10 ways to invest in Brazilian companies without coming to Brazil

If you are a foreigner or non-resident Brazilian and want to invest in Brazilian companies, continue reading this article and see the main ways to invest without coming to Brazil.

Author: Bianca Noronha Anchieta Aragão

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10 ways to invest in Brazilian companies without coming to Brazil

Investing in Brazilian companies can be considered a “sea of opportunities”, even more so for foreign investors.

The purchase of short or long-term shares of Brazilian companies and debentures are some attractive options that Brazilians and non-resident foreigners can choose to operate in the Brazilian financial market.

But, did you know that you can do this without coming to Brazil?

If you want to invest in Brazilian companies but still haven’t worked up the courage to not know how to do it while living abroad, check out this article on what you need to know and the main types of investment currently offered.

Can non-resident Brazilians and foreigners invest in Brazilian companies without coming to Brazil?

First, you should know that Brazilians and non-resident foreigners can invest in Brazilian companies without coming to Brazil.

If you are a non-resident Brazilian and haven’t delivered the Communication or the Definitive Exit Statement, you can invest in Brazil like any other Brazilian who lives in the country. 

If you are a foreigner or non-resident Brazilian, who has completed all the final exit procedures, you must become a Non-Resident Investor.

Non-Resident Investors can invest in the same products available to residents in the country and, in addition, receive a differentiated treatment from the Federal Revenue of Brazil and the financial market.

To become a Non-Resident Investor, you must follow certain procedures established by the National Monetary Council (CMN). Check out!

What to do to become a Non-Resident Investor?

According to CMN Resolution 4.373, anyone wishing to become a Non-Resident must indicate:

• Legal Representative;
• Fiscal Representative;
• Custodian.

The appointment of a Legal and Tax Representative is necessary to give you a Tax Domicile and give you the possibility to carry out acts even outside Brazil.

This representative must be someone you trust, such as a lawyer or a Financial Institution, who will fulfill and be responsible for your tax obligations.

In addition, it is necessary to clarify that the Legal Representative, if an individual, must indicate a financial institution to be jointly and severally liable for tax obligations, through civil liability insurance.

The Custodian, on the other hand, must be an Institution recognized and authorized by the Stock Exchange Commission (CVM) and the Central Bank.

In addition, it’s necessary to have an account domiciled abroad, with Central Bank Regulations.

What are the tax obligations of a Non-Resident Investor?

As already mentioned, Non-Resident Investors receive special treatment from the Federal Revenue Service and the Financial Market.

First of all, it’s necessary to present the Annual Income Tax Declaration (DIRPF) resulting from the movement of capital into Brazilian territory.

As for taxation, it will be differentiated, both on Financial Operations (IOF) and on Income Tax (IR).

It’s ideal for you to have specialized advice to guide you on taxation in each type of investment and also to provide any necessary assistance.

If I invest as a non-resident, is it possible to obtain an investor visa in the future?

Yes, it’s possible to obtain an investor visa in the future, as long as capital remittances follow the investment registration procedures at the Central Bank, which are quite simple to do but need to be done BEFORE sending the money to Brazil.

The exchange operation must be registered with the Central Bank as an investment.

10 ways to invest in Brazilian companies without coming to Brazil

Now that you know what to do to be able to invest in Brazilian companies, see the main forms of investment that are currently offered:

• Open your own company 

 It’s possible to open your own company in Brazil without ever having been to the country.

Yes, currently every company opening process can be done remotely, with the help of a lawyer.

After opening the company, it’s possible to appoint a representative to take steps and have a physical address, either by renting or buying a property, which is also possible to do online or by hiring a “virtual office”.

The virtual office is a company that you can hire, it will receive subpoenas and correspondence and will send them to you, in addition to having the necessary documentation to obtain documentation at the City Hall of the chosen city.

It’s important to know if it’s a well-established and reliable company because it will not be able to delay the delivery of mail, for example.

The attorney-in-fact should preferably be a lawyer, as many actions he will take may be restricted to a lawyer. In addition, it can be hired for a fixed monthly fee or on demand. The activity of each type of company will make it more or less necessary.

Finally, it’s possible to operate a bank account, hire employees, fire employees and manage the most diverse types of companies remotely, without having to come to Brazil.

• Invest in an established small or medium-sized company

Investing in an already incorporated company is even simpler than opening your own company, as the small company already incorporated will have its own administrator and legal representative.

