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.
Some previsions of Brazilian Internet Civil Code, Law 12.965/13, stipulate sanctions, applicable even to companies overseas (that choose not to set up in the country), 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.
§ 1st 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.
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