Branch vs Subsidiary in Brazil: DREI Authorization Explained

Reviewed by Luiz Eduardo da Silva, director of LegalBR. Updated on 22 October 2026. About 9 minutes to read.

The choice between a branch vs subsidiary in Brazil comes down to one question: should the foreign company itself operate in Brazil, or a separate Brazilian company that it owns? A branch needs prior federal authorization and exposes the parent directly; a subsidiary is registered only at the state Board of Trade and keeps liabilities in Brazil. This guide sets out the DREI authorization file, the timeline and the ongoing duties of each vehicle.

The legal difference in one paragraph

A subsidiary is a Brazilian company, usually a limited company (Ltda) or a corporation (S.A.), with its own legal personality and its own assets. The parent is a partner and, in general, its risk is limited to the capital it invested. By contrast, a branch (filial or sucursal of a foreign company) has no separate personality. It is the foreign company operating in Brazil under articles 1,134 to 1,141 of the Civil Code. Consequently, a creditor of the branch is a creditor of the parent.

Brazil has no “representative office” regime. A foreign company that wants to carry on business in Brazil under its own name needs federal authorization; otherwise, it sets up a Brazilian company. Our overview of market entry options covers the alternatives that require no entity at all.

Branch vs subsidiary in Brazil side by side

On tax, both are taxed as Brazilian legal entities on their Brazilian profits, typically under presumed or actual profit. Neither can use the Simples Nacional regime. Dividends paid abroad by a subsidiary bear the 10% withholding tax in force since January 2026 (Law 15,270/2025); confirm with your tax advisers how the rule applies to profits a branch remits to its head office.

The DREI authorization file for a branch

Under IN DREI 77/2020, the foreign company applies for authorization to the federal government through the gov.br portal. The National Department of Business Registration and Integration (DREI) reviews the file. The application includes:

• the resolution of the parent’s competent body approving operations in Brazil, stating the activities and the capital allocated to Brazil;
• the full text of the parent’s articles or bylaws;
• a list of partners or shareholders and of all managers, with names, professions, domiciles and holdings, unless the home-country law prevents it;
• evidence that the company is validly incorporated under its home-country law;
• the resolution appointing the representative in Brazil, with a power of attorney to accept the conditions of the authorization, settle any matter and receive service of process;
• the representative’s declaration accepting those conditions;
• the parent’s latest balance sheet;
• proof of payment of the federal service fee.

Documents issued abroad must be authenticated under the law of their country, legalized (by apostille in Apostille Convention countries) and translated by a Brazilian sworn translator. See our guide on apostille and sworn translation. If the DREI finds a missing formality, it issues a requirement that the company must meet within 60 days.

Once authorized, the company files the authorization and its documents with the Board of Trade (Junta Comercial) of the state where the branch will operate. Under article 1,136 of the Civil Code, it cannot start operating before that registration. Then come the CNPJ, state and municipal registrations, the bank account and the registration of the allocated capital with the Central Bank, which has specific guidance for branches of foreign companies in its SCE-IED manual.

How the subsidiary route works

For a subsidiary, there is no federal authorization. The foreign parent obtains its own CNPJ, appoints a legal representative in Brazil, signs the articles, and the company is registered at the Board of Trade and with the Federal Revenue. The foreign capital is then paid in through a foreign exchange contract and declared in SCE-IED.

The timeline is shorter. Once the apostilled documents arrive in Brazil, our team typically has the company ready to operate within 15 to 30 days, unless the activity requires a specific license. Our step-by-step guide on opening a business in Brazil details each stage.

The subsidiary also offers flexibility later. Investors can enter by buying quotas or shares, the company can be sold as a whole, and group reorganizations follow ordinary corporate procedures.

Ongoing duties and running cost

The set-up difference is visible on day one; the maintenance difference shows up every year. In practice, a branch carries duties that a subsidiary does not:

• Changes at the parent: amendments to the parent’s articles or bylaws require federal approval through the same gov.br channel, with the resolution and the service fee.
• Publications: under article 1,140 of the Civil Code, the company must reproduce in Brazil the financial statements and management acts it publishes under its home-country law, and publish the balance sheet and results of its Brazilian establishments, under penalty of losing the authorization.
• Permanent representative: the branch must always have a representative in Brazil with powers to settle any matter and receive service (article 1,138), so turnover in that role needs immediate replacement.
• Capital allocated: changing the amount allocated to Brazil is an amendment to the authorization terms.

A subsidiary, in turn, holds its annual accounts approval, files corporate acts at the Board of Trade, keeps its e-BEF and SCE-IED data current, and maintains the legal representative of its foreign partners. Both vehicles keep accounting, tax returns and payroll filings under the same rules.

The 2026 alphanumeric CNPJ

Normative Instruction RFB 2,229/2024 created an alphanumeric CNPJ. The structure keeps 14 characters, but the first 12 may combine letters and numbers. The Federal Revenue generated the first alphanumeric CNPJ on 31 July 2026, and the rollout is gradual: new registrations may still receive numeric numbers for a while. Existing CNPJs do not change.

For a foreign group setting up a branch or a subsidiary now, this has practical effects:

• Parent systems: ERP, consolidation, treasury and vendor master files must accept letters in the CNPJ field.
• Banks and KYC: payment files, intercompany contracts and onboarding forms abroad may validate the number as digits only.
• Counterparties: Brazilian customers and suppliers are adapting their systems too, so test invoicing and payments early.

When a branch beats a subsidiary in Brazil

A subsidiary is the default for most foreign groups. Our guide to the types of companies in Brazil explains why. A branch is worth considering mainly when:

• a regulator, a contract or a public tender requires the foreign entity itself to be present, for example to rely on its own credentials;
• the group wants Brazilian operations inside the parent’s balance sheet for a specific accounting or tax reason confirmed by its advisers;
• the activity is limited in scope and the parent accepts direct exposure.

Conversely, some activities exclude a branch. For example, mining rights in Brazil may be granted only to Brazilians or to companies incorporated under Brazilian law with head office and management in Brazil (Constitution, article 176). Check sector rules before choosing.

Decision steps

1. Check sector rules

   Confirm whether your regulator, licenses or tenders require a Brazilian company or accept an authorized foreign company.

2. Weigh liability

   Decide whether the parent can accept direct exposure to Brazilian tax, labor and contract claims.

3. Compare timelines

   Set the federal authorization period against your commercial start date.

4. Model the tax position

   Ask tax advisers to compare profit remittance, financing and exit for each vehicle.

5. Plan the documents

   List what the parent must approve, apostille and translate, and who will be the representative in Brazil.

Common mistakes

• Choosing a branch to save time: the federal authorization makes it the slower route in almost every case.
• Treating a branch as a liaison office: there is no lighter status; an authorized branch has the full set of Brazilian obligations.
• Weak powers of attorney: the representative’s powers must cover accepting the authorization conditions, settling any matter and receiving service of process.
• Unlegalized documents: files without apostille or sworn translation receive requirements and lose weeks.
• Forgetting the parent’s later changes: a new name, new bylaws or a merger abroad must be approved in Brazil, or the branch’s records fall out of date.
• Missing publications: failing to reproduce the parent’s financial statements in Brazil puts the authorization at risk.
• Assuming the capital is automatically registered: the allocated capital must also be reported to the Central Bank. See our SCE-IED guide.

Questions investors ask