Doing business in Brazil

A Q&A guide to doing business in Brazil.

This Q&A gives an overview of key recent developments affecting doing business in Brazil as well as an introduction to the legal system; foreign investment, including restrictions, currency regulations and incentives; and business vehicles and their relevant restrictions and liabilities. The article also summarises the laws regulating employment relationships, including redundancies and mass layoffs, and provides short overviews on competition law; data protection; and product liability and safety. In addition, there are comprehensive summaries on taxation and tax residency; and intellectual property rights over patents, trade marks, registered and unregistered designs.

This article is part of the global guide to doing business worldwide. For a full list of contents, please visit www.practicallaw.com/dbi-mjg.

Contents

Overview

1. What are the key recent developments affecting doing business in your jurisdiction?

The main legal development in recent times affecting businesses in Brazil is probably the adoption of anti-corruption laws and regulations, in response to protests against corruption and other matters. Decree No. 8,420 of 18 March 2015, was adopted as the implementing regulation of the Anti-Corruption Law (Law 12,846 of 1 August 2013). The new legal framework provides for the strict liability of companies for acts of corruption of local and foreign government officials. As a result of the new regulations, companies in every sector are expected to establish or improve compliance programmes.

Brazil has also taken steps to modernise its dispute resolution procedures. On 16 March 2015, a new Civil Procedure Code was adopted and is expected to expedite cases brought to the judicial system. Arbitration procedures are also being improved, with the amendments to the Arbitration Law (Law 9,307, 1996) introduced by Law 13,129 of 26 May 2015.

 

Legal system

2. What is the legal system based on (for example, civil law, common law or a mixture of both)?

Brazil is a Federative Republic and its legal system is based on civil law.

 

Foreign investment

3. Are there any restrictions on foreign investment (including authorisations required by central or local government)?

Brazil is generally open to foreign investment, but investments in certain sectors are either restricted to nationals or subject to governmental authorisation, such as the following:

  • Financial institutions.

  • Press and broadcasting services.

  • Airlines with domestic flight concessions.

  • Postal services.

  • Private security and transport.

  • Nuclear energy.

  • Property of rural land.

  • Activities near international borders.

  • Cabotage (that is, where foreign aircraft from one country travel into another country and pick up foreign nationals or citizens of that country and provide transportation to and between points within that country).

With the enactment of Law 13,097 of 19 January 2015, foreign investment is no longer restricted in the healthcare sector.

Foreign direct investment must be registered in the Brazilian Central Bank and, for investments in capital markets, in the Brazilian Securities Commission. Additionally, foreign investors must obtain registration to invest in the country and appoint a representative that is resident in Brazil.

 
4. Are there any restrictions on doing business with certain countries or jurisdictions?

As a member of the United Nations, Brazil implements the United Nations Security Council Resolutions, some of which impose economic sanctions that restrict certain types of trade with certain countries.

A list of the Brazilian Decrees implementing Security Council Resolutions is available at www.bcb.gov.br/fis/supervisao/RELACAO_DECRETOS_CSNU.pdf.

 
5. Are there any exchange control or currency regulations?

Cross-border transactions must be registered in the Brazilian Central Bank's Information System. Additionally, the parties to a cross-border transaction must enter into exchange agreements with financial institutions authorised by the Central Bank to operate in the foreign exchange market.

In certain cases, there are other regulatory requirements that need to be observed before funds can be remitted abroad. For example, registration of technology transfer or IP licensing contracts with the National Institute of Industrial Property is required before royalties can be remitted.

The exchange agreements are freely negotiated. However, the Central Bank has authority to indirectly interfere in exchange rates by:

  • Selling and buying foreign currency.

  • Performing credit operations abroad.

  • Temporarily restricting transactions.

 
6. What grants or incentives are available to investors?

Brazil offers a wide variety of incentives to investors, at the federal and regional or local levels, such as:

  • Taxation incentives to sectors considered strategic by the Government.

  • Incentives in the context of development of infrastructure projects in several sectors (energy, telecommunications, oil and gas, logistics and transportation) through public bidding process and public-private partnerships.

  • Tax incentives in "Tax Free Areas" (for example, the Zona Franca de Manaus) and Export Processing Zones.

  • Funding from public banks, in particular the Brazilian Development Bank.

  • Lower taxation on investment by non-residents in the capital markets.

  • Distribution of dividends is not subject to income tax.

 

Business vehicles

7. What are the most common forms of business vehicle used in your jurisdiction?

The most common forms of business vehicles used in Brazil, including by foreign investors, are:

  • Limited liability companies (sociedades limitadas), which cannot issue securities, are subject to less formalities and disclosure requirements and are governed by more flexible and less detailed legal rules. They must have two or more shareholders and are typically appropriate for investors that do not have relevant partners.

  • Closely-held corporations (sociedades anônimas fechadas) must have two or more shareholders and:

    • can issue securities;

    • are subject to additional formalities and disclosure rules compared to limited liability companies;

    • are governed by legal rules that allow the use of more sophisticated corporate structures and capital raising options.

 
8. In relation to the most common form of corporate business vehicle used by foreign companies in your jurisdiction, what are the main registration and reporting requirements?

