Waypoint

Starting Up in Brazil: A Practical Guide for Irish Entrepreneurs

Imagine you arrive in Brazil. You have a brilliant business idea and the desire to bring it to life. But in the process of setting up you find out that starting a business here needs more than ambition. It requires patience, paperwork, and the right advice.

Thankfully there is a lot of information available to help potential entrepreneurs get up and running quickly, so they can focus on what’s important – running their business.

Can a Foreigner Open a Business in Brazil?

Short answer, yes. But, as with many things in Brazil, you need a personal tax number, also known as a CPF (see below). Obtaining a CPF is only one part of the process in setting up a business here, though a vital one that you should look to do as early as possible. And remember, even if you want to work for a company abroad while living in Brazil, you will need a CPF.

In this instance, an important watch out is double taxation. Depending on the country your job is based, you may end up having your income taxed twice, once in your job location, and again when bringing the money into Brazil.

If you do wish to work for a company abroad, it can sometimes be more beneficial to set up a small business and operate as an external consultant.

This can remove other difficulties such as the business not wanting to deal with the headache of the barriers to employ someone based in Brazil from the likes of Ireland, the US, or UK. It’s important to note however, obviously if you operate as a consultant, you will no longer receive the employee protections offered by the country your client is based in. So, worth keeping in mind when negotiating with a prospective employer.

Once you’ve got your CPF sorted and decided that Brazil is indeed your physical base, your next big decision is: what kind of company do you want to run?

Types of Business Structures

There are multiple ways to structure your business. Choosing the right option depends on how you plan to operate. An accountant, or contador, can help you understand which option is best for your business.

Microempreendedor Individual (MEI)
The MEI is a great option for those looking to start a small business, but with minimal bureaucracy and tax obligations. It was typically designed to bring informal workers into the formal economy and allow them to register as a legal business entity by acquiring a CNPJ tax ID and issue invoices, known as a nota fiscal.

There are a few key eligibility requirements for registering as an MEI. You:

• may only earn a maximum of R$81,000 per year
• cannot be a partner or owner in another business
• can only hire at most one employee earning a minimum or union wage
• work in a profession covered by the MEI regime such as graphic designer, hairdresser, or food vendor

The MEI can be a great option if you’re a gig worker or freelancing. For example, if you’re a freelance graphic designer from Dublin, now operating from São Paulo, this may be your best option. Though, it is only open to migrants with a CPF tax number (as it really is this important) and residency in Brazil.

Sociedade Limitada
The Sociedade Limitada (LTDA), or Limited Liability Company is one of the most common set ups for small-to-mid-sized businesses, and the route many migrants go when setting something up. It typically takes about a month to complete the process.

The LTDA is governed by the Contrato Social (Articles of Association) and differs from the MEI in that you can have more than one partner, and businesses with revenue up to R$360,000 are considered a Microempresa (ME) or microbusiness. Once you exceed this limit the business is then considered a Empresa de Pequeno Porte (EPP) or small business, where the revenue cap is R$4.8 million.

A non-Brazilian may own 100% of a LTDA, but must have Brazilian residency (and of course, again, a CPF). Any investment must go through the Banco Central or the Central Bank via the RDE-IED system for foreign direct investment. This is essential not just for legal compliance, but also to repatriate profits later.

While other options exist such as a Sociedade Anônima (S/A) – the Brazilian equivalent of a joint-stock company, these are typically for larger businesses. The MEI or LTDA are typically the better options for most Irish people starting up in Brazil.

Key Requirements in Setting Up a Business

As in all countries, there are some basic requirements you will need to fulfil to set up a business in Brazil, regardless of the type.

Cadastro de Pessoa Física (CPF)
Important to note that whether or not you’re setting up a business in Brazil, as mentioned, the CPF is one of the most essential documents you will need to obtain if you intend to live here. The CPF is similar to the Irish PPS number, and is needed for many things, from setting up a bank account, to getting a mobile phone contract, to owning property, and of course, for working and paying taxes.

