Branch or Subsidiary: How to Open an Office in Brazil

A foreign company that wants its own office in Brazil has two paths: open a branch of the company itself or set up a subsidiary, a Brazilian company controlled by the parent. A branch has no legal personality of its own, depends on federal government authorization and leaves the parent company liable for everything that happens here. A subsidiary, almost always a limited liability company (LTDA), is registered with the Commercial Registry like any Brazilian company and limits liability to its capital. That is why it is the path chosen by the vast majority of foreign companies.

Branch and subsidiary side by side

	Branch	Subsidiary (LTDA)
What it is	An extension of the foreign company	A separate Brazilian company controlled by the parent
Government authorization	Yes, from the federal government (DREI)	No
Liability	The parent is liable for all obligations	Limited to the LTDA's capital
Representative in Brazil	Mandatory, with full powers	Administrator and attorneys as set in the articles
Timeline	Longer, because of the authorization	A few weeks
Most common use	Specific cases	The vast majority of foreign companies

How a branch works

A foreign company that wants to operate in Brazil through a branch, agency or office needs federal government authorization. Under DREI Normative Instruction 77/2020, the request is filed through the gov.br portal and reviewed by the National Department of Business Registration and Integration (DREI). The documents include the parent's resolution to open the branch, the company's articles or bylaws and the capital allocated to operations in Brazil, stated in reais.

After authorization, the branch is filed with the Commercial Registry of the state where it will operate and receives a CNPJ. The foreign company must also keep a permanent representative in Brazil with full powers.

The most sensitive point: since the branch is the foreign company itself, the parent is directly liable for debts, taxes and lawsuits in Brazil.

How a subsidiary works

A subsidiary is set up like any Brazilian company. The foreign parent becomes a partner (it needs its own CNPJ in Brazil), appoints an attorney resident in the country and registers the articles of association with the Commercial Registry. The full step by step is in how to open a company in Brazil as a foreigner, and the role of the CNPJ in what is a CNPJ.

Since 2019, an LTDA can have a single partner, which lets the parent own 100% of the subsidiary. The company has local obligations from the first month: bookkeeping, taxes and, if there are employees, labor rules. See accountants in Brazil: what they do and what they cost.

Which to choose

In practice, the LTDA subsidiary wins in most cases:

• it needs no federal authorization, so it is faster;
• it protects the parent, because liability is limited to the capital;
• it is the structure Brazilian banks, customers and suppliers know best;
• it makes it easier to bring in local partners later.

A branch usually appears in regulated sectors or when there is a specific tax or contractual reason to operate as the foreign company itself. In those cases, decide with a lawyer.

What if I just want to sell, without an office?

Many companies do not need an office at first. You can sell from abroad, with payment providers that accept Pix and installments, or work with a Brazilian sales representative or distributor. See can you sell in Brazil without a local company?. If what you need is to hire people, an employer of record (EOR) solves it without opening a company: see hiring in Brazil: CLT, PJ or contractor.

After opening

Once the structure is in place, the next steps are the company bank account, registering the foreign capital with the Central Bank and choosing the tax regime. Plan how money goes back to the parent too: see how to send profits abroad.

Summary

To have an office in Brazil, a foreign company can open a branch, which requires federal authorization and exposes the parent, or an LTDA subsidiary, which is faster and limits liability. In most cases the subsidiary is the right choice, and before it, it is worth testing the market without a local structure. If you want help deciding the timing and the format, talk to BrazilDoor.