This type of investment can be made in several ways, under free contracting of the Brazilian company with the foreign investor.

The necessary precautions are the verification of the company’s financial and fiscal situation, its debts, and its current and future cash reserves.

It’s interesting to have the support of an accountant and a specialized lawyer for a controlled operation, which may seem complex at first, but after this first phase, it can yield much more income and establish a long-term partnership.

• Investment in Fixed Income

Investment in fixed income can be done simply and quickly with great security through traditional banks like as Banco do Brasil, Bradesco, Banrisul, Santander, Itaú, Caixa Federal and others.

This yield accompanies the “SELIC RATE”, which is the basic interest indicator of the Brazilian economy. The higher the Selic rate, the higher the income paid to this type of application.

The risk is minimal and, in general, it is not losing money, but just not receiving the estimated amount. In the 1st quarter of 2023, for example, the yield was between 0.8% and 1% per month on invested capital.

It’s common for foreigners to borrow money abroad (where they have credit) to invest in fixed income in Brazil.

• Purchase of shares on the Stock Exchange

The main way to invest in companies in Brazil is through the purchase and sale of shares.

Shares are one of the types of variable income investments and are normally offered on the Stock Exchange.

By applying this modality, you will be buying fractions of a company, and becoming a partner of the same.

In this case, the invested capital will fluctuate along with the company’s performance. If you have good results, the value of your share will increase, however, the opposite can also happen.

• Debêntures (a way to invest in Brazilian companies)

Debêntures are fixed-income securities issued by companies, which act as a loan for them to carry out their plans.

In this modality, the investor is remunerated through interest, which can be pre-fixed, post-fixed, or hybrid.

Debentures tend to have a higher return among fixed-income investment types.

However, its risk is higher than that of other types of financial investments presented. This is due to the fact that there is no guarantee from the Credit Guarantee Fund in this modality.

That is, if the company goes through financial problems and is unable to pay its debts, this body will not assume them.

• ETF

The Exchange Traded Fund (ETF) is an investment fund, a group of shares, that you can apply without having to buy an asset at a time.

ETF shares are traded on the stock exchange and are based on a market index.

The biggest advantage of the ETF is its high profitability since it is possible to transform investment into cash quickly and without losing value.

An example of an ETF is the BOVX11. In this investment fund, you will acquire shares of the largest companies in Brazil, such as VALE, Petrobras, Itaú, Bradesco, Ambev, Embraer, and Magazine Luiza, with just one purchase order.

• Day Trade

Day Trade is short-term negotiations, carried out on the stock exchange, which combines the purchase and sale of the same share on the same day, by the same investor.

Thus, the settlement of a Day Trade is exclusively financial, since the shares don’t transit through the investor’s investment portfolio.

Day Trade tends to have some special features compared to other stock purchases and sales.

Brokerage houses, for example, usually practice cheaper brokerage fees than traditional operations. In addition, Day Trade taxation is also differentiated.

• Crowdfunding

Regularized by the Securities and Exchange Commission (CVM) in 2017, Crowdfunding is considered Collective Financing, in which a company exposes its project or investment plan for a group of investors to finance it.

In this modality, there is a deadline for the return on investments, being a differential when compared to other modalities.

In addition, not all Financial Institutions offer this type of investment, so it’s necessary to do research and have good advice to choose the best option.

• Angel Investor ( a way to invest in Brazilian companies)

Angel Investor is an investment that involves a considerable amount of investment, with a high volume of capital and risk.

In this modality, in addition to the invested capital, the investor will also offer his knowledge to help in the growth and expansion of the company.

That is, by ensuring the company’s high growth potential, the investor will get a return on his contribution.

• BDR

In case you want to invest in Brazil and in some foreign companies, without having to deal with the bureaucracy of other countries, you can count on the BDR.

Brazilian Depositary Receipts (BDR) are certificates from foreign companies that allow their shares to be traded in Brazil.

It should be clarified that whoever acquires a BDR is not directly purchasing the shares of a company abroad. In fact, they invest in securities that represent these stocks.

Despite this, the BDRs are beneficial, as they dispense with opening an account in a foreign brokerage and other procedures that a common international investment requires.

If you need a specialist to have better guidance on the possibility of investing in Brazilian companies or how to regularize yourself, contact us.