Investments made by foreigners in the country shall be registered through the Brazilian Central Bank, in the Electronic Declaratory Registry of Direct Foreign Investment implemented by the Central Bank (RDE-IED). Investments in cash are recorded in the amount of the foreign currency transferred to Brazil and converted into Brazilian currency (Reais) as paid in capital on the date of inflow. Although an investment in cash is the most common form of initial contribution, foreign investors may also contribute into Brazilian companies with assets in-kind. However, contribution of noncash items may be more cumbersome, and in some instances requires feasibility analysis.

The Brazilian company which is the recipient of the foreign investment in cash or in kind must obtain a number from the RDE-IED, corresponding to the Investor (foreign investor)/Receiver (Brazilian company) pairing, through the Information System of the Central Bank (SISBACEN). Such RDE-IED number must be indicated in the exchange agreement related to the foreign investment. The Brazilian company must then register the foreign investment before the Central Bank through the SISBACEN RDE-IED system within 30 days from the closing of the foreign exchange agreement sustaining the respective inflow foreign capital.

Foreign capital invested in Brazil is granted the same legal treatment applicable to Brazilian capital under similar circumstances. However, Brazilian law requires that foreign capital that is brought into the country on account of direct investment must be registered with the Brazilian Central Bank in order to guarantee remittances of dividends, interest, and return of original invested capital without taxation thereon.

Besides regulatory requirements for certain business sectors, there are no legal minimum capital requirements unless: (i) the Brazilian entity applies for the so called RADAR license which allows the entity to engage on import or export transactions of goods, or (ii) hires an expatriate to become a general manager/director of the Brazilian entity, in which case a minimum capital of R$600,000 per individual, or R$150,000 per individual, in addition to the generation of at least 10 new jobs within a 2-year period, counting from the incorporation of the Brazilian entity or arrival of the foreign individual in Brazil.

Author: José Eduardo Flores

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