Registration and formation

There are important registration requirements concerning both limited liability companies and corporations. For example, the corporate name must make reference to the activity the vehicle will develop. Additionally, the formation documents must be filed with the Board of Trade of the state where the company is headquartered. Before the filing, the foreign shareholder must enrol with the national taxpayers' registry. The vehicle must also be registered with the national and, depending on its activities, with state and municipal taxpayers' registries.

Additional registrations with other agencies or government bodies may be required depending on the vehicle's activities (and such registration sometimes must be obtained before the formation of the entity), including:

  • Central Bank for financial institutions.

  • Federal Insurance Commissioner for insurance companies.

  • Federal police for private security services.

  • National Agency of Civil Aviation for public airline services.

If a registration with such agencies is not necessary, a company can generally be incorporated in Brazil within two weeks.

Reporting requirements

To be effective against third parties, corporate acts must be filed with the Board of Trade and, for corporations, they must be published in official newspapers (which increases the compliance cost of these vehicles). While corporations must publish their annual financial statements, this requirement does not apply to limited liability companies, with certain exceptions.

Share capital

Except for certain activities, such as insurance companies, financial institutions and public airline services, there is not a maximum or minimum share capital requirement for corporations and limited liability companies. However, there are minimum investment requirements to appoint foreign individuals to management positions in a company.

Non-cash consideration

Shares can be issued for cash, assets or credits. Whenever shares are issued for non-cash consideration, corporate law requires that the asset used for the payment of the shares is valued by an independent company. This requirement does not apply to limited liability companies.

Rights attaching to shares

The following issues apply to rights attached to shares:

  • Restrictions on rights attaching to shares. Corporations can issue shares with restrictions on voting rights, as long as such shares have other advantages over the regular shares. Other restrictions on rights attaching to shares can be established in shareholders' agreements.

  • Automatic rights attaching to shares. Automatic rights attaching to shares include:

    • participation in the company's profits;

    • participation in the company's assets on liquidation;

    • monitoring the company's management in accordance with procedures provided in law;

    • pre-emptive right for subscription of shares and, in corporations, securities convertible in shares;

    • withdrawal from the company when dissenting certain shareholders' decisions.

 
9. In relation to the most common form of corporate business vehicle used by foreign companies in your jurisdiction, outline the management structure and key liability issues.

Management structure

Limited liability companies are managed by one or more individuals (officers). Corporations are managed by at least two officers (diretoria) and can also have a board of directors (conselho de administração) with powers to make strategic decisions and approve certain matters. The board of directors is not mandatory, unless the corporation is publicly held or has authorised capital.

Management restrictions

To serve as officers of limited liability companies and corporations, a foreign individual must hold a permanent visa.

Directors' and officers' liability

Directors and officers have duties of loyalty and care towards the company. They are not personally liable for obligations regularly undertaken on behalf of the company. However, they are liable if they violate the company's bye-laws or the applicable law or perform their duties with negligence or wilful misconduct.

Parent company liability

In corporations, shareholders are liable up to the limit of the share capital subscribed by each of them and for the valuation of the assets used by them as payment of such capital. In limited liability companies, partners are liable up to the limit of the total share capital not yet paid up and for the valuation of the assets used by all of the partners as payment of the share capital. Additionally, all shareholders are liable for damages caused by the improper exercise of voting rights (conflict of interest) and controlling shareholders are liable for losses caused by the abuse of such controlling power. It is also possible to hold shareholders liable as a result of the piercing of the corporate veil in cases of fraud or abuse of entity for other purposes.

 

Employment

Laws, contracts and permits

10. What are the main laws regulating employment relationships?

Employment relationships in Brazil are regulated primarily by the Consolidation of Labour Laws (CLT) and the Brazilian Constitution 1988. The CLT and other special laws that regulate specific matters of Labour Law apply equally to Brazilian employees and to foreign employees working in Brazil.

 
11. Is a written contract of employment required? If so, what main terms must be included in it? Do any implied terms and/or collective agreements apply to the employment relationship?

A written employment contract is not required under the law. However, it is common practice for employment contracts to be written. A written contract is advisable, as it helps formalise the employee's working conditions. If the employer chooses to adopt a written contract, it is important that such documents include:

  • The type of contract (if for a definite or an indefinite term).

  • The term of the contract and the reason for hiring (if a contract for definite term).

  • The location where the employee will work and the possibility of transferring the employee to other locations, if necessary.

  • The position of the employee.

  • The salary.

  • The possibility of discount on the employee's salary as a result of damages he may cause to the employer.

Collective bargaining agreements apply to employment relationships and prevail over contractual arrangements if the collective bargaining terms are more beneficial to the employee than the terms of the contract.

 
12. Do foreign employees require work permits and/or residency permits?

Foreign employees must obtain work permits and visas to enter and remain in Brazil. Different types of visa are applicable depending on the situation of the employee. At the start of the process, employers must apply for work permits to be granted to the employees.

Temporary permits/visas

These are available (subject to specific requirements depending on the type of work) to foreigners that are hired as employees in positions that do not involve powers of administration or representation of the company in Brazil. The authorisation to work and stay in Brazil is valid for up to two years, but it is possible to extend it for another two years, as well as to convert it into a permanent visa. An employee's dependants can also work in Brazil with their respective temporary visa, which is issued with the same validity period as that of the employee.

