Foreign Investment And Foreign Companies In Brazil

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Posted: 1st May 2019 by
Leandro Luzone
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With Brazil being the seventh biggest economy in the world with a GDP of USD 2.3 trillion, it is no surprise that investors are more interested in expanding outside their jurisdiction.

However, alongside the benefits of a strong labour force and an expanding consumer market, comes a complex regulatory system and high taxes. We speak with Leandro Luzone on how foreign companies can prepare for the complexities they may face.

Can you share what the current foreign investment scene is like in Brazil?

Among the most difficult aspects for foreign investment in Brazil are regulatory, tax, labour, and bureaucratic issues; factors which when unsuccessful or mismanaged, can seriously impact the results of a project.

However, despite high costs and bureaucracy, the huge Brazilian consumer market and the availability of investments attract foreigners to set up their business here.

Recently, after amendments in the law, it is possible to obtain a residence visa by means of investment, in ready or under construction residential or commercial real estate.

With the investment, foreign investors will be entitled to a provisional two-year residence permit. After that, the authorisation becomes permanent.

This measure facilitates the entry of investors and helps the growth of the real estate market, which was adversely affected during the crisis.

How can a foreign company be sure that the business conducted in Brazil is bringing progress to the company locally and regionally?

In order to provide legal certainty to the foreign investment, it is important that the company, with the support of a legal expert, prepare the necessary preliminary documents and follow the bureaucratic procedures. As for the segment of operations, there may be a differentiation regarding the need for registration before specific public agencies, as well as different variations of procedures according to the intended business structure.

After the creation of the business plan, the first thing to consider is the most appropriate legal corporate structure in accordance with each situation, while considering the tax impacts on the operation and other laws, including labour and consumer law.

For the foreign investor, the primary issue for a business investment decision is legal certainty. Everything is clear when the company knows the legal and bureaucratic requirements of the business you want to explore.

The foreign company or investor needs to be sure that they will not be presented with any surprises and that they can plan, contract and execute their projects within an expectation already calculated under the aspect of legal certainty.

From this, can you share the common challenges clients face regarding foreign investment in Brazil? How do you assist with this?

The biggest challenges that foreign clients face in Brazil are related to: the opening times of the company; bureaucracy and obtaining the necessary licenses to start operations; the difficulties related to the adaptation of the local business culture; and, the complexity of tax and labour legislation.

Our main job is to soften these barriers in order to provide foreign investors with greater efficiency and agility in conducting business in Brazil, always focusing on the legal certainty of international investment.

Knowing the corporate legal challenges, we always try to anticipate the problems, passing on to the foreign client the general challenges that they may face when conducting business locally.

As Thought Leader in this sector, can you share some tips that help foreign clients, individuals or companies, in order to be successful with their projects in Brazil? What are your tips for foreign traders entering Brazil for business?

It is important for a foreign investor, individual or company, to have an intimate knowledge of the local environment, including both the direct and indirect costs of doing business in Brazil, related to distribution, government procedures, employee benefits, environmental laws and complex tax structure. As speed in Brazil is a real problem, the investor also must adjust the budgets and business plan accordingly.

Leandro Luzone is the founding partner of Luzone Advogados – Law Firm, as well as a legal expert in civil and commercial law, business and corporate law, and in private international law. Many foreign clients asked for his opinion on various issues related to Brazilian Law. He has worked as a lawyer and legal adviser for several foreign companies and their affiliates with activity in Brazil and abroad.

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