According to the Brazilian Constitution, financial foreign operations involving the remittance of interest can only occur with a special register of the company and investors in the Brazilian Central Bank. Here you will find the procedures to remit interest in Brazil.
In Brazil, no restrictions apply to interest paid to a foreign investor or to a company as long as it is properly registered in Brazilian Central Bank. To apply for it, the company and the investor first need an authorization of the Departamento de Organização do Sistema Financeiro, also known as Deorf, which is the Organization Department of the Financial System.
After that, all foreign financial transaction must present an initial registry in Brazil's Central Bank. To remit interest to abroad the company that will receive the investment must apply for an special user access in SISBACEN, which is the Central Bank electronic information system.
The Initial Registry at Central Bank
Register in SISBACEN
The company must be accredited to the Central Bank requiring a password to entry the electronic information system. More information about this process can be found in the Central Bank webpage.
The foreign capitals are registered in specific modules at SISBACEN according to their classification. Direct foreign investments, such as the remittance of interest abroad, must be registered in the IED module in the Registro Declaratório Eletrônico, known as RDE, which is the Declaratory Electronic Registry, available in SISBACEN. IED means Investimento Estrangeiro Direto, which is the Foreign Direct Investment.
Registry in Cademp
To apply for RDE, the national remitting company and the non-resident investor have to be registered at the Cadastro de Pessoas Físicas e Jurídicas, also known as Cademp, which is the registry of Companies and Individuals. Cademp's registration can be done through the PASCS10 app available on SISBACEN. The PEMP500 transaction should be used in order to permit the online application of both company and investors. This transaction will provide an online form that must be filled, providing a Cademp registry necessary to continue the process of remit interest through SISBACEN.
Providing a RDE-IED to Register the Remittance
After that, the PRDE600 transaction must be accessed through SISBACEN. Three options will be presented in the initial page, the MRDE600 screen:
- Cadastramento de RDE-IED, which is the Registry of RDE-IED
- Declaração da Empresa Receptora, which is Declarations of the Receiving Company
- Declaração do Investidor, which is the Declarations of the Investor
To register a RDE-IED number the company and investor involved in the remittance process must access the first option and fill the information and upload the documentation requested. With the company RDE-IED registry it is possible to apply for the remittance selecting the second option presented.
Necessary Documents and Information to Remit Interest
The second option of MRDE600 screen, Declarações da Empresa Receptora, allows the registry of the declaration of responsibilities of the company using the company's RDE-IED number. The menu that will appear is the MRDE630 screen, that presents the option Distribuição de Juros sobre o Capital Próprio, or distribution of interest on own capital.
Selecting this option, the MRDE652A page will appear in the screen requiring the following information, that must be filled by the company:
- base period of remuneration
- Trial Balance previous to base period
- Final Trial Balance of the base Period
- Retained Earnings corresponding to the beginning to of the base period
- Retained Loss in the beginning of the base period
- net profit in the end of the base period
- loss in the end of base period
- Absorb of Retained Loss in the base period
- net equity
- interest on equity reserve (total gross amount)
- interest on equity reserve (total net value after Income Tax was charged).
After all information has been filled, the MRDE603F screen appears requesting for more information, but now regarding the non-resident investor:
- net value attributed to each non resident investors
- net value attributed to resident investors.
The SISBACEN and the RDE-IED registries are mandatory and are responsibility of the company and the investors. After all of this is done, the company and the investor must search the legal institutions recognized by the Central Bank to finally remit the interest abroad. This webpage presents institutions that are available to deal with it.
The interest value paid to the involved in the economic transaction, being them resident or domiciled abroad, will be deducted when the IRPJ and CSLL tax basis are determined. Interest payments to nonresident shareholders are subjected to income withholding tax at the rates of 15% to 25%.