Permanent permit/visa

These are available to foreigners that will work in Brazil in administrative positions, such as officers with management powers (power to sign documents on behalf of the company) or directors. The maintenance of the authorisation is subject to the lawful exercise of the management role by the employee. To obtain this type of authorisation a foreign investment of at least BRL600,000 (per hired foreign employee) must be made in the Brazilian company. Alternatively, an investment of BRL150,000 (per hired foreign employee) is allowed, provided that ten new employment positions in Brazil are created within the following two years.

Termination and redundancy

13. Are employees entitled to management representation and/or to be consulted in relation to corporate transactions (such as redundancies and disposals)?

Employees are not entitled to management representation or to be consulted with on corporate transactions, unless otherwise provided in collective bargaining agreements, which is uncommon.

 
14. How is the termination of individual employment contracts regulated?

Termination of individual employment contracts by the company can occur with or without cause.

Termination with cause can occur when the conduct of the employee (Article 482, Consolidation of Labour Laws) is serious enough to justify his dismissal without the payment of any additional compensation (such as advance notice, a 40% fine on the Fundo de Garantia do Tempo de Serviço (FGTS), which is the government severance indemnity fund, accrued Christmas bonuses and proportionate holidays).

Termination without cause is also normally possible, but additional compensation must be given to the employee (advance notice and a 40% fine on FGTS). However, dismissal without cause cannot occur if the employee is legally entitled to employment stability, for example, in the event of pregnancy, work accidents and management position in labour unions. An employee entitled to stability can only be dismissed with cause.

Employment contracts can also be terminated as a result of the employee's resignation. Here, the employee must give advance notice to the employer and is entitled to receive the amounts normally owed until the resignation (such as balance of wages, accrued vacations and accrued Christmas bonuses). Payment of additional compensation is not required in this case.

 
15. Are redundancies and mass layoffs regulated?

Although provisions regarding mass layoffs can be included in collective bargaining agreements, there are currently no laws and regulations applicable to the matter. However, the Brazilian Superior Labour Court understands that prior negotiations with labour unions are required before mass layoffs, with a view to establishing an agreement that may regulate compensation. Labour courts have held that mass layoffs are void in the absence of negotiations with labour unions and either the employment relationship must continue or the employee must receive compensation.

 

Tax

Taxes on employment

16. In what circumstances is an employee taxed in your jurisdiction and what criteria are used?

Once qualified as a tax resident, a foreign citizen is subject to Brazilian taxation. Tax residency varies according to the type of visa granted to the foreigner:

  • Permanent visa. The immigrant is considered as a resident on entry into Brazil.

  • Temporary visa. Tax residency depends on having paid employment or a 183-days stay in Brazil during a 12-month period.

Brazilian citizens are taxed in Brazil when they qualify as Brazilian residents, which occurs in various cases including:

  • In the event of permanent residence.

  • Temporary absence and permanent absence without a prior official communication of permanent leave.

 
17. What income tax and social security contributions must be paid by the employee and the employer during the employment relationship?

Tax resident employees

Tax resident employees must pay the following:

  • Income tax. This is withheld by the employer on a monthly basis according to progressive tax rates. From 2015, the maximum rate is 27.5% for gains over BRL4,664.68. After the end of the year, the employee must calculate the total income tax due during the year, file a tax return and pay any income tax due.

  • Social security contribution (INSS). This is also withheld by the employer on a monthly basis at rates between 8% and 11%. The maximum rate is currently applicable for gains of up to BRL4,663.75.

Non-tax resident employees

Non-tax resident employees must pay income tax. Non-tax residents are normally taxed at the rate of 25% (withholding tax).

Employers

Employers must pay the following:

  • INSS. This is a monthly levy under one of the following methods:

    • on payroll: 20% for companies and 22.5% for financial institutions or similar;

    • on gross revenues: 1% to 2% (for specific industries).

  • Work related injury risk. This is a monthly levy on payroll at a rate that can vary between 0.5% and 6.0%.

  • Social contribution to other entities and funds. This is a monthly levy on payroll at a rate that can vary between 0.25% and 7.7%.

Business vehicles

 
18. When is a business vehicle subject to tax in your jurisdiction?

Tax resident business

Companies domiciled in Brazil are subject to Brazilian taxation on their worldwide income.

Non-tax resident business

Branches and subsidiaries established in Brazil are taxed as Brazilian companies (tax treaty exceptions may apply).

 
19. What are the main taxes that potentially apply to a business vehicle subject to tax in your jurisdiction (including tax rates)?

Brazil has a very complex tax system. Several types of tax are applicable. The main ones are as follows.

Corporate income tax (IRPJ)

The rates applicable to IRPJ are 15% with a surplus of 10% for annual income exceeding BRL240,000 (or for quarterly income over BRL60,000), reaching a total of 25% in most cases.

Social contribution on net profit (CSLL)

CSLL is levied at a rate of 9% on corporate profits. Financial institutions are subject to a rate of 15% until 31 August 2015, and a 20% rate from September 2015 onwards.

