Setting up a Cyber Business in Brazil

In essence, a business can operate in Brazil by two ways: being a company registered in Brazil or not. The preference to establish a formal branch in the country will be determined by the actual needs of the business: if the venture needs labor force in the country, the need of a physical structure such as a back office and commercial representation or due to taxation planning strategies. Normally, this analysis is done previous to the decision of setting up in Brazil. If the setting up will be the case, the core rule of business regulation in Brazil will apply: the registration process begins at the municipality level of the city where the company is being implemented, where it is necessary to check the availability of the company’s name and a suitable, authorized office address for the activity. If any city may suit, or a number of them can, an analysis of the best fiscal treatment may be deemed necessary. The setting up continues with the societary form and rules of the branch being registered at a state commercial board and obtaining a CNPJ (fiscal ID) before the federal treasury (Receita Federal). There will be the need of Brazilian domiciled representative and an operational address.

Some previsions of Brazilian Internet Civil Code, Law 12.965/13, stipulate sanctions, applicable even to companies overseas, if its posture is deemed to have caused damages, in a certain online operation that involves at least one terminal located in Brazil (article 11). This is the unofficially translated text:

Article 11. Any process of collection, storage, custody and treatment of records, personal or communications data by connection providers and Internet applications providers, in which at least one of these acts occurs in the national territory, shall respect Brazilian law, the rights to privacy, and the confidentiality of personal data, of private communications and records.

§1º The provisions aforementioned apply to data collected in national territory and to the content of communications, in which at least one of the terminals is located in Brazil.

Therefore, Brazilian Law must be observed in the event an e-business has clients in Brazil, under penalty of certain civil and economical sanctions. These penalties can be enforced directly in Brazil and/or internationally,  through international judicial cooperation procedures, depending on the nature of the sanction in each case.

The law stipulates certain obligations of record keeping  of connection logs and app operations, among other provisions, even if the online service provider is foreigner, such as the contained in articles 13 and 15.

The Civil code of the Brazilian Internet also determines, in its article 8º, that it is deemed invalid any clauses that “in adhesion contracts, do not offer an alternative to the user-contractor to adopt the Brazilian courts for resolving disputes arising from services rendered in Brazil.”

This Brazilian specific law for the  Internet has been considered a landmark law and is among a few other national laws with specific principles and guidelines for the use of internet. Good or bad, is the legal standard for all those wanting to navigate in the huge Brazilian online market  waters.

For more information and assistance in digital compliance in Brazil, contact us through the form  or read more on the suggested articles below.

Our firm is prepared to legally conform your services specifically to the Brazilian Market.