Subsidiary Law Changes In Brazil Can Benefit Your Company

Author:Ms Vanessa Mello
Profession:TMF Group

Opening a subsidiary in Brazil just got less complex thanks to a new law affecting business addresses.

Brazil is known for its high rate of bureaucracy which landed it in the top ten most complex countries for business in TMF Group's Compliance Complexity Index 2018. But now, it seems like the government is passing laws to ease some of the burdens on new businesses in Brazil.

In the past, businesses looking to open a subsidiary of their company in Brazil had to have an address that was compatible with the activity stated in the bylaws or article of information. For example, if an industrial company wanted to register for a new entity in Brazil for an administrative office or headquarters, they would have to have an address of a factory or in an industrial area. Both the State and Municipal Authorities would have to check to make sure that the address was compatible with the activities of the business. This was very costly for businesses and it was hard for the new companies to comply with these requirements. Businesses had to search for locations that were compatible even if they were further out away from city centres.

Now, under Normative Instruction DREI nº 50, companies are allowed to specify a different activity for their headquarters and for the branches of the business. They can choose any address without regard to the type of business. There can even be a virtual address assigned for the company for the first year. This allows for a company to have administrative offices at any address in the country that is appropriate for that type of work.

Easier start for companies in Brazil

Companies looking to open a new entity in Brazil will be able to take advantage of this change. They can choose to set up their business at any address they pick regardless of the main activity of the...

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