Subsidiary or branch in Brazil: choosing the right structure for a foreign company
Guilherme Chambarelli
Published on
3 min read
In this article
Most foreign companies enter Brazil through a subsidiary, usually a limited liability company (LTDA) or a single-member SLU, rather than a branch. A branch requires prior authorization from the federal government, exposes the parent company directly to Brazilian liabilities and takes longer to set up. A subsidiary is a separate Brazilian legal entity, can be incorporated in a few weeks once documents are ready and limits the parent’s liability to its investment, with some exceptions.
Key points
- A subsidiary is a Brazilian company; a branch is the foreign company itself operating in Brazil.
- Branches need federal government authorization before they can operate.
- Subsidiaries offer limited liability and more flexibility for local partners and investors.
- Tax treatment of a subsidiary and a branch is broadly similar for corporate income tax.
- Both must register foreign capital with the Central Bank.
Side-by-side comparison
| Topic | Subsidiary (LTDA/SLU) | Branch |
|---|---|---|
| Legal personality | Separate Brazilian entity | Same entity as the parent |
| Government authorization | Not required in most sectors | Required before operating |
| Liability | Limited to the capital, subject to exceptions | Parent liable for Brazilian obligations |
| Set-up time | Usually a few weeks after documents are ready | Usually several months |
| Local partners | Easy to admit | Not possible |
| Name | Can be different from the parent’s | Must use the parent’s name |
Why a subsidiary is usually the better choice
- Speed: no prior federal authorization in most sectors.
- Risk isolation: the parent’s exposure is, as a rule, limited to its investment, although labor, consumer and some tax rules can reach the group.
- Flexibility: easier to bring in local partners, raise investment or sell the business.
- Market practice: banks, customers and public bodies are used to dealing with LTDAs.
When a branch may make sense
Branches are rare and usually appear in specific contexts, such as certain regulated activities, project-based operations or when the parent’s own balance sheet must stand behind the Brazilian operation. Even then, the authorization process and the need to keep Brazilian accounting for the branch should be weighed carefully.
Requirements for a subsidiary
- Brazilian tax ID (CNPJ) for the foreign parent as a non-resident partner.
- Legalized corporate documents of the parent, with apostille and sworn translation.
- A Brazilian-resident attorney-in-fact for the foreign partner.
- An administrator, who may live abroad (IN DREI 112/2022) if a Brazilian-resident attorney-in-fact is appointed to receive service of process.
- Articles of association registered with the Commercial Registry.
- Municipal and, where needed, state registrations.
- Central Bank registration of the capital contribution.
Tax aspects
Both structures are subject to corporate income tax (IRPJ and CSLL) on Brazilian profits and to consumption taxes, which are moving to CBS and IBS under the tax reform. Since 2026, dividends paid abroad by a Brazilian subsidiary are subject to 10% withholding, unless a tax treaty provides otherwise. Intercompany transactions follow Brazil’s transfer pricing rules, aligned with the OECD arm’s length standard since 2024.
Frequently asked questions
Can a foreign company be the sole owner of a Brazilian subsidiary?
Yes. The SLU allows a single shareholder, including a foreign legal entity.
Is there a minimum capital requirement?
Not in general. Certain regulated sectors and some investor visas require minimum amounts.
Can I start with a representative office?
Brazil does not have a simple representative office regime as in some countries. Activity in Brazil generally requires a local entity or a branch.
Can a branch later be converted into a subsidiary?
It is possible, but the process involves transferring assets and contracts and may have tax effects. It is usually simpler to start with the right structure.
How Chambarelli Advogados can help
Our Foreign Desk structures and incorporates Brazilian subsidiaries for foreign groups and supports them with tax, contracts and governance. Book a meeting with one of our partners.
Informational content, updated October 2026. It does not replace advice on your specific case.
