Entering the Brazilian Market: Subsidiary, Branch, Distributor or Employer of Record? (2026)

Reviewed by Luiz Eduardo da Silva, director of LegalBR. Updated on 15 October 2026. About 11 minutes to read.

A Brazil market entry can start small, with a distributor or a commercial agent, or go straight to a subsidiary that invoices and hires locally. Each route trades control for speed and cost, and Brazilian law adds its own twists: agents protected by a 1965 statute, no simplified representative office and a branch regime that needs federal authorization. This guide compares the routes under the rules in force in 2026 and shows how to choose.

Brazil market entry routes at a glance

Brazil is a large, protected and heavily regulated market, so the entry route shapes your prices, your tax exposure and your exit options. The table compares the six routes foreign companies use most.

These routes are not exclusive. For example, many groups start with a distributor, add an agent to manage key accounts and later open a subsidiary that takes over the distribution. Planning that sequence from the start avoids expensive terminations later.

Exporting through a distributor or importer

The simplest entry is to sell to a Brazilian company that imports and resells your products. The Brazilian buyer is the importer of record: it needs Siscomex registration (RADAR) with the Federal Revenue, clears customs and pays import duties and taxes. As a result, you take no tax or customs exposure in Brazil, but you also give up the client relationship and part of the margin.

Distribution and agency agreements are governed by articles 710 to 721 of the Civil Code. Several rules surprise foreign exporters:

• Exclusivity by default. Unless the contract says otherwise, the law presumes territorial exclusivity in both directions.
• Notice for open-ended contracts. A contract without a fixed term can be terminated with 90 days’ notice, but only after a period compatible with the investments the distributor made (article 720).
• Special regimes. Vehicle distribution follows its own statute (Law 6,729/1979), with much stronger protection for dealers.

Before appointing a partner, register your trademark with the National Institute of Industrial Property (INPI). Brazil follows a first-to-file system, and a distributor that registers your brand in its own name gains leverage in any later dispute.

Commercial agents and Law 4,886/1965

A commercial agent finds clients and takes orders on your behalf, while you invoice and ship. Independent commercial representation is regulated by Law 4,886/1965, which protects the agent much like an employee in some respects.

The indemnity grows with the relationship, so a successful agent becomes expensive to replace. In addition, if the agent works with subordination, fixed hours and exclusivity to a single principal, labor courts may treat the relationship as employment. Therefore, contracts should reflect real autonomy, and the indemnity should be budgeted from the first year.

Employer of record: hiring before you have an entity

An employer of record (EOR) is a Brazilian company that formally employs people who work for you. It registers them, runs payroll, deposits FGTS and reports through eSocial, and it charges you a monthly fee on top of labor costs. EOR is a fast way to place a country manager or a small team while you test the market.

However, Brazil has no specific EOR statute. Providers rely on the general rules on outsourcing of services, which allow a company to outsource any activity, including its core activity (Law 6,019/1974, article 4-A, as amended in 2017). That framework carries limits:

• Subsidiary liability. The company that benefits from the work answers for labor debts if the provider fails to pay.
• Direct subordination. If your managers give daily orders directly, a court may recognize employment with your group.
• Temporary staffing is different. A temporary work contract lasts up to 180 days, extendable by 90, and only covers replacement of staff or extraordinary demand.
• No local invoicing. The EOR cannot sell in your name. If your team negotiates and closes deals in Brazil for the foreign company, questions arise about the foreign company operating in Brazil without authorization and about tax exposure.

In practice, EOR works best as a bridge of a few months to a year, with a subsidiary planned as the next step. Our guide on hiring employees in Brazil explains CLT contracts and employer costs.

Subsidiary: the standard route for Brazil market entry

A subsidiary is a Brazilian company owned by the foreign group. It invoices clients in Brazil, hires under Brazilian labor law, holds licences and contracts in its own name and limits the parent’s liability to the capital invested. For most foreign groups, it is the long-term answer.

The usual vehicle is a single-member limited company (SLU) owned by the parent, or a limited company (Ltda) when there are two or more partners. A corporation (S.A.) suits groups that expect outside investors. Our guide on types of companies in Brazil compares them in detail.

1. Register the foreign partners

   The parent obtains a CNPJ and foreign individuals obtain a CPF, each with a resident legal representative.

2. Prepare documents abroad

   The parent’s corporate documents and powers of attorney are apostilled and translated by a Brazilian sworn translator.

3. Register the company

   The articles are filed with the Board of Trade (Junta Comercial), followed by the company’s CNPJ and municipal and state registrations.

4. Open the bank account and bring in capital

   The capital is remitted from abroad and registered with the Central Bank in SCE-IED.

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. On taxes, keep in mind that Simples Nacional is not available when a legal entity is a partner, so a subsidiary uses Lucro Presumido or Lucro Real, and dividends paid abroad bear 10% withholding tax since January 2026. Our corporate tax guide explains the regimes, and our step-by-step formation guide covers each filing.

Branch of the foreign company

Some executives ask for a “representative office”. Brazilian law has no such light regime. Under articles 1,134 to 1,141 of the Civil Code, a foreign company cannot operate in Brazil without authorization from the federal government, a power exercised through the National Department of Business Registration and Integration (DREI) under IN DREI 77/2020.

A branch is legally the foreign company itself. Therefore, the parent answers directly for the branch’s obligations, the application requires extensive documentation and capital allocated to Brazil, and authorization takes months before registration with the Board of Trade. A branch makes sense when a regulator, a tender or a contract requires the foreign entity itself to be present. Otherwise, a subsidiary is faster and keeps the risk in Brazil.

Acