Foreigners in the Simple National are allowed to have residence?

Simple National emerged as a way to simplify and reduce the tax burden for small businesses. It’s an optional regime, but how can foreigners obtain this advantage? And may foreigners in the Simple National be allowed to have residence? Find out below!

Colaboration: Leonardo Almeida Lacerda de Melo

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What is Simple National?

Simple National was created with the idea of ​​simplifying tax collection for small businesses. Taxes are collected through a single guide (DAS), facilitating the accounting of the company seeking to benefit from the regime.

With Simple, there is a saving of up to 40% of taxes due if the entrepreneur opts for the Simple National regime.

Foreigners in Simple

In short, foreigners can be partners in a company that adheres to Simple, as long as they have tax domicile in Brazil. In fact, there is no legal prohibition regarding this, and foreigners can indeed be part of the corporate structure.

However, non-resident partners, whether foreigners or even Brazilians, are not allowed.

In other words, even non-resident Brazilians are prevented from being part of the corporate structure of a company that opts for Simple National, under the same conditions.

Therefore, foreigners must be tax residents for companies in which they are partners to join the Simple system, seeking to invest or open a company in Brazil, and wishing to benefit from said tax regime.

The Simple National Law provides for some restrictions regarding the corporate structure of companies seeking to join the Simple National system.

The first one we can mention is the impossibility of having a legal entity in the structure of partners, whether Brazilian or foreign.

Another restriction refers to the possibility of one of the partners managing another company. In this case, the combined value of both cannot exceed the limit of R$2.4 million.

Another impediment we can mention is companies that have debts with the INSS or with the Federal, State, or Municipal Public Treasury, the enforceability of which is not suspended.

If there are any impediments, the company may still opt for the Presumed Profit regime.

What is the Definition of a Resident and Non-Resident Foreigner?

A resident is a person who resides permanently in Brazil, as well as those who enter the country with a permanent visa or certain temporary visas.

It can be said that a resident is a foreigner who:

• enters Brazil with a permanent visa, on the date of arrival; OR
• Enters Brazil with a temporary visa: on the date on which he/she completes 184 days, consecutive or not, of residence in Brazil, within a period of up to twelve months;
• Enters Brazil with a temporary visa: on the date of obtaining a permanent visa or employment relationship, if this occurred before completing 184 days, consecutive or not, of residence in Brazil, within a period of up to twelve months; OR
• Resides in Brazil.

Regarding the concept of non-resident, one can mention someone who has left Brazil permanently with a declaration of departure, as well as someone who has left temporarily after 12 months of absence.

It’s also worth mentioning the non-resident status of a person with a temporary visa who stays in the national territory for up to 183 days in 12 months.

On the 184th day, the person automatically becomes a resident and will have obligations with the Federal Revenue Service in Brazil and other state agencies.

What are the Advantages of Simple National over Presumed Profit?

Simple is a way to make life easier for entrepreneurs and reduce their taxes. Below is a list of the main differences between the two tax regimes:

• Greater simplicity and ease in calculating and collecting taxes: In addition to simplifying calculations and controls, presumed profit does not have a monthly calculation deadline, which leads to interest and fines for late payment. In Simple National, all taxes are calculated and collected monthly, avoiding additions and fines;
• Lower tax costs: Presumed profit has rates that vary between 15% and 32% of gross revenue, while Simple National has a single tax of 8% to 33%, depending on the size of the business;
• Greater legal certainty: Simple National is legally supported by Complementary Law 123/2006, while presumed profit does not have a legal text to regulate it.
• Greater variety of options: Simple National has four different regimes (Simple National Micro, Real Profit, Profit Presumed, and Presumed Simplified) that adapt to the financial needs of each company.
• Lower tax burden: Presumed profit charges more taxes than Simple National, including Income Tax, PIS, COFINS, IRPJ, IPI, among others;
• Less bureaucracy: Simple National organizes all taxes from the various files required in the Presumed Profit process, in addition to offering a unified form for delivery and proof of monthly payment.

How does the Simple National work?

The Simple is nothing more than the combination of several taxes into one, with a considerable discount.

The taxes collected through the DAS are listed below:

• Corporate Income Tax — IRPJ;
• Social Contribution to Net Profit — CSLL;
• PIS and COFINS;
• Industrial Property Tax — IPI;
• Tax on the Circulation of Goods and Services — ICMS (there are exemption provisions, such as in Rio Grande do Sul, for certain Simple National beneficiaries);
• Tax on Services — ISS (depending on the municipality);
• Contribution for Social Security — CPP.

Regarding exempt taxation, it can be summarized as taxes not listed here, which will not be collected by the DAS. For example, there is no need for an employer’s INSS contribution. However, the company should always consult an accountant to settle any debts due in relation to its specific situation.

The Simple National was created through Complementary Law No. 123 of December 14, 2006 (Simple National Law).

How can a foreign entrepreneur acquire residency?

Also, the investor can obtain a permanent residency meeting the necessary requirements, which are summarized as making a certain investment in a Brazilian company (normally R$500,000.00 or R$150,000.00 for certain sectors) or other means.

Depending on the case, permanent residency may be acquired immediately. However, if the investment is less than R$500,000.00 (in companies in specific areas), temporary residency will be granted. This, however, may be converted to permanent residency 90 days before its expiration.

Another way to obtain the visa is by purchasing a property in the national territory worth R$1,000,000.00 or more, except the northeast region, where the minimum value is R$700,000.00. For more information on the investor visa, access our article on the subject.