Guide to m&a tax 2021

---

BRAZIL
1
TAXAND GLOBAL GUIDE TO M&A TAX 2021

---

1. INTRODUCTION
a. Forms of Legal Entity
There are several types of legal entities in Brazil, the most common ones being the Limited Liability Company (“Limitada” or “Ltda.”) and the Corporation (“Sociedade 
Anônima” or “S/A”). Both types of entities used to require at least two shareholders. More recently, the Brazilian Civil Code was amended to allow the incorporation of 
Limitadas with one or more quotaholders.
Apart from the entities mentioned above, there are also the “Limited Liability Individual” entities (“EIRELI”), which are established by one individual or legal entity. The 
EIRELI is different from the Limitada with a single quotaholder because the later does not require a minimum capital (equivalent to BRL 104,500 / approximately USD 
19,5931).
Lastly, there is also a “Silent Partnership” entity (“SCP”), which has no legal relevancy on its own and is formed by the ostensible partner, who is responsible for 
performing the activities of the SCP, and the silent partner, who is not visible to third parties.
Brazilian legal entities incorporated under any of these forms are normally subject to the same domestic tax treatment2. However, there may be differences regarding 
the application of tax rates and/or tax calculation bases, depending on the tax regime adopted by each of these entities.
Limited liability entities are more commonly used, as they are usually straightforward to incorporate, requiring less formalities if compared to Corporations.
Non-resident entities investing in Brazil must register with the Brazilian Central Bank and obtain a Brazilian taxpayers code - Federal Taxpayers’ Registry for Corporate 
Entities (Cadastro Nacional de Pessoa Jurídica – CNPJ/MF). In addition, foreign shareholders must have a Brazilian legal representative.
As indicated previously, Limitadas do not require a minimum capital, except in a few specific cases (e.g. when a foreign individual is appointed as the company’s legal 
representative).