Sweet Home Floripa, Florianópolis, Brazil

Dr. Carlos Zoéga Coelho

In our most recent interview, Carlos Zoéga discussed the exciting, new service offered by his law practice. Carlos will now offer a full-service business consultancy that allows foreign investors the opportunity to perform thorough due-diligence investigations on Brazilian businesses. 

This new consultancy service, Carlos told me, “examines all the non-legal aspects of investing in a Brazilian company.  For example, we can now help foreign investors evaluate the financial records of the company.  We can also prepare the necessary reports to provide the investor with a clear understanding of the risks and returns their investments should command.”

Carlos is offering this consultancy service to his clients, whether they are interested in investing in Brazil–today one of the top two BRIC economies–or investors who seek an investor’s visa in Brazil through investment.

Carlos assists foreigners wishing to living permanently in Brazil to obtain a permanent resident status through an investor’s visa.  In our interviews on this subject, Questions about Brazil’s Investor Visa?  Ask Dr. Zoéga. and More Questions about Brazil’s Investor Visa?  Ask Dr. Zoéga. we learned that foreign nationals who invest R150,000 in a Brazilian business can obtain the right to live permanently in Brazil.  Those articles described how to go about setting up your own business from scratch.  But not all clients wanted to build up a business from the ground up.

In fact, several clients asked if Carlos wouldn’t be willing to try and connect them up with already-existing Brazilian businesses so that they could act as partners or investors.  Carlos explained that “in many cases, my clients tell me that they would prefer to become a partner of a business that is already running, that is already successful, that is already making profits, than to start from zero in a new country, in a completely different cultural and economic environment.”

Some of these clients have special areas of expertise that they can offer Brazilian businesses.  Others just want to make an investment and be silent partners.  Investing in a Brazilian business, however, can be almost as complicated for an uninformed foreign investor as starting a Brazilian business from scratch.  That’s why Carlos is now offering a specialized business consultancy in addition to his legal services.  Those who wish to invest in an already-existing business can make sure that the business is profitable, honest, and following Brazil tax and other guidelines.  The first step is “due diligence in researching the prospective company in order to understand exactly what the situation is regarding its debts, especially labor and tax debts.”

Through this consultancy, prospective investors can assess whether a Brazilian company is worth investing in, how much of a return they should receive on investments, and assess its track record.

Carlos added that he is now equipped to offer his consultancy service to both individuals and businesses as well.  In fact, his services are available to any investor, whether they want to live in Brazil or not.  In addition to assessing the value of partnerships with individual companies, Carlos can also help to set up holding companies that control partnerships in a variety of Brazilian companies in order to diversify investments among different industries or markets.

Once clients have decided that a partner business is a good investment, Carlos can also negotiate “the percentage of the shares that will be sold against the amount that will be invested, including the preparation of all legal documents involved.”  So, for those individuals and businesses who want to come to Brazil and invest in an already-existing and profitable business, Zoéga Coelho & Advogados now offers a way to do it in a way that is fully informed and with proper due diligence.

Dr. Carlos is Senior Partner at ZOÉGA COELHO & ADVOGADOS  Rua Adolfo Melo, n.38, sala 202 – Centro 88015-090 Florianópolis/SC – Brasil Telefone: (55 48) 3223-4729  Fax: (55 48) 3322-0483

SKYPE: carloszoegacoelho

SHF:  I heard somewhere that you have to have a Brazilian partner—or buy into an existing Brazilian business—in order to get an Investor’s Visa.  Is that true?

Dr. Carlos Zoéga, Senior Partner at Zoéga Coelho & Advogados

CZC:  No, that’s not true.  What you do have to have, though, is a person who is a Brazilian citizen or a permanent resident to be what’s called an “administrator.”  The administrator has to be Brazilian or a (foreign) permanent resident because the government requires someone with a permanent Brazilian address to receive documents on behalf of the company.  An administrator must be appointed when the documents are filed to open the company.  So, someone besides the person opening the business will have to be an officer of the company—at least at first.

SHF:  Well, six months after filing the articles of the company the visa holder will become a permanent resident.  Can he or she them become the administrator?

CZC:  Yes, they can and that sometimes happens.

SHF:  Do visa applicants feel nervous about appointing an administrator to run a company in possession of R150,000 of their cash?

CZC:  Usually the decision to open a business is taken among friends.  People rarely just appoint a stranger or an acquaintance to be their administrator.  Usually it’s an important contact or connection in Brazil.  It’s usually a person that the investor knows well. It can’t be just anyone.