Social contribution on revenues (PIS/COFINS)

Social contribution on revenues is determined as follows:

  • Cumulative method. Tax credits on inputs are disallowed. Taxes levied at a rate of 0.65% (PIS) and 3.0% (COFINS).

  • Non-cumulative method. Credits on inputs are allowed. Taxes levied at a rate of 1.65% (PIS) and 7.6% (COFINS). Interest income earned by financial institutions is subject to a 0.65% (PIS) rate and 4% (COFINS) rate. Interest income earned by non-financial institutions is now subject to PIS and COFINS at the respective rates of 0.65% and 4%. A 0% rate is still applicable to hedge interest income as well as to income from positive and negative foreign exchange variations relating to exports and obligations assumed by the company in Brazil.

Excise tax (IPI)

This is a value added tax (VAT) levied on the circulation of manufactured goods at a rate that varies from 0% to 300%. Tax credits on inputs are allowed.

Tax on credit, foreign exchange, insurance, or securities transactions (IOF)

IOF is a federal tax used to regulate financial and capital markets, therefore its rates frequently vary. The currently applicable rates are as follows:

  • IOF-credit. This is levied on credit transactions involving financial institutions (and factoring companies) and loans between companies and individuals (when a company is the lender). The tax is applied at a fixed rate of 0.38% in connection with a daily:

    • 0.00041% rate (if the borrower is a company);

    • 0.00082% rate (if the borrower is an individual).

  • IOF-foreign exchange (IOF-FX). This is levied on foreign exchange transactions. Generally, the IOF-FX is levied at a 0.38% rate, but there are variations.

  • IOF-securities. This is levied on securities transactions at a maximum daily rate of 1.5%. Exceptions and limitations can apply according to the case.

  • IOF-gold. This is levied on gold purchases (as financial asset) at a 1% rate of the purchase price.

  • IOF-insurances. This is levied on life insurance and similar at a 25% rate. Exceptions, 0% rates and exemptions can apply according to the case.

Sales tax (ICMS)

ICMS is a state tax similar to VAT and is levied on the sale of goods and on communication and inter-state and inter-municipal transportation services. Tax credits on inputs are allowed. ICMS rates vary by product, normally levied at 17% to 19% rates. Inter-state rates are levied at 7% or 12%.

Services tax (ISSQN)

ISSQN is a municipal tax levied on services at rates between 2% and 5%. Tax credits are not allowed.

Dividends, interest and IP royalties

 
20. How are the following taxed:
  • Dividends paid to foreign corporate shareholders?

  • Dividends received from foreign companies?

  • Interest paid to foreign corporate shareholders?

  • Intellectual property (IP) royalties paid to foreign corporate shareholders?

Dividends paid

Dividends paid to individuals or companies are not subject to income tax. The remittances are currently subject to a 0% IOF-foreign exchange (IOF-FX) rate.

Dividends received

Dividends received from abroad by individuals or companies are subject to tax in Brazil. The remittance to Brazil is subject to a 0.38% IOF-FX rate.

Interest paid

Generally, interest remitted abroad is subject to a 15% withholding rate (income tax). The rate can be reduced by tax treaty provisions (for example, the tax treaty with Japan). Interest remitted to low tax jurisdictions (tax havens) are subject to a 25% withholding rate (income tax). IOF-FX at 0.38% rate is levied on the remittance.

IP royalties paid

Royalty payments are subject to income tax at a 15% rate (25% rate if remitted to a low tax jurisdiction). The withholding rate can be reduced by virtue of tax treaty specific provisions (for example, those with Spain and Israel).

Royalty payments are also subject to the Contribution of Intervention in the Economic Domain (CIDE-Royalties) at a 10% rate (on the payer) and to IOF-FX at a 0.38% rate.

For the purposes of deductibility, royalties must be based on contracts registered with the National Institute of Industrial Property. Legislation provides for limitations regarding the deductibility of royalty payments (limited to 1% to 5% of the net sales revenue).

Groups, affiliates and related parties

 
21. Are there any thin capitalisation rules (restrictions on loans from foreign affiliates)?

Interest is not fully deductible by companies for corporate income tax and social contribution on net profit purposes when related to debts that exceed the limits imposed by thin capitalization rules. Therefore, debts are analysed on the ratio between either:

  • The debt and the debtor's net equity.

  • The creditor's proportional net equity held in the company.

The limits are applicable not only to each inter-company loan, but also to all inter-company debt held by a company.

The ratios are as follows:

  • 2:1, if interest is payable to related parties abroad.

  • 0.3:1, if interest is payable to a creditor in a low tax jurisdiction or under privileged regimes.

 
22. Must the profits of a foreign subsidiary be imputed to a parent company that is tax resident in your jurisdiction (controlled foreign company rules)?

Profits arising from controlled foreign subsidiaries must be recognised by the Brazilian parent on a yearly basis. The same rule applies to affiliates (in some cases) and to entities deemed equal to controlled companies for that purpose. However, profits arising from affiliates are only taxed on 31 December of the year when they are actually made available to the Brazilian company.

In some cases, the deduction and consolidation of tax losses carried forward by controlled and affiliate foreign companies are allowed.

