Foreign Citizens

In Brazil, The foreign Capitals Act defines how foreign capital, assets, machines and equipments entering Brazil without initial fund expenditure, directed to the production of assets or services, as well as the financial or monetary resources brought into Brazil for application in economic activities, provided they belong to corporations with main office abroad or individuals resident and domiciled abroad. The Central Bank of Brazil regulates the commercial/financial exchange markets and that of tourism.

The registration of foreign capital shall be carried out by means of the Direct Foreign Investment Electronic Declaratory Registration (RDE–IED - Registro Declaratório Eletrônico – Investimento Externo Direto), which integrates the Central Bank Information System (Sistema de Informações do Banco Central – Sisbacen).

For the purposes of the Electronic Declaratory Registration, the following are considered direct foreign investments: permanent participation in receiving companies in Brazil, or in accordance with the market practices, participation with traits of permanence, withheld by a non-resident investor, individual or corporation established abroad, upon property of shares or quotas that represent the stock capital of Brazilian companies, as well as the allocated capital from foreign companies authorized to operate in Brazil.

Yes. The mentioned registration is essential for the remittance of profits abroad, for the repatriation of capital and for the registration of profits re-investment.

The investments in currency do not depend of any prior authorization on behalf of the government authorities. In order to subscribe the capital or to acquire participation in an existing Brazilian company, all it takes is to provide the remittance of the investments by means of a banking institution authorized to operate with exchange.

The registration of investments is carried out by the beneficiary Brazilian company and/or by the foreign investor’s representative, within thirty days as of the close-off of the exchange agreement, by means of Module RDE – IED (Direct Foreign Investment Electronic Declaratory Registration), which integrates the Central Bank Information System – Sisbacen.

Eventual investments carried out based on resources that are not registered into the  RDE–IED system are subject to prior authorization from the Department of Financial Tort Enhancement and Exchange and Capital Supervision.

The investment made by means of importing assets without exchange covering, carried out to pay-in capital stock, and provided the relevant asset is tangible, does not require prior approval by the Central Bank.

In accordance with the Foreign Capitals Act, the so-called re-investments of profits are the profits accrued by companies established in Brazil pursuant to individuals or corporations established abroad, so long as such profits are re-invested in the company that generated them or elsewhere in the local economy.

The foreign capital registered before the Central Bank of Brazil may be repatriated to its original country at any time; in principle, no prior authorization of any kind shall be required for such purpose.

The amounts in foreign currency registered no Central Bank of Brazil as investments made by non-resident persons may be repatriated without levying of income tax.

The amounts in foreign currency that proportionally exceed the original investment made (capital gain) are subject to income tax withheld at a 15% bracket. In the specific case of capital repatriation, it must be observed that the Central Bank of Brazil usually examines the involved company’s equity, considering as a basis it balance sheet. If the equity is negative, the Central Bank of Brazil may construe there has been dilution of the investment, thus denying authorization for repatriation in an amount proportional to the negative bottom line accrued.

The beneficiary, individual or corporation, established and domiciled in Brazil, or the proxy, when the beneficiary is resident or domiciled abroad, is responsible for withholding and collecting the income tax levied on the capital gain accrued by an individual or corporation established abroad who transfers assets located in Brazil.

The investments carried out by means of external credits conversion, in events of operations that are not registered into the RDE-IED System, are subject to prior authorization by FIRCE (Foreign Capitals Department). Once this authorization is granted, a symbolic exchange operation of purchase and sale of funds takes place.

That is the operation through which credits subject to generating transfers abroad base don the norms in force are used by the non-resident creditor to acquire or pay-in for participation in the capital stock of a Brazilian company.

In accordance with a Resolution of the Brazilian Monetary Council (Conselho Monetário Nacional – CMN), any non-resident investor, individual or corporation is allowed to invest in Brazilian markets (either financial markets or stock exchange).

Participation of foreign capital in financial institution is subject to approval of the Brazilian Government, if the latter understands any national interest is involved.

In some cases, participation of foreign capital in the following activities is forbidden or restricted:

• Development of activities involving nuclear power.
• Ownership and administration of newspapers, magazines and other publications, as well as of radio and television broadcasting networks.
• Health services.
• Rural properties and border-zone businesses.
• Courier and telegraph services.
• Airlines with domestic flight concessions.
• Air and space industry.

The Brazilian companies may apply for and obtain permission to operate in the mining industry, even if it is under foreign control.