Accounting & Bureaucracy in Brazil

. Country Overview Territory: 8.5 million km2 Population: of 200 million (2013) GDP: USD 2.25 trillion (2013) GDP per capita: USD 11.208 (2013) Currency: Brazilian Real (BRL) Capital City: Brasília Main Business Cities: São Paulo, Rio de Janeiro 26 states, 1 Federal District and over 5500 Municipalities Country Profile Entry Options Tax & Simulation HR & Simulation Case Expertise .

Dealing with Bureaucracy Business in Brazil Why Invest in Brazil? High Profit Margins Largest Market in South America Growing Middle Class No Tax on Dividends Dealing with Bureaucracy Ease of doing business: Brazil ranks 120th of 189 vs. Hungary who ranks 54th (World Bank Data) Time to open a company: In Brazil it takes 84 days vs. 5 days in Hungary. (World Bank Data) - *Brazil is down from 122 days in 2012. Time to prepare and pay taxes: Brazil 2.600 hours vs. Hungary 277 hours (World Bank Data) Country Profile Entry Options Tax & Simulation HR & Simulation Case Expertise .

. Entry Options Setting up a Company Limited Liability Company SA / Coorporation Eireli Permanent Visas As a Person (BRL 150.000) As a Company (BRL 600.000) Buying a Company Joint Venture Country Profile Entry Options Tax & Simulation HR & Simulation Case Expertise .

Requirements for Entry Options Proper Planning Legal Representative of Shareholders Legal Representative of Company / Administrator Commercial and Tax Residence Accountant Support from a Local Expert Patience Country Profile Entry Options Tax & Simulation HR & Simulation Case Expertise .

. Tax System Why such a Complex Tax System? A complex organization: the Federal Government, 26 Federal States (+DF), and thousands of municipalities, each with legislative powers There are exceptions to all rules: according to territory, products and recipients   Constant changes to legislations: Federal, state & municipalities can make change one or the other tax (ex IPI, IOF, INSS, ICMS, II, PIS, COFINS) Country Profile Entry Options Tax & Simulation HR & Simulation Case Expertise .

Municipal, State & Federal Contributions and Taxes ISS (Service Tax) ICMS (VAT - Interstate & municipal Tax) PIS (Social Integration Program Contribution) COFINS (Social Contribution for Social Security Funding) IPI (Industrialized Goods Tax) II (Import Tax) IE (Export Tax) IRPJ (Corporate Income Tax) IRRF (Withholding Income Tax) CSLL (Corporate Social Contribution) IOF (Financial Operations Tax) CIDE (Contribution at the Economical Domain) FGTS (Workers Fund) INSS (National Social Security) Country Profile Entry Options Tax & Simulation HR & Simulation Case Expertise .

. TAX Regimes DIRECT TAXATION Country Profile LUCRO REAL Entry Options Tax & Simulation HR & Simulation Case Expertise LUCRO REAL (Real Profit) Revenue > 78M BRL Net Margin < 20% LUCRO PRESUMIDO (Presumed Profit) Products > 8% of Rev. Services > 32% of Rev. Net Margin > 20% . IRPJ (Cooperate Income Tax) = 15% upto BRL 20.000 Or 25% above BRL 20.000 CSLL (SOCIAL CONTRIBUTION) = 9% THE DISTRIBUITION OF DIVIDENDS IS NOT TAXED

CLT - Consolidated Labour Laws General Guide Lines CLT - Consolidated Labour Laws CLT - Standard rights and obligations: 13.3 monthly wages a year Maximum of 44h work week 30 days holidays after a year of work Right to protection against arbitrary dismissal Transport to and from work Maternity (4 months) and paternity leave (5 days) Occupational insurance Union membership No particular agreements can suppress employee’s rights guaranteed by law. However, increasing these rights is accepted, and occurs depending on the union. Country Profile Entry Options Tax & Simulation HR & Simulation Case Expertise .

. Wage Simulation Cost For Employer BRL 15.800 Official Wage Country Profile Entry Options Tax & Simulation HR & Simulation Case Expertise Cost For Employer BRL 15.800 Official Wage BRL 10.000 Employee Net Earning BRL 7.500 Difference between employees net wage and total expense of employer is over 100% .

According to the Collective Agreement Benefits Ticket Transport Compulsory 30 days Holidays ater 1 year Overtime extra pay or time compensation Ticket Supermarket According to the Collective Agreement Ticket Restaurant Health Insurance Profit Share Program Country Profile Entry Options Tax & Simulation HR & Simulation Case Expertise .

. Experience / Cases Not successful endeavors: Impatient / Restless No previous planning Adventurers Does not seek assistance Successful endeavors: Previous planning Previous established clients and contacts Resources Adaptation Persistence Patience Reach out for local experts Country Profile Entry Options Tax & Simulation HR & Simulation Case Expertise .

. Our Expertise Entry Strategy Business model, HR Planning, Import&Export Study, Global Study, Tax optimization, Accounting regime advice, Joint venture, Tax Audit and Accounting Administrative and Financial Management Banking, Monthly Reporting, Controlling, Revenue management  Accounting and HR Bookkeeping, issuance and calculations of tax notes, income statements, annual reports, HR obligations Legal Representation, Domiciliation Country Profile Entry Options Tax & Simulation HR & Simulation Case Expertise .

. Our References Country Profile Entry Options Tax & Simulation HR & Simulation Case Expertise .

Thank You & Welcome to Brazil! Eduardo.cruz@europartner.com.br www.europartner.com.br