Capital controls for investments outside of Brazil

I will sometimes paste conversations with friends and potential clients. Names and details are always changed.


Mr. Martins:

I am a lawyer in Westeross.  I found you through your blog.

I represent a private equity management company. We have an opportunity to bring a Brazilian investor in as an investor in one of our funds. Can you give me general guidance on what--if any--restrictions apply to such investments? 

As far as I can determine, Brazilian citizens (companies and individuals) have a duty to report any investment over $100,000 held outside the country. However, there are no restrictions on making investments abroad.

Any guidance you can provide is appreciated.

Viserys,

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Dear Viserys, 

Thanks for contacting me.  

I'm starting to advise some private equity funds in Brazil, and I think your contact comes at a very good time. Please let me know if your clients ever gets interested in investing in Brazil. 

Regarding your question, there is no previous license or approval required for a Brazilian to invest abroad.  The registration you mention does exist, but it must be made yearly and always after the investment has been made.

However, due to recent changes in law (through provisional measure 627), any income or capital gain made abroad must be declared and taxed in Brazil, every year. 

This may required your client to plan his investment better, since he will probably be subject to double taxation (Westeros and Brazil). 

Your client may postpone the Brazilian taxation if his investment is specially planned, but this kind of solution is still new and unclear.

Adler