 
23. Are there any transfer pricing rules?

Transfer pricing rules apply to imports and exports of goods, services and rights (except for royalties, technical assistance and similar), as well as to interest paid, due or earned by Brazilian individuals or legal entities, in operations either with:

  • Related parties.

  • Parties located in low tax jurisdictions or under-privileged regimes.

Brazil adopts both comparative methods and methods of presumed fixed margins. The latter are more widely used in Brazil than it is usual in other countries.

Customs duties

 
24. How are imports and exports taxed?

Goods

Generally taxes are levied on imported goods as follows:

  • Import tax (II). II is non-recoverable. Rates vary from 0% to 35%.

  • Excise tax (IPI). IPI is usually recoverable for goods imported for resale or to be used as raw material or similar. Rates vary from 0% to 300%.

  • Social contribution on revenues (PIS/COFINS). Recoverable for taxpayers in the non-cumulative regime. The rates currently applicable to most products are 2.1% (PIS) and 9.65% or 10.65% (COFINS).

  • Sales tax (ICMS). State tax recoverable for regular ICMS taxpayers. Usually levied at rates from 17% to 19%.

  • Additional of freight for merchant marine renewal (AFRMM). This is non-recoverable. Applicable to imports through maritime transportation only. The rate is 25% of the international freight value.

Services

Generally, taxes are levied on imported services as follows:

  • Withholding income tax. Rates of 25%, 15% or 0%.

  • CIDE-royalties. Applicable to technical services, technical assistance and similar services. The rate is 10%.

  • PIS/COFINS. Rates of 1.65% (PIS) and 7.6% (COFINS).

  • Services tax (ISSQN). ISSQN is a municipal tax. Rates vary from 2% to 5%.

  • Tax on credit, foreign exchange, insurance, or securities transactions (IOF-FX). IOF-FX is levied at a rate of 0.38%.

Most exports are free of taxes. However, the exportation of some products is taxed at rates that vary from 9% to 150%.

The references above are to nominal rates. The actual tax burden can vary according to each tax calculation basis.

Double tax treaties

 
25. Is there a wide network of double tax treaties?

Brazil currently has double tax treaties with: Argentina, Austria, Belgium, Canada, Chile, China, Denmark, Ecuador, Finland, France, Hungary, India, Israel, Italy, Japan, Luxembourg, Mexico, Norway, Peru, Philippines, Portugal, Slovak Republic, Czech Republic, South Africa, South Korea, Spain, Sweden, the Netherlands, Trinidad and Tobago, Turkey, Ukraine and Venezuela.

The treaties have very similar structures to the Organisation for Economic Co-operation and Development (OECD) standards, although Brazil is not an OECD member state.

 

Competition

26. Are restrictive agreements and practices regulated by competition law? Is unilateral (or single-firm) conduct regulated by competition law?

Restrictive agreements and practices and unilateral conducts are regulated by Law 12,529 of 30 November 2011, which also encompasses conducts involving foreign companies, if their acts have an actual or potential effect in Brazil.

Competition authority

The Administrative Council for Economic Defence is the competition authority in Brazil (www.cade.gov.br).

Restrictive agreements and practices / Unilateral conduct

Law 12,529 of 30 November 2011 prevents conduct that has or may have the following effects (even if they are not achieved):

  • Limits, distorts or harms free competition.

  • Dominates a relevant market.

  • Arbitrarily increases profits.

  • Abuses dominant position.

A company or group of companies that controls at least 20% of a relevant market is presumed to have a dominant position.

Violators are subject to administrative fines under Law 12,529 of 30 November 2011 and also criminal penalties (two to five years' imprisonment and fines) for cartels (Law 8,137 of 27 December 1990).

 
27. Are mergers and acquisitions subject to merger control?

Mergers, acquisitions, joint ventures, and co-operative and associative agreements transactions are subject to the Administrative Council for Economic Defence's (CADE's) pre-merger control, provided that the turnover threshold is met (Law 12,529 of 30 November 2011).

For notification purposes, at least one of the economic groups involved in the transaction must have a gross revenue or business turnover in Brazil corresponding to at least BLR750 million and another economic group must have at least BRL75 million of gross revenue or business turnover in Brazil.

CADE's Resolution 2 of 29 May 2012 establishes de minimis rules for the submission of minority shareholding acquisitions and CADE's Resolution 10 of 29 October 2014 establishes exemptions for specific cases of associative agreements.

Foreign-to-foreign acquisitions are subject to merger control whenever the above thresholds are met and the transactions have, or may have, an effect in Brazil.

 

Intellectual property

28. Outline the main IP rights in your jurisdiction.

Patents

Definition and legal requirements. Under Brazil's Industrial Property Law (Law 9,279 of 14 May 1996), inventions are patentable if they are:

  • Novel.

  • An inventive step (non-obvious to a person skilled in the art).

  • Of industrial applicability.

Additonally, objects that are fit for practical use can be patented as a utility model if they are susceptible to industrial application and present a new arrangement in their shape or structure, resulting from an inventive step, which creates structural improvements to the object.

Registration. Patent applications must be filed with the National Institute of Industrial Property (INPI). Brazil adopts a substantial examination system regarding patent applications. The INPI examines these applications for:

  • Compliance with formal and general requirements.

