1. Introduction
It is not difficult to incorporate a company in Brazil, as, during the last few years, Brazilian Public Authorities have enacted several rulings aiming to simplify and expedite such procedures. However, there are still several measures that must be observed to have the company fully qualified to start doing business in Brazil. Labour and employment law is known to be severe and very specific, therefore, it is an important aspect to be aware when expanding to Brazil.
TozziniFreire Advogados is a full-service law firm acting in 47 areas of corporate law. We offer a unique structure with industry groups and international desks staffed by lawyers who are considered experts by the market and key national and international guides.
Our labour and employment team is highly experienced in advising foreign corporations entering Brazil. The group is prepared to provide advice on any labour and employment aspect including but not limited to hiring structures, employment and service agreements, mandatory employment rights, profit-sharing plans, stock options, flexible benefits, variable compensation, executive compensation, internal policies, health and safety matters, terminations and severance packages, collective bargaining agreements, union relationships and expatriates.
2. Labour and Employment Law Requirements
a) Employer Policy Requirements
In Brazil, labour relations are a matter of Federal law, so the States and Municipalities have no power to legislate over labour matters. Therefore, labour rights are nationally standardised, and the same labour costs and consequences will apply regardless of an employer’s place of business or place of incorporation.
The basic principles concerning labour relations in Brazil are contained in the Labour Code, the so-called “CLT”, enacted on May 1, 1943, and amended over the years by scattered statutes. The most important change in the Labour Code occurred in November 2017, when the Labour Reform became effective changing more than 100 articles of the CLT.
The Federal Constitution of 1988 also establishes rights for urban and rural workers and there are also regulations of the Ministry of Labour that must be observed when hiring workers in Brazil.
The Labour Code and Federal Constitution establishes several mandatory rights that must be observed by employers such as: minimum wage, annual vacation, 13 salaries per year, deposits in the “severance fund”, severance package, maximum working hours per day and week, among others.
Considering that the mandatory rights are non-negotiable and already established by law, it is not necessary to have employer’s policies and/or employment handbooks related to the matter. Nevertheless, employers may provide additional rights to the ones established by law and may also implement their internal policies in Brazil as long as they are not in conflict with the Brazilian law.
Several international companies that incorporate subsidiaries in Brazil opt to have written internal policies, even if they repeat some rights already established by law, to have all employees and even foreign executives responsible for the Brazilian subsidiary aware of the applicable rights and conditions of the relationship. The code of conduct and employee handbook are the most common policies usually implemented in Brazilian subsidiaries.
In what regards health and safety at the workplace, the main programs Brazilian companies must implement are the ones below, and their conditions may vary depending on the number of employees and risk factor of the companies:
- Occupational health and medical control program (known as PCMSO);
- Environmental risk management control program (known as PGR);
- Internal commission to avoid work-related accidents (known as CIPA); and
- Specialised Occupational Health and Safety Team (SESMT).
As of May 26, 2026, in view of the new terms of the Regulatory Standard No. 1 (NR 1), companies in Brazil must address work related psychosocial risk factors as part of their mandatory Risk Management Program (PGR) and adopt a proactive approach to mental health in the workplace.
The organisation’s responsibilities in occupational risk management extends beyond the mere preparation of documents. It requires the implementation of dynamic and ongoing processes, encompassing planning, execution, monitoring and corrective actions throughout all stages of risk management.
Other rules and health and safety programs may have to be observed depending on the activities performed by the companies, their number of employees and risk factors.
b) Employee Training Requirements
Since 2023, companies that are required to have CIPA, which is an Internal Commission for Accident and Harassment Prevention, must perform training and educational actions at least every 12-month period aimed at the prevention and combat of harassment and other types of violence in the workplace. To verify if a company is required to have a CIPA it is necessary to analyse the number of employees hired by the company and the company’s risk factor in accordance with Regulatory Standard No. 5 (NR-5),
Moreover, depending on the type of activities that will be performed (i.e., work at heights, confined spaces, among others), employees may have to complete certain training activities, which should be in accordance with regulations of the Ministry of Labour, as well occupational and environmental programs of the company.
Employees working on remote work system should receive written and ostensive health and safety guidelines to prevent work-related accidents/illness.
c) Employment Agreements
In Brazil, workers may be hired in several ways, but the most common practice is the hiring of workers as employees.
An employment relation is characterised by the simultaneous presence of four elements: (i) services rendered on a personal basis; (ii) on a permanent/habitual basis; (iii) with subordination, i.e., the services are rendered under the direction of a supervisor; and (iv) upon the payment of remuneration in consideration for the services rendered.
If the elements above are not present in a labour relationship, the parties are free to structure it in a different way other than a formal employment agreement, such as: (i) independent contractors/consultants, (ii) service providers/outsourced workers, (iii) temporary workers, (iv) interns and non-employed officers, among others, provided that the specific rules and regulations regarding such other forms are complied with.
