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,

----------------------

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

Visa options for investors in Brazil

One of the questions I receive the most from my clients want to invest in Brazil is on the possibility of obtaining a visa for partners, directors and managers of their company.

Basically, in Brazil there are 3 visas that relate to business:

1) For investments above 600,000.00 Brazilian Reais, the company has the right to appoint one foreigner as a director. This foreigner will receive a visa automatically. Each 600,000.00 allow for one director.

2) For investments above 150,000.00 Brazilian Reais, one investor may obtain a Visa, as long as he can prove that the company will bring a relevant social impact to the area where it is located, or that the company will generate jobs for Brazilians. Again, each investor must bring at least 150,000.00 (lower investments may grant a visa if the social impact is proven to be outstanding).

The social impact is evaluated according to the business plan presented along with the visa request. The main criterion is always the creation of jobs. But the use of new technology and te empowerment of local communities are also important.

A relevant social impact would be, for instance, the installation of a factory in a very poor region. If the business plan is solid, the social impact can be easily accessed by the Brazilian government.

Some of my clients, for example, invested only 100,000.00 BRL and obtained a visa. In one specific case, the new company brought new design for wood furniture, and would employ a few workers in the production of such furniture. The business was also located in a poor region of a big city in the Northeast of Brazil.

  

3) Finally, a foreigner may obtain a work visa if a Brazilian company hires him for a permanent job. Possessing a bachelor or graduate diploma makes the granting of the visa more probable. The Brazilian company must have 2 Brazilian employees in similar functions to every foreigner it hires for that function.

Should you or your company have any problems or questions concerning visas in your business in Brazil, do not hesitate to contact us for further information.