  • Intrinsic unpatentability.

  • An assessment to confirm that it is not part of the state of the art.

Enforcement and remedies. Patent rights can be enforced by the right-holder. Administrative proceedings in INPI are available to oppose patent applications or annul patents. Infringement proceedings are brought in state courts and annulment proceedings in federal courts. The right-holder can seek:

  • Injunctions to cease the infringement.

  • Search and seizure orders.

  • Orders to prevent importation of infringing products.

  • Damages.

Criminal sanctions such as imprisonment and fines are also applicable.

Length of protection. Invention patents are valid for 20 years and utility model patents are valid for 15 years, in both cases as from the filing date. However, their term of protection cannot be less than ten years and seven years, respectively, as from the date of concession.

Trade marks

Definition and legal requirements. Any distinctive and visually perceptible sign is eligible for registration as a trade mark, unless otherwise provided (Law 9,279 of 14 May 1996). Smell, sound and taste cannot be protected as trade marks. To be registered, trade marks must not be similar to another trade mark applicable to the same goods or services, so as to possibly cause confusion or association in the market. The legislation also provides that signs that are descriptive, generic, deceitful, unlawful or contrary to public order and morality cannot be registered as trade marks.

Protection. Trade mark applications are filed with INPI. Brazil adopts a substantial examination system regarding trade mark registrations. INPI examines the application for:

  • Compliance with formal requirements.

  • Inherent registrability.

  • Conflicts with other trade marks.

Protection for unregistered trade marks may be available under unfair competition rules and under the Paris Convention provisions regarding well-known trade marks.

Enforcement and remedies. Trade mark rights can be enforced by the right-holder (the owner of the registered trade mark or the user of an unregistered trade mark). Administrative proceedings in INPI are available to oppose trade mark applications or annul registrations. Infringement proceedings are brought in state courts and annulment proceedings in federal courts. The right-holder can seek:

  • Injunctions to cease the infringement.

  • Search and seizure orders.

  • Orders for seizure or destruction of infringing products.

  • Orders to prevent importation of infringing products.

  • Damages.

Criminal sanctions such as imprisonment and fines can also apply.

Length of protection and renewability. A trade mark is protected for a period of ten years from the date of registration. On application, protection can be extended for equal and successive periods of ten years, without limitation.

Registered designs

Definition. An industrial design is an ornamental plastic form of an object or an ornamental arrangement of lines and colours that can be applied to a product (Law 9,279 of 14 May 1996). To be eligible for protection, the industrial design must provide the object with a distinctive visual configuration, which must be new, original and able to be industrially manufactured.

Registration. Industrial design applications are filed with INPI. Brazil adopts a non-examination system regarding industrial design applications. There is no substantial examination of the applications, which are only examined by INPI for compliance with formal requirements. Substantial examination can be carried out on request of the applicant.

Enforcement and remedies. Industrial design rights can be enforced by the right-holder. Administrative proceedings in INPI are available for the annulment of registrations. Infringement proceedings are brought in state courts and annulment proceedings in federal courts. The right-holder can seek:

  • Injunctions to cease the infringement.

  • Search and seizure orders.

  • Damages.

Criminal sanctions such as imprisonment and fines are also applicable.

Length of protection and renewability. Protection of registered designs must remain in force for a period of ten years from the filing date, and is extendable for three successive periods of five years.

Unregistered designs

Definition and legal requirements. Brazil does not provide for specific protection of unregistered designs. This protection may be available under unfair competition rules, depending on the circumstances of the case. Unregistered designs may be entitled to copyright if the design is considered a work of authorship unattached from a product and as long as they comply with the requirements of Brazil's Copyright Law (Law 9,610 of 19 February 1998).

Enforcement and remedies. The right-holder can enforce rights regarding unregistered designs under the unfair competition rules (Law 9,279 of 14 May 1996). Proceedings are brought in state courts, unless one of the parties is a federal entity (in which case proceedings are brought in federal courts). The right-holder can seek:

  • Injunctions to cease the infringement.

  • Search and seizure orders.

  • Damages.

Criminal sanctions such as imprisonment and fines are also applicable.

Length of protection. Due to the lack of specific provisions regarding unregistered designs, there is no specific term of protection. If eligible for copyright protection, protection lasts for 70 years from 1 January of the year following the author's death.

Copyright

Definition and legal requirements. Brazil's Copyright Law (Law 9,610 of 19 February 1998) provides protection for original works of authorship that are expressed through any means or fixed in any tangible or intangible form. Such works include literary, artistic and scientific works, as well as databases and software (Law 9,609 of 19 February 1998). Copyrights in Brazil grant the right-holder patrimonial rights as well as granting the author moral rights, such as the right of attribution, of integrity and of disclosure.

Protection. Copyright protection does not require registration. To provide evidence of authorship and of the date of creation of the work, the right-holder can register the work in different institutions, depending on its nature.

Enforcement and remedies. The right-holder can bring infringement proceedings in state courts, unless one of the parties is a federal entity (in which case proceedings are brought in federal courts). He can also seek:

  • Injunctions to cease the infringement.

  • Search and seizure orders.

