BRAZIL Law and Practice Contributed by: Júlio de Oliveira, Stephanie Makin, Gabriel Lacerda and Carlos Augusto Cruz, Machado Associados
Machado Associados Avenida Brigadeiro Faria Lima, 1656 11th floor 01451 918 São Paulo – SP Brazil
Tel: +55 11 3819 4855 Fax: +55 11 3819 4855
Email: machado@machadoassociados.com.br Web: www.machadoassociados.com.br/en
1. Corporate Structures, Residence and Tax Treatment 1.1 Corporate Forms and Their Tax Treatment Businesses generally adopt a corporate form in order to perform their economic activities in Brazil. The main corporate forms used by businesses are corporations ( sociedade anônima ) and limited liability companies ( limitada ). Sociedade Anônima As a rule, a sociedade anônima must have at least two shareholders, which can be individuals or legal enti - ties, residents or non-residents. However, the Brazilian Corporations Law establishes that, exceptionally, a sociedade anônima can be (i) incorporated as a wholly owned subsidiary, by public deed, as long as the sole shareholder of the corporation is a Brazilian company; or (ii) converted into a wholly owned subsidiary as a consequence of the acquisition of its shares by a Bra - zilian company or merger of its shares into a Brazilian company. There is no minimum capital requirement, and the liability of shareholders is limited to the price of the shares subscribed or acquired by them. A sociedade anônima can be publicly held if the secu - rities issued are admitted for trade in capital markets, or closely held if the securities issued are not admitted for trade in capital markets.
Limitada There is no minimum number of partners required to incorporate a limitada . As such, it is possible to incorporate a limitada with only one partner ( limitada unipessoal ). There is also no minimum capital require - ment, and the liability of the quotaholders is limited to the amount of their respective quotas, but all quo - taholders are jointly liable for the paying up of any unpaid portion of the quota capital. Limitadas cannot be publicly held. Brazilian legislation also allows foreign companies to incorporate branches in Brazil and establishes that such a branch shall be treated as a Brazilian legal enti - ty for tax purposes. The tax deductibility of expenses not associated with the activities of the branch in Bra - zil is accordingly restricted. The establishment of a foreign company’s branch depends on a special permit granted by the federal government of Brazil, and any amendment to the company by-laws or its articles of association requires the approval of the federal government in order to be valid in Brazil. In view of this, it is not common for foreign companies to incorporate branches in Brazil. 1.2 Use and Taxation of Transparent Business Structures The most commonly used transparent entities in Brazil are consortiums and investment funds.
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