You can apply for your CPF via the Brazilian consulate abroad or if you’re already in Brazil, through Receita Federal or Banco do Brasil/Caixa Econômica branches.

Cadastro Nacional da Pessoa Jurídica (CNPJ)
The CNPJ, a Brazilian tax ID, is the corporate version of the CPF – your business’s official identification number for legal and tax purposes. Without the CNPJ you cannot legally issue invoices, pay taxes, or register employees.

To obtain a CNPJ, you must first register your company either through Junta Comercial or the Cartório (Notary Office), depending on the structure of the business. The Receita Federal will then issue your CNPJ.

You Must Have a Local Address
You will need an actual Brazilian address, not just a PO Box, so Recieta Federal knows where to send you tax notices (and yes, they will send them). This can be a rented office or a home office if allowed by local zoning laws. If you’re abroad, some law firms may provide a temporary address as part of their services.

The Business Requires a Legal Representative
The legal representative does not necessarily need to be Brazilian, but must be a Brazil-based representative with a CPF. If you fill these criteria, then you will not need an additional representative.

However, should you need it, a legal representative will act on behalf of the company and be legally responsible for its operations. Of course, it’s important to choose someone you trust if appointing an external representative. They could be a business partner, a lawyer, or an accountant.

Capital Investment
While not required for an MEI, some minimum capital may be required to set up a LTDA or S/A. This is more likely to be the case if the business is connected to a visa application.

If you’re looking to obtain a permanent visa via investment, the minimum is R$500,000 in most cases, or R$150,000 in innovative or tech ventures.

Getting Past the Bureaucracy

Brazilian bureaucracy is famous. Unfortunately, this is not a country where you can just set up shop and start selling. But with the right allies, you can navigate the jungle of paperwork without losing your patience, or your passport.

Contrato Social
The Draft Articles of Association is the formal document that defines the legal structure of your company. This is around things such as who the partners are, how profits are shared, and what the company does. If forming a LTDA, the Contrato Social document is essential, must be written in Portuguese, and signed by all partners or their legal representatives. It’s best to have this drafted by a lawyer or accountant familiar with business incorporation.

Register with the Junta Comercial or Cartório
You must register with the Junta Comercial or Cartório, depending on the business type. This legally brings your business into existence. The Junta Comercial is more common for LTDAs, while Cartórios are more common for non-profits, associations, or specific business types like law firms.

Apply for Municipal and State Licences
Depending on what your business does and where it operates, you may need various local and regional licences. These can include:

• Alvará de Funcionamento: a business operating permit from city hall.
• Inscrição Municipal or Estadual: municipal or state registration for services and commerce.
• Imposto Sobre Serviços: tax for service providers.
• Imposto Sobre Circulação de Mercadorias e Serviços: tax for commerce and goods, roughly equivalent to VAT.

It’s worth noting that each city and state has its own procedures and timelines, and some business types also require inspection from fire departments or health surveillance.

Hire a Contador
Hiring a contador, or accountant, is practically a must in Brazil. Almost all businesses are required to have an accountant to manage the likes of bookkeeping, tax filings, labour obligations, and annual declarations and compliance. Your accountant should be able to advise on the right tax regime for your business. We would also recommend that you obtain legal support, especially for things like drafting contracts, translating legal documents, or navigating legal and investment rules.

While this all may be a bit of a maze, Brazil rewards persistence. And once you’re in, you’re playing in one of the most dynamic markets in the world. As some of our previous articles have shown there are lots of opportunities between Ireland and Brazil, from agriculture, to music, to technology. But setting up to do business here–or from here with a foreign-based company–can be complicated. But once set up with the right structure, you’ll be well-placed to thrive in the world’s tenth-largest economy.  

And as always, if you need support in your endeavour, Irish Business Network Brazil is here to help in whatever way we can.