated;

iii) every year, the local branch must publicize, in an official newspaper in Brazil, its financial statements and L&P reports. This is not required for Brazilian Limited Liability Companies, except when they reach considerable size;

iv) branches are subject to direct overview by the public prosecutor's office;

v) registration procedures are lengthier and more complicated;

vi) according to Brazilian law, acts of the branch may generate direct liability to the controlling company, abroad. 

On top of that, there is no tax advantage in operating via a branch instead of using a 
new corporate vehicle.

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