  • Destruction of unlawful copies.

  • Damages.

Criminal sanctions such as imprisonment and fines are also applicable.

Length of protection and renewability. Copyright protection lasts for a period of 70 years from 1 January of the year following the author's death. For anonymous or pseudonymous works, as well as audiovisual works and photography, the term of protection is 70 years from 1 January of the year following the first publication or disclosure. Software is protected for 50 years as from 1 January of the year of publication or, if unpublished, of the year of creation. Copyrights are not renewable.

Other

Intellectual property rights can also be granted for:

  • Geographical indications (Law 9,279 of 14 May 1996).

  • Plant varieties (Law 9,456 of 25 April 1997).

  • Integrated circuits (Law 11,484 of 31 May 2007).

Protection is also available to confidentiality, business secrets and know-how, under unfair competition and other general rules.

 

Marketing agreements

29. Are marketing agreements regulated?

Agency

Agency agreements are regulated by Law 4,886 of 9 December 1965 and by the Brazilian Civil Code (Law 10,406 of 10 January 2002). Unless otherwise provided in the agreement, the relationship between the principal and the agent is considered exclusive. Unilateral termination without cause is limited to the cases provided for in the applicable laws. Otherwise the agent is entitled to compensation, the calculation of which depends on whether the agreement has a fixed term. The Brazilian Civil Code (Law 10,406 of 2002) also provides general regulation regarding agency agreements.

Distribution

Even though the Brazilian Civil Code (Law 10,406 of 10 January 2002) refers to "distribution and agency contracts", the prevailing understanding is that traditional distributorship contracts (where a distributor purchases goods to resell) are not specifically regulated. However, distribution agreements concerning land motor vehicles are specifically regulated by Law 6,729 of 28 November 1979 (Ferrari Law). Civil Code provisions concerning contracts in general are applicable to distributorship contracts. This includes a provision that unilateral termination is only possible after a reasonable period sufficient for a party to recover its investments, if the investments were substantial (see Article 473, Brazilian Civil Code).

Franchising

Franchising agreements are regulated by Law 8,955 of 15 December 1994, which states that they must be in writing and signed in the presence of two witnesses. The Before signing a franchising agreement, the franchisor must present the franchisee with an offering circular that includes substantial information regarding (Law 8,955 of 15 December 1994):

  • The franchisor.

  • The company's balance sheets and financial statements.

  • Expected investments to be made by franchisee.

  • Relevant fees.

  • Eventual exclusivity rights to be granted.

The agreement can be considered void if the offering circular is not presented to the franchisee in advance. If the franchisor is a foreign entity, the agreement must be registered with the National Institute of Industrial Property. This is to allow for the remittance of royalties and payment of other fees.

 

E-commerce

30. Are there any laws regulating e-commerce (such as electronic signatures and distance selling)?

Decree 7,962 of 15 March 2013 regulates e-commerce transactions when they are subject to consumer protection laws. It specifies information that the seller must provide to consumers, among other obligations. The decree also reinforces the seven-day period applicable to cases of distance selling, during which the consumer may exercise a "right of regret" in accordance with the Consumer Protection Code (Law 8,078 of 11 September 1990).

General rules regarding contracts and consumer protection are also applicable to any e-commerce transactions.

Electronic documents have the same legal validity as physical documents. Provisional Measure 2,200-2 of 24 August 2001 establishes a presumption of authenticity if the parties use a digital signature provided by any certified authority.

 

Advertising

31. Outline the regulation of advertising in your jurisdiction.

Advertising is a self-regulated industry. The non-governmental organisation Conselho Nacional de Autorregulamentação Publicitária (CONAR) is the authority in charge of enforcing the Brazilian Self-Regulation Advertising Code. CONAR analyses complaints presented by its own members, consumers and authorities, and can recommend the media to suspend publication of a specific advertisement or send warnings to the advertiser and the agency. Its recommendations are usually followed by the media.

Unfair competition and intellectual property rules (Law 9,279 of 14 May 1996), as well as consumer protection rules (Law 8,078 of 11 September 1990), are also applicable to advertising practices, such as:

  • Misleading advertisements.

  • False attribution of rewards.

  • References to patents.

  • Comparative advertising.

There are also specific rules on the advertisement of certain products, such as firearms (Law 10,826 of 22 December 2003), medicine, tobacco and alcohol (Law 9,294 of 15 July 1996).

 

Data protection

32. Are there specific statutory data protection laws? If not, are there laws providing equivalent protection?

There are no specific personal data protection laws, although the matter is covered by constitutional principles and other general legislation, for example:

  • The Consumer Protection Code (Law 8,078 of 11 September 1990) imposes limitations on the creation of consumer databases.

  • The Law 12,965 of 23 April 2014 (Internet Civil Framework) provides for the protection of the privacy of internet users and establishes restrictions regarding collection, storage and disclosure of personal data to third parties, including data relating to connection logs and use of applications.

There are also specific rules concerning the protection of data held by Governmental entities and data that may be relevant for national security, for example, Decree 8,135 of 4 November 2013.

