The decision to open a representative office in Brazil is an important step for an international company interested in setting up a permanent establishment here. Our experts in company formation in Brazil can help you open a liaison office in the country.
| Quick Facts | |
|---|---|
| Best used for | Advertising and promotional activities, market research, general liaison. |
Prohibited activities | Commercial business purposes |
Name | As the parent company’s |
| Legal entity | No |
| Judicial capacity | It cannot be a party to legal proceedings in its own name. |
| Liability | The foreign company is liable for its Brazil representative office. |
| Types of companies that can use a liaison office | All types of companies interested in exploring their opportunities in the Brazilian market. |
| Limitations on foreign companies | No restrictions apply on the type or size of the foreign company that can open a representative office in Brazil. |
| Local representative | An appointed agent. |
| Subject to taxes | No |
| Subject to reporting | No |
| Registration | Registration is not needed for this business form. |
| Alternatives to the Brazil representative office | Open a branch (subject to approvals and conditions), or incorporate a local company (subsidiary). |
| How we can assist you | Our company formation experts in Brazil assist foreign investors who wish to set up a representative office or open another business form. |
| When to contact us for assistance | As soon as the company’s Board considers it is favorable to commence promotional or market research activities in Brazil. |
Table of Contents
What is a representative office?
The representative office, or liaison office as it is also called, offers a first entry into the market and, even though it is not used for commercial purposes, it provides valuable intelligence on the Brazilian business climate and market potential.
Investors who want to open a company in Brazil cannot use the representative office as a substitute for a legal entity, but rather as a springboard for entering the local market.
How is a liaison office used?
A foreign company that sets up a liaison office in Brazil can find customers and suppliers, and gain important knowledge on how the market will respond to its product or service.
The liaison office is, as its name suggests, a point of contact between a foreign company and its Brazilian clients. This office is set up when the parent company abroad is not yet licensed to engage in activities in Brazil.
What activities can the representative office perform?
Once the foreign company completes the process to establish a representative office in Brazil, the office will be able to engage in the following activities:
- Perform different types of market research;
- General liaison activities, sourcing potential business partners, or sourcing products for the parent company;
- Quality control and client relations activities;
- Engage in administrative assistance activities and drawing up contracts for the parent company;
- Hire staff, however, only as necessary to perform the aforementioned types of activities.
What are the advantages of the representative office in Brazil?
The advantages of a liaison office can be seen as purely strategic ones. Below, our company formation agents list some of the key reasons why companies may opt for this initial structure when entering the Brazilian market:
- Quick setup: while the representative office is subject to proper registration with the authorities, this is generally faster compared to the company registration process;
- Low set-up costs: a liaison office does not require a minimum capital, nor costly initial investments in office space or utilities;
- Low overhead costs: because its activities are non-commercial, and it operates with one representative (in most cases), the overall operational costs will also be significantly lower compared to those related to companies;
- Valuable insights: as stated, the liaison office can provide a trove of useful information on the local market, which can be used by the foreign company to adjust its market entry strategy and to adjust to doing business in Brazil.
What are the limitations of a representative office?
The Brazilian liaison office is limited to non-commercial activities. Therefore, the office and its appointed representative in Brazil need to observe the requirements for non-trading.
As such, our team lists the types of activities that will not be possible with this type of structure:
- Use the office to engage in manufacturing or the provision of services;
- Derive income from Brazil, as a result of the liaison office’s activities;
- Engage in trading, or the sale of goods or services.
How do I register a representative office in Brazil?
Foreign companies cannot simply set up a liaison office to engage in the aforementioned market research activities. They must notify their presence and the conduct of these activities to the local authorities.
Below, we summarize some of the most important steps for foreign companies that open a representative office in Brazil:
- Appoint a local representative: the liaison office will have an individual to act as representative, as decided and appointed by the foreign company’s Board. Their information will be provided for the registration of the office;
- Prepare the documents: these can include the foreign company’s constitutive documents, the resolution to open the liaison office and the one to appoint the aforementioned representative, and others;
- Register the office: this is done in the state in which the liaison office will operate.
Please keep in mind that the Brazilian authorities may request additional information from the foreign company, which may serve as additional proof of their commercial motivation to open a representative office in the country.
All documents provided for this purpose must be translated into Portuguese and presented in the form requested by the local authorities.
Contact our agents specializing in Brazil company formation if you wish to know more about the registration of a representative office, or the setup of other business forms.