SHF:  Now, let’s talk about once the visa process is completed.   What are the investor’s responsibilities?  I once spoke to a person who has an Investor’s Visa.  I asked him how his business was going and he shrugged, grinned and then confessed that he wasn’t doing much business.  Instead, he was just lying on the beach and drawing the interest on his investment each month. He seemed quite pleased to be getting a steady return. Is that okay?  Or is there some oversight to make sure that you really are running a Brazilian business?

CZC:  No, that’s a problem.  When you take out the Investor’s Visa you have to explain the nature of your business.   Later, the Polícia Federal, which monitors all visas, will ask you to prove that you have been engaged in the type of business stated on your application.  If you have not been involved in business of that nature then you will be asked to leave the country.

SHF:  How long before you have to report to the Polícia Federal and show that you are running a business?

CZC:  It used to be five years.  But now it’s only three.  Many people don’t know about that, but it’s important to know because the police WILL check your economic activity.  It’s not clear yet whether people who received their Investor’s Visas when the period was five years will be checked after only three years, but it is possible.

SHF:  Why did the law change?

CZC:  The law was actually changed as a result of efforts on the part of the Ministry of Labor.  You see, the Investor’s Visa is supposed to give foreigners the right to live in Brazil in exchange for creating jobs in Brazil.  It’s not just a formality, it’s a real policy goal.  The amount a person had to invest in Brazil used to be much higher, but the government lowered it in order to attract investors.  They are working with the assumption that people will bring in their investment money, open businesses, and then hire Brazilians to work for them.  The Ministry of Labor wanted to make sure that these jobs would really appear.  So they shortened the time limit.

SHF:  So, what would happen if you go to the authorities after three years and they see that you have no economic activity to speak of and you say, “Well, I meant to run my business, but one thing led to another, there were so many sunny days, I took up surfing.  I’m very sorry.  I’ll try harder next time.”

CZC:  Well, then you’ll be asked to leave the country.  The police will say that you are obviously a tourist and not a businessman at all.  So you are to leave and return on a tourist visa, which allows you to stay in the country for six months every year.

SHF:  Well, what if you haven’t done any business, but you hire a maid and a gardener?  Does that count?  Will the authorities ask you to leave and take away those jobs?

CZC:  No, that doesn’t count.  Domestic jobs are out of the immigration policy focus. You will be asked to leave the country, because your visa will not be renewed.

SHF:  So, I guess that means that you can’t take your investment cash and buy a house with it?

CZC:  No.

SHF:  Well, what about a hotel?  What if you build a hotel and your house is part of the hotel?

CZC:  In that case it might be okay, but you would have had to list “Hotel” as the nature of your business when you filed the original documents for the Investor’s Visa.

SHF:  What about if you open a business, do regular commerce, but don’t hire anyone.  For example, what if you open a translating business and work it yourself.   Or if you open a consultancy business where you are the only employee.  In other words, the nature of your work excludes Brazilians.  What then?

CZC:  When you are applying for an investor visa, you need to attach to the application form a document showing your investment plan, the number of jobs that will be generated, the type of earnings your business will provide, the increase of productiveness, etc. If you declare that your business will not generate a single job, it is very probable that the authorities will not grant you the investor’s visa.

SHF:  Lastly, what about if you open a business and you just can’t make any money.  You hire people, you advertise, you do whatever you can do, but the business just doesn’t cut it?  Can you lose your visa?

CZC:  You don’t have to make a profit.  You don’t have to make a big success.  But  you do have to show that you were engaged in the type of economic activity described on your application.

SHF:  Dr. Zoega, on behalf of Sweet Home Floripa, I want to thank once again for helping our readers understand Brazilian law.

CZC:  My pleasure.  See you next month.

Dr. Carlos is Senior Partner at ZOÉGA COELHO & ADVOGADOS Rua Adolfo Melo, n.38, sala 202 – Centro 88015-090 Florianópolis/SC – Brasil Telefone: (55 48) 3223-4729  Fax: (55 48) 3322-0483

SKYPE: carloszoegacoelho

Many foreigners living illegally in Brazil were heartened recently by an amnesty declaration that provided a way for all undocumented foreign nationals to become permanent residents of Brazil.   Recently I spoke to Dr. Carlos Coelho Senior Partner at Zoéga Coelho & Advogados to better understand the ins and outs of Brazil’s new immigration policy. 

 “The amnesty was really part of a larger move by the Brazilian government to distinguish its immigration policies from those of the United States and the European Union,” Coelho told me. “Those governments typically try to restrict the flow of foreign immigration.  Brazil, on the other hand, wants to show the world that it’s a people-friendly country.”   

“On the same day that Lula declared the amnesty,” Dr. Carlos continued, “a new Lei do Estrangeiro (Foreign Immigration Law) was submitted to Congress.  The new laws would guarantee a broad range of basic rights for foreigners.  It would also facilitate their absorption into Brazilian society.”  Read the rest of this entry »

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