However, whenever the elements of an employment relationship are present and the employee is hired in any other form other than as an employee, the individual is able to request acknowledgement of employment before a Court, with the consequential payment of all labour and social security rights. The non-employee agreement executed by the parties will be disregarded because in Brazil, for employment purposes, the facts prevail over formal documents.
In what regards employment agreements, although it is not mandatory to have written agreements as verbal agreements are also valid, it is recommendable and common to execute written agreements with employees. The agreements may be for: (i) indefinite term, (ii) fixed term, or (iii) intermittent work. The most adequate term varies in accordance with each type of activity to be performed.
In recent years, the distinction between employment agreements and independent contractor arrangements (“pejotização”) has gained renewed relevance in Brazil. While Brazilian Labor Courts have traditionally applied a strict factual test to recharacterize non‑employment arrangements whenever the elements of an employment relationship are present, the Brazilian Supreme Court (STF) has increasingly recognized the constitutionality of alternative forms of work engagement.
At the same time, the STF has reaffirmed that contractual autonomy is not unlimited and does not protect fraudulent or sham arrangements designed to conceal employment relationships. Where the factual elements of employment are verified, recharacterization may still occur. However, this discussion is currently under heightened scrutiny, as the STF has admitted the matter under the general repercussion system and ordered the suspension since April 2025 of similar cases nationwide pending a final and binding decision from the STF.
The STF is expected to decide on three main points:
- The legality of hiring individuals as independent contractors, including through personal legal entities (“PJs”);
- Jurisdiction: whether cases involving alleged fraud in civil or commercial contracts — with potential recognition of employment relationships — should be heard by the Labor Courts or the Civil Courts;
- Burden of proof in misclassification or fraud allegations — i.e., whether it lies with the contractor or with the company.
The forthcoming ruling is expected to play a key role in defining the boundaries between employment agreements and independent contracting models, with significant implications for companies operating in Brazil.
3. Corporate Law Requirements
In Brazil, the two (2) most common company types are the Sociedade Limitada (“Limitada”) and the Sociedade Anônima (“S.A.”), roughly comparable to limited liability companies and corporations in other jurisdictions. In a Limitada, the corporate capital is divided into quotas, while in a S.A. it is divided into shares, which can be privately negotiated (closely held), or traded in the stock market (publicly held). Although Brazilian laws provide for other types of legal entities (e.g., unincorporated joint venture, Sociedade em Conta de Participação, etc.), these types are preferred for offering limited liability for their quotaholders/shareholderspartners, clear legal framework, and solid governance mechanisms.
In general, the choice between a Limitada and S.A. depends on factors such as ownership structure, legal flexibility, cost and confidentiality considerations. In our experience, the Limitada is the most suitable corporate type for subsidiaries fully owned by a single shareholder (subsidiária integral), as it allows simpler incorporation procedures. Therefore, the requirements listed below are related to the incorporation of a Limitada. If needed, we can provide you with the requirements for the incorporation of an S.A.
a) Compliance for Incorporation of a Limitada
A Limitada can be formed with one (1) or more partners, also known as quotaholders, whether or not Brazilian resident individuals or legal entities. A non-resident partner must appoint a Brazilian resident (lawyer, or other partner or manager of the Brazilian company) as its legal representative, with powers to vote and deliberate on the quotaholders’ meetings, to receive service of process on behalf of the non-resident partner with respect to company matters, and to represent before Brazilian tax authorities. In addition, foreign partners must be registered before the Brazilian Central Bank and the Brazilian Revenue (Receita Federal do Brasil – RFB), with the obtainment of the related National Register of Legal Entity (Cadastro Nacional de Pessoa Jurídica – CNPJ).
Additionally, Limitada shall be managed by at least one (1) individual, and, since the enactment of Law Nº. 14.195/2021, this individual can be a foreigner citizen, including non-residents. In such case, it must be appointed a Brazilian resident as their legal representative.
The incorporation of a Limitada requires the execution of its Articles of Association (Contrato Social) in the Portuguese language. As required by law, some items must be necessarily included in the Articles of Association, including (i) the name of the partners and respective personal data; (ii) the name of the Limitada, which must include its purpose and the expression “Limitada” (or its abbreviated form “Ltda.”) and may not be identical or similar to the name of a pre-existing company; (iii) the address of the head office; (iv) the company purposes, which must be clearly described; (v) the company’s term of duration, which may be determined or indefinite; (vi) the company’ corporate capital and information about whether or not it is fully paid-in and the payment term of the subscribed capital; (vii) each partner’s participation in the corporate capital and a statement that the liability of each partner is limited to the company’s subscribed capital; and (viii) the person(s) who shall be the manager(s) of the company and their powers. There is no minimum capital requirement for incorporation, and dividends may be distributed proportionally or non-proportionally to the equity interest held by the quota holders, as agreed in the Articles of Association.