 

Product liability

33. How is product liability and product safety regulated?

Product liability is mainly regulated by the Consumer Protection Code (Law 8,078 of 11 September 1990). Under the code suppliers involved in a supply chain are strictly and jointly liable for damages suffered by consumers because of defective products and for improper or incomplete information made available to consumers about the product and risks of its use.

In relation to product safety, the code expressly provides that products and services do not bring unreasonable risks to the consumers' health or safety. Specific regulations on product safety and quality standards are also issued by federal regulatory agencies, such as the:

  • National Institute of Metrology, Quality and Technology.

  • National Sanitary Vigilance Agency. 

Consumer protection policies are also covered by general rules on civil liability and torts provided in the Brazilian Civil Code (Law 10,406 of 10 January 2002).

Claims for damages can be brought in state courts by an individual plaintiff or in a class action.

 

Main business organisations

Securities Exchange Commission (Comissão de Valores Mobiliáris) (CVM)

W www.cvm.gov.br/subportal_ingles/index.html

Main activities. CVM is a federal entity that regulates the Brazilian capital markets.

Federal Revenue of Brazil (Receita Federal do Brasil)

W http://idg.receita.fazenda.gov.br

Main activities. The Federal Revenue collects and administers all federal taxes and is responsible for customs supervision and control.

Brazilian Central Bank (Banco Central do Brasil) (BACEN)

W www.bcb.gov.br/?ENGLISH

Main activities. BACEN is part of the Brazilian National Financial System and is the main Brazilian Monetary Authority. It is responsible for the regulation and monitoring of financial institutions, control over capital inflows and outflows, and monetary, exchange rate and credit policies.

Brazilian Ministry of Development, Industry and International Commerce (Ministério do Desenvolvimento Indústria e Comércio Exterior) (MDIC)

W www.desenvolvimento.gov.br

Main activities. MDIC is in charge of the formulation, development and evaluation of public policies relating to the promotion of national trade, foreign trade, investment, innovation and consumer affairs.



Online resources

Brazil’s Presidency

W planalto.gov.br

Description. This is a government website that provides up-to-date federal legislation in Portuguese.



Contributor profiles

Alice Dourado, Partner

Campos Fialho Canabrava Borja Andrade Salles Advogados

Campos Fialho Canabrava Borja Andrade Salles Advogados

T +55 11 4064 7020/+55 31 4501 7854
F +55 11 4064 7005/+55 31 4501 7798
E alice.dourado@camposfialho.com.br
W www.camposfialho.com.br

Professional qualifications. Brazil, Lawyer; US, New York, Attorney

Areas of practice. Corporate; M&A; capital markets; private equity.

Non-professional qualifications. Bachelor of Accountancy

Cristina Borja, Partner

Campos Fialho Canabrava Borja Andrade Salles Advogados

T +55 31 4501 7790
F +55 31 4501 7798
E cristina.borja@camposfialho.com.br
W www.camposfialho.com.br

Professional qualifications. Brazil, Lawyer

Areas of practice. Labour law; social security.

Leonardo Canabrava, Partner

Campos Fialho Canabrava Borja Andrade Salles Advogados

Campos Fialho Canabrava Borja Andrade Salles Advogados

T +55 31 4501 7796
F +55 31 4501 7798
E lcanabrava@camposfialho.com.br
W www.camposfialho.com.br

Professional qualifications. Brazil, Lawyer

Areas of practice. Infrastructure; project finance; antitrust and competition; arbitration and complex litigation.

Non-professional qualifications. Bachelor of Economics.

Lucas Spadano, Partner

Campos Fialho Canabrava Borja Andrade Salles Advogados

Campos Fialho Canabrava Borja Andrade Salles Advogados

T +55 11 4064 7013
F +55 11 4064 7005
E lspadano@camposfialho.com.br
W www.camposfialho.com.br

Professional qualifications. Brazil, Lawyer

Areas of practice. International trade; antitrust and competition; intellectual property.

Non-professional qualifications. Bachelor of International Relations; MBA

Patrícia Alvarenga, Partner

Campos Fialho Canabrava Borja Andrade Salles Advogados

T +55 31 45017822
F +55 31 45017798
E patricia.alvarenga@camposfialho.com.br
W www.camposfialho.com.br

Professional qualifications. Brazil, Lawyer

Areas of practice. Corporate; M&A; private equity.

Non-professional qualifications. Bachelor of Accountancy

Roberto Salles, Partner

Campos Fialho Canabrava Borja Andrade Salles Advogados

T +55 31 4501 7868
F +55 31 4501 7798
E roberto.salles@camposfialho.com.br
W www.camposfialho.com.br

Professional qualifications. Brazil, Lawyer

Areas of practice. Tax; tax planning; tax litigation.

* The following associates have also contributed to this article, Bernardo Santos (IP), Bruno Augustin (Trade/Antitrust), Bruno Delpupo (Antitrust); Carlos Henrique Morais (Tax), Clarissa Barcelos (Labour), Clarissa Mello (Labour), Débora Resende (Corporate), Guilherme Costa Val (Tax), Laura Diniz (Tax), Luiza Tângari (IP), Patricia Lima (Tax), Paulina Cho (Tax), Pedro Brandão (Trade/Antitrust), Pedro Magalhães (Tax), Vinícius Martins (Tax).


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