A foreign company interested in doing business in the country can choose to open an SPV company in Brazil as needed to meet certain business goals or projects. The Special Purpose Vehicle (SPV) is a company opened for a particular purpose, usually for securing assets and, overall, for minimizing the parent company’s financial risk.
Our Brazil company formation experts can advise foreign investors on the suitable uses of a Brazilian SPV, the tax and accounting considerations, as well as the particularities they need to be mindful of when choosing this jurisdiction.
Our team specializes in the formation of all types of legal entities, and we also assist foreign entities interested in entering the market in other ways, such as the option to open a branch in Brazil.
Brazilian SPV characteristics
SPVs in Brazil are investment funds or securitization companies. Investment funds like FIDCs (Fundo de Investimento em Direitos Creditórios), FIIs (Fundo de Investimento Imobiliário) are owned by investors through interest (cotas) issued by the fund, organized in the legal form of joint ownership without legal personality. SPVs must adhere to relevant regulatory requirements set by the CVM (Comissão de Valores Mobiliários), which is the Brazilian Securities and Exchange Commission.
It’s uncommon for SPVs in Brazil to face insolvency issues. If an SPV company goes bankrupt, investors in their securities, especially in real estate and agriculture, are usually not affected. Brazilian law keeps the assets that support these securities separate from the company’s general assets.
Our Brazilian company formation agents can help you open an SPV company.
How to open an SPV company in Brazil
The special purpose vehicle is most commonly incorporated as a limited liability company, a separate legal entity from its founder(s), which has two or more partners that can be individuals or other companies.
Some of the characteristics of the LLC are the following:
- it does not need a mandatory minimum prescribed capital;
- its partners are liable according to the amount of capital they have paid in the company;
- a foreign national can be appointed as the manager of the company, provided that this person is lawfully staying in Brazil and is not prevented from occupying such a position within a company;
- a foreign company can incorporate an LLC in Brazil as a subsidiary, and its level of control over the Brazilian LLC will be according to the number of shares it owns in the company; for foreign companies that open an SPV company in Brazil, structuring the vehicle as a subsidiary can be one manner in which they may decide to use it as a vehicle for their purposes.
In order to open an SPV company in Brazil, a foreign organization or foreign founder will follow the usual requirements applicable to the incorporation of an LLC:
- Prepare the documents for the LLC: these are the company’s Bylaws or Articles of Incorporation; it is advisable to work with our experts as soon as you start the process to set up a company in Brazil;
- Submit any additional documents: any documents issued in a foreign language, such as those referring to the company’s shareholders, must be translated;
- Register the company: the LLC is registered with the National Registry of Legal Entities belonging to the Ministry of Finance;
- Open a bank account: the company will need a business account for which the registration documents will be submitted, along with identification documents for the partners.
Organizations that choose to open a SPV company in Brazil can rely on our assistance throughout the company formation process. As needed, one of our agents can provide representation via a power of attorney in order to handle certain aspects of the incorporation or mandatory submissions. You can reach out to us at any time for more information about company incorporation in Brazil.
Securization in Brazil
SPVs in Brazil are generally established specifically to conduct securitization transactions. This is a financial process where various financial assets, such as loans, mortgages, or receivables, are pooled together and packaged into securities that are then sold to investors.
A securitization transaction typically involves several parties, each playing a specific role in the process:
- Originator: This is the company that has loans or other assets they no longer want to manage and gather these assets together;
- The SPV in Brazil, which transforms these assets into securities that investors can buy. Each security represents a share or stake in the assets from the reference portfolio;
- Investors, who purchase these securities, in order to earn a specified rate of return. They provide the funding that the originator receives in exchange for the securities;
Each party in a securitization transaction has distinct responsibilities and interests. Our specialists in company incorporation in Brazil can explain more about securitization.
Brazilian corporate compliance requirements
Once it is registered and operational, the special purpose vehicle will need to comply with the tax and filing requirements:
- The 15% corporate income tax (up to 34% including the surtax);
- The indirect taxes, such as the state VAT which has rates between 4% and 25%;
- The social security contributions when hiring employees of 8% of the wage for the employers, along with other contributions;
- Other taxes, as may be applicable, such as the transfer tax or the financial transactions tax.
Advantages of opening an SPV company in Brazil
Opening an SPV company in Brazil can offer several advantages, such as:
- Forming an SPV in Brazil offers limited liability protection to its owners (shareholders or members). The personal assets of the owners are generally protected from the debts and liabilities of the company;
- SPVs can be used for securitization, asset protection, risk management, and other business needs;
- SPV companies in Brazil are taxed similarly to regular companies;
- SPVs are a way for companies to access funding from outside investors while minimizing their own financial risks and keeping their financial standing intact;
- Establishing an SPV in Brazil ensures compliance with local legal and regulatory requirements, including registration with regulatory authorities such as the Brazilian Securities and Exchange Commission (CVM) and the Central Bank of Brazil (BCB).
We can help you open a company in Brazil, based on your specific business goals and needs.
Why invest in Brazil
Entrepreneurs can invest in the country through Brazilian SPVs, especially considering these economic trends and factors:
- The Foreign Direct Investment (FDI) net inflows in Brazil in 2022 was 91.5 billion dollars;
- Brazil’s GDP in 2022 was around 1.92 trillion U.S. dollars;
- The Foreign Direct Investment (FDI) in Brazil amounted to 4.8% of the Gross Domestic Product (GDP) in 2022;
- During the same year, Brazil experienced a net inflow of $4.2 billion in portfolio investment.
Our team specializing in company formation in Brazil can provide details on the tax and filing obligations, and the requirements to which a special purpose vehicle can be subject to. The SPV can be used for multiple purposes, as part of a cohesive business strategy. We can also offer assistance if you wish to open a branch in Brazil.
Contact us for more information on how to open a SPV company in Brazil.