Most foreign groups enter Brazil through a limited company (Ltda.), which can have a single partner. Foreign partners need Brazilian tax IDs and, in several cases, a representative resident in Brazil. Foreign capital must be reported to the Central Bank, and the choice of tax regime should be made before the company starts operating.
Choosing the legal form
The two usual vehicles are the limited company (sociedade limitada, or Ltda.) and the corporation (sociedade anônima, or S.A.).
- Limited company (Ltda.). It is the most common choice for subsidiaries of foreign groups. Each partner's liability is limited to the value of its quotas, but all partners are jointly liable for paying in the capital (Civil Code, art. 1,052). Since 2019 a limited company can be formed by a single partner (art. 1,052, § 1).
- Corporation (S.A.). It is governed by the Corporations Law (Law 6,404/1976) and is usually chosen for larger structures, joint ventures or when the business plans to bring in investors through shares.
Brazil does not require a Brazilian partner for most activities. Some sectors have specific restrictions, such as media and the acquisition of rural land, so the activity should be checked before incorporating.
Foreign partners and directors
- Tax registration. Foreign partners must be registered with the Brazilian Federal Revenue: individuals with a CPF and companies with a CNPJ.
- Representative in Brazil. A shareholder of a corporation who lives abroad must keep a representative in Brazil with powers to receive service of process (Law 6,404/1976, art. 119). Limited companies are subject to similar commercial registry requirements for non-resident partners, which we check in each case.
- Directors living abroad. In a corporation, directors and board members may live abroad, provided they appoint a representative resident in Brazil, with powers that last at least three years after the end of their term (art. 146, § 2, as amended in 2021).
Registering the foreign investment
Under the Foreign Exchange and Foreign Capital Law (Law 14,286/2021), foreign capital in Brazil receives the same legal treatment as Brazilian capital (art. 9), and the Central Bank of Brazil regulates, monitors and may request information on foreign capital flows and stocks (art. 10). In practice, the investment in the Brazilian company must be reported to the Central Bank under its regulations, which also matters later for repatriation and dividends.
Step by step
- Define the structure: legal form, partners, capital and who will manage the company.
- Obtain Brazilian tax IDs for the foreign partners and appoint the representative in Brazil.
- Draft the articles of association, including management powers, transfer of quotas and exit rules.
- File the incorporation with the state Commercial Registry (in São Paulo, JUCESP) and obtain the company's CNPJ.
- Complete state and municipal registrations and the licenses required for the activity, and open the bank account.
- Report the foreign investment to the Central Bank.
- Choose the tax regime and set up accounting, payroll and the eSocial registration before hiring.
Choosing the tax regime early
The simplified regime for small businesses (Simples Nacional) is not available to a company that has another company among its partners, nor to a branch or office of a foreign company (Complementary Law 123/2006, art. 3, § 4, I and II). Most foreign-owned subsidiaries therefore choose between presumed profit and real profit. See our guide to taxes for foreign companies.
Checklist
- Confirm that the activity has no restriction on foreign ownership.
- Decide between Ltda. and S.A. and who will be the administrators.
- Arrange CPF or CNPJ for each foreign partner and a resident representative.
- Prepare the articles of association with clear exit and deadlock rules.
- Plan the Central Bank reporting of the capital before transferring funds.
- Choose the tax regime and the accounting firm before the first invoice.
Frequently asked questions
Can a foreign company own 100% of a Brazilian company?
Yes, for most activities. A limited company can even have a single partner (Civil Code, art. 1,052, § 1). Sectors such as media and the acquisition of rural land have specific restrictions, so the activity must be checked first.
Do we need a director who lives in Brazil?
In a corporation, directors may live abroad if they appoint a representative resident in Brazil (Law 6,404/1976, art. 146, § 2). For limited companies, the commercial registry requirements for non-resident partners and administrators are checked case by case.
Can profits be sent back to the parent company?
Yes. Since January 1, 2026, dividends remitted abroad are subject to 10% withholding income tax, with exceptions and a credit mechanism set by law. See our guide to taxes.
Legal references
- Civil Code (Law 10,406/2002)
- Corporations Law (Law 6,404/1976)
- Foreign Exchange and Foreign Capital Law (Law 14,286/2021)
- Simples Nacional (Complementary Law 123/2006)
Links to the official text of the laws (in Portuguese). This guide is general information and does not replace advice on a specific case.