Brazilian Saving Products
This guide will provide information about the process and the profitability of saving money in Brazil. Also, you can check how to open a savings account in a Brazilian financial institution, its requirements and guarantees.
A spender country
When it comes to saving money, Brazil is far behind other under development countries such as China for example. By way of comparison, while the South American country saves around 16% of its GDP, the Asian giant keeps astonishing 51% of what it produces.
The Brazilian low level of savings indicates that the country is consuming more than it should, and leaving very little to invest in its growth. Today, the investment rate is somewhere between 17% and 19% of the GDP, but if the country estimates to grow at a rate of 5% per year, it should be investing around 25% of what it produces. That is why Brazil needs the injection of foreign capital to maintain its growth rates.
In Brazil, the money applied in savings is generally intended to investments in housing infrastructure.
Profitability of the savings
In Brazil, the savings remuneration is attached to the basic interest rates of the country’s economy (Selic and Taxa Referencial).
Selic rate: is the index that guides the interests charged in Brazil and the base rate used as reference for monetary policies. The target for the Selic rate is established by the Brazilian Monetary Policy Committee (Copom). Currently, the Selic is at a rate of 9%.
Taxa Referencial (TR): is calculated by the Brazilian Central Bank based on the monthly Certificate of Bank Deposits of the 30 largest financial institutions of Brazil. This year, the TR was between 0,5228% and 0,6073%
Until January 2012, the savings income were only based on the Taxa Referencial rate. Since then, the savings are also vary according to the pecentages of the Selic rate.
If the Selic is over 8.5%, the savings will raise at a fixed income of 0.5% per year or 6.17% per month. But if the Selic rate is equal or less to 8.5%, the savings will grow with a variable income that follows the equation, 70% of Selic + Taxa Referencial.
The table above organizes the calculation:
| Selic over 8,5% | Selic at 8,5% or less |
| Fixed income | Variable income |
| 6,17% per year + Taxa Referencial | 70% of the Selic + Taxa Referencial |
Before, the savings had a fixed income, that would not vary for nothing. By the table, we can conclude that as the Selic rate drops, the savings income will reduce as well.
Opening a savings account in Brazil
In Brazil, the so-called cadernetas de poupança (Portuguese for savings account) are the ideal financial application for lower income investors. It is a conservative low-risk investment, provided by almost all the Brazilians commercial banks.
The initial amount of money required to open a savings account according to the financial institution involved. Some banks will request a minimum value (most of them require a BRL 50,00 investment) but other banks will require a zero initial amount.
Although the savings are set through the commercial banks, it is not necessary to be an account holder to become a saver in Brazil. Anyone can request the opening of saving, it is simply required to pass by a bank branch, carrying:
Individuals: CPF, identity document, proof of residence and income verification.
Companies: CNPJ, Contrato Social, partner’s CPF, identity card and proof of residence and the company’s proof of residence.
Foreigners
Can open a savings account in Brazil:
- Foreigners with a permanent visa
- Foreigners with a temporary visa living for 12 uninterrupted months in Brazil
- Foreigners with a temporary visa counting with employment ties in Brazil
When in the bank, the foreigners must present the RNE, CPF, proof of residence and income verification.
Foreigners of Portuguese nationality are not needed to file for RNE in order to open a saving account. They can apply for the issuance of the same identity document that is given to Brazilians.
Through some Brazilian banks, foreigners living abroad can also open a savings account in the country. In this case, they have to present CPF, the identity card of their country of origin and verification of income.
They also will have to present a proof of residence, which can be from an acquaintance or relative living in Brazil or of a property that they might posses in the country. This process can only be done in person at a Brazilian bank branch.
As you can see, presenting the CPF or CNPJ is the number one request for any person or company wanting to become a saver in Brazil. You can check how to issue this document here.
Guarantees
The savings up to BRL 60.000 are protected by the Fundo Garantidor de Crédito (Credit Guarantee Fund), which is a non-profit private entity responsible for protecting the money of investors and savers in case the financial institution bankrupt. As the Fundo Garantidor de Crédito is mantained by the financial instituitions, it will only protect the savings of its members. Therefore, it is important to check if the financial institution you intend to save money in is one of the FGC's maintainers.
Taxation on savings
Individuals that have saving accounts in Brazil are totally exempted from paying taxes over their savings income, like the Withheld Income Tax or the Tax over Financial Operations (IOF). But not for long, as there is a bill to be approved in the House of Representatives that will tax the savings with an amount superior to BRL 50.000.
As for the companies, the taxation process follows the aliquots below:
- Applications up to 180 days: 22,5%
- Applications from 181 to 360 days: 20%
- Applications from 361 to 360 days: 20%
- Applications from 361 to 720 days: 17,5%
- Application over 720 days: 15%