In this article, you will find the procedures to remit dividends and profits to nonresidents and companies abroad.
The attraction of foreign direct investment has been a priority in almost all developing countries and Brazil is no exception. With economic liberalization, deregulation of the financial account and capital and the privatization process, from the early 1990s, the country has attracted a significant amount of new investments.
The economic recovery in the recent months boosted the remittance abroad of profits and dividends of multinational company branches, according to the deputy head of the Economic Department of the Central Bank, Fernando Rocha. He has also said that the increase in production has made companies profit more, causing the expansion of the volume remitted abroad.
How to Remit Profits and Dividends Related to Foreign Investments?
The company receiving the foreign investment must first register at the Department of the Brazilian Central Bank (Banco Central) in order to receive a password and make the electronic registration of foreign direct investments. Since September 4, 2000, Banco Central is only accepting registrations made by the Internet on the bank webpage.
Foreign investments are registered in specific modalities. All registrations are issued with a RDE number, which is used in foreign exchange transactions relating to remittances abroad for the return of profits and dividends.
To receive a password access, it is necessary to submit the formulário de Solicitação de Credenciamento (application for accreditation form) duly completed, with legal representatives notarized signature, accompanied with documents to proof the authority of the signatories:
- Articles of Association
- Minutes of Meetings or Sessions
After this procedure, the person must enter the Central Bank web page, in the option Sisbacen-Informática, in the item Acesso ao Sisbacen via internet, to make the transfer and run the program PASCW10 – Sisbacen via VPN. Having done that, the remittances of profits and dividends can be declared.
Information Required for Remittances
Before the declaration and the remittance of dividends and profits registry, it must be included to the webpage the net equity of the distribution balance sheet. The person must inform:
- the receiving company's (empresa receptora) CADEMP code
- the date of the corporate action that supports the remittance
- the balance sheet date of the profits and dividends distribution
- the total value of the profits distributed in national currency
- the remittance of dividends and profits values in national currency subjected to each nonresident investor.
After the operation, the person will receive an identification number of the registry and that number can be used in the Central Bank for the currency exchange. There is no requirement for examination or prior authorization from the Central Bank for remittances.
No Restrictions on the Distribution of Profits
There are no restrictions on the distribution of profits and their subsequent remittance abroad. The profits generated since January 10, 1996 are exempt from income tax withholding. The currency remittances abroad, however, may be restricted whenever there is not a corresponding registry in the Central Bank. If the investment is not registered, it will be considered an inward investment. If this occurs, the remittances of profits and dividends abroad will not be allowed. In addition, foreign investors may be subjected to fines for omission of registry.
Brazil has signed treaties with several countries to avoid any double taxation on investments, including Argentina, Austria, Belgium, Canada, Chile, China, Korea, Denmark, Ecuador, Spain, Philippines, Finland, France, Hungary, India, Israel, Italy, Japan, Luxembourg, Norway, Portugal, Slovakia, Czech Republic and Sweden.