In general, no prior governmental consents or approvals are required for the incorporation of a Limitada. However, some specific types of entities (e.g., branches of foreign entities, foreign governmental authorities, among others) may be required to obtain prior consents or approvals before the Executive Branch of the Federal Government, which according to Section 1.124 of Law No. 10,406, of January 10, 2002 (“Brazilian Civil Code”), provided that no other term is set forth in the Law, this authorisation shall be deemed to have expired if such entity does not commence operating within twelve (12) months counted as of the publication of the authorisation. Depending on the activity to be performed by the legal entity, such as rendering of energy or telecommunication services, air companies, etc., it might be necessary to obtain prior approval or authorisation from regulatory agencies.
Although it is not mandatory, it is advised to proceed with two (2) feasibilities verification: (i) regarding the possibility of using the desired corporate name; and (ii) regarding the possibility of performing the intended activities at the place where the legal entity will be headquartered.
Upon conclusion of the aforementioned verification and once the partners or their legal representatives, as the case may be, execute the Articles of Association, the following steps have to be taken in order to have the company fully qualified to do business in Brazil:
- Obtainment of a form called Basic Entrance Document (Documento Básico de Entrada – DBE) within the Brazilian Revenue’s system, regarding the incorporation of the legal entity and appointment of the information described in the Articles of Association;
- Filing and registration of the Articles of Association with the competent Board of Trade having jurisdiction over the company, together with the powers-of-attorney from the foreign partners (which must be previously translated into Portuguese by an official translator and registered with the competent Registry of Deeds and Documents);
- The company must be registered with the following authorities, which depending on the State and Municipality may occur simultaneously with the aforementioned filing and registration:
- Federal tax authorities, which will grant to the company the National Register of Legal Entity (Cadastro Nacional de Pessoa Jurídica – CNPJ);
- State and Municipal tax authorities. If the company is be solely engaged in rendering services, the State tax identification may not be needed;
- Ministry of Labour;
- Social Security authorities; and
- Export-import agency if the company will be engaged in the importation or exportation of goods.
- The company must obtain a municipal license to do business. In certain Municipalities, this license is obtained together with the municipal tax identification, also, depending on the Municipality, the municipal license and the municipal tax identification may be obtained jointly with the CNPJ and the state tax enrolment; and
- Once the foreign equity investment is made, it must be registered within thirty (30) days with the Central Bank of Brazil for exchange control purposes.
As a full-service law firm, we have the required expertise to assist and advise your organisation with the incorporation of a company in Brazil.
b) Post Incorporation Registrations
Once the Articles of Association are duly filed and registered, and the aforementioned tax registration are obtained, the Limitada might be required to obtain certain licenses, authorisation and registration, depending on the characteristics of the activities to be performed and of the establishment where it will be located at. For instance, manufacturing activities may require environmental licenses, telecommunication services may require authorisation from the National Telecommunication Agency (ANATEL), hospitals, restaurants, pharmacies, cafeterias, and similar shall obtain municipal, state and/or federal sanitary licenses.
Also, any trademark, patent, industrial design and/or utility model used/developed by the company must be registered with the National Institute of Industrial Property (Instituto Nacional de Propriedade Intelectual – INPI), so it is protected and effective in relation to third parties.
Furthermore, after the incorporation of a Limitada, it must comply with the following periodic obligations:
- Limitadas must hold an annual quota holders meeting within four months subsequent to the end of each financial year, to review the management accounts and the company’s financial statements, which minutes must be filed with the competent Board of Trade for registration within twenty (20) days counted as of the date in which the meeting was held, so they are effective in relation to third parties since the date the minutes were executed. If the minutes are filed after this period, it will only be effective in relation to third parties as of the date of its registration.
- Every Limitada that receives any Foreign Direct Investment must be registered before Central Bank of Brazil. Only companies receiving foreign direct investment equal to or greater than USD 100,000 are required to register the investment before the Central Bank. If a company’s total assets are equal to or greater than BRL 100,000,000, it must submit an annual declaration in the Electronic System for Registration of Foreign Direct Investment (SCE-IED), until March 31, referring to the period ended on December 31st of the previous year. On the other hand, if the company that receives foreign direct investment has total assets equal to or greater than BRL 300,000,000, it must update its accounting and corporate information before the Central Bank four times a year, as follows: (i) by June 30th, referring to the period ended on March 31st; (ii) by September 30th, referring to the period ended on June 30th; (iii) by December 31st, referring to the period ended on September 30th; and (iv) by March 31st of the following year, referring to the period ended on December 31st of the previous year.
Finally, all companies that hold a CNPJ have a 30-day deadline, after its registration, to inform their Ultimate Beneficial Owner (UBO) to the Brazilian Internal Revenue Service. UBO means a directly or indirectly individual that owns, controls, or significantly influences the entity. For these purposes, significant influence is presumed when the individual holds directly or indirectly over 25% of the entity’s capital.
As a full-service law firm, we can assist any foreign company with this procedure.
4. Payroll and Benefits Providers
In Brazil, the vast majority of smaller employers outsource payroll and benefit responsibilities to third party companies. In what regards larger employers, they usually have their own internal teams processing payroll, however there are larger employers that prefer to outsource payroll and benefit responsibilities to third party companies who specialise in these areas. Depending on the preference, we would be happy to recommend payroll providers to fit your business’s requirements.
