Starting a Business in Brazil

The Ins and Outs of Starting a Business in Brazil

Starting a business in Brazil requires several steps and involves a few government agencies; all paperwork needs to be in Portuguese. Accordingly, you’ll want to enlist professionals if opening a business here. At a minimum you’ll want a local accountant and attorney. You’ll probably also want to retain their services on an ongoing basis.

Note that it may not be necessary to incorporate in Brazil to do business here.

If you already have a foreign business, you may be able to simply register that business in Brazil. The amount of paperwork required (and associated costs) could be reduced and the process much faster.

Things to know:

• You’ll need to obtain a CNPJ number, which is your company’s tax ID number, equivalent to a TIN in the United States
• The company’s articles of incorporation must be translated into Portuguese by a certified translator
• Important: The company must have a resident agent in Brazil to interface with public and government agencies and maintain responsibility for tax payments

Brazil is fairly socialist. Government-mandated and customary benefits (including allowances for transportation to/from the job, subsidized lunches, and the “13th salary” paid in December) make the effective cost of carrying an employee just about double his nominal salary. Also, be aware that labor laws generally favor the employee in case of dispute. And, should things not go well, shutting down a business can itself involve significant costs and paperwork.

The current corporate income tax rate for companies is 15%.

What Business Opportunities are There in Brazil?

Importing is one possibility. This is a country of more than 200 million, and the burgeoning middle class has a huge appetite for brand-name consumer goods, from Victoria’s Secret lotions to Polo brand shirts to anything made by Apple. Up through 2014, hordes of Brazilians made trips to the States specifically to shop. With the current exchange rate, far fewer Brazilians can afford the trip—but their desire for consumer goods remains unabated.

Many foreigners have opened bars and restaurants—often themed, such as an Irish pub. There are also franchise opportunities; most of the fast-food chains are represented here, as are some more upscale chains, Outback Steakhouse, for example, is enormously popular.

Many foreigners have found a spot where they’d like to settle down, then opened a small hotel (pousada) there. There are still many lovely areas in Brazil which aren’t well developed. Brazilians—perhaps motivated by the high costs of traveling abroad—are belatedly discovering their own beautiful country, so a well-located pousada could be a good venture. Hostels also are popular, both with foreign backpackers and with Brazilians, who like the social atmosphere. Brazil is also going green, so eco-tours are increasingly popular

Language schools are a natural business for foreigners. Brazil has traditionally lagged behind other countries in English ability, but today Brazilians recognize that having English greatly increases their opportunities. There are already many language schools peppering the landscape, but many, frankly, aren’t very good. There is definitely room for results-oriented schools, and any school operated by a native English speaker instantly has credibility. Classes centered on conversation and on business English are quite popular, as are multi-day immersion courses. Note that Spanish and French are also popular second languages here, which present other revenue opportunities.

Yes, there are business opportunities in Brazil, even in today’s economic muddle. However, you should know your market well, and be very conservative when creating your business plan. In particular, allow for unanticipated delays and expenses. We’d also suggest going with a type of business proven to be popular here. While Brazilians have seized onto technology with relish (even housemaids have smartphones), in most other ways they are slow to try new things. So, no matter how good a chimichanga you whip up, a Mexican restaurant is likely to fail here.

We wouldn’t advise opening a business in Brazil just to get residency, at least not until you’ve explored other options—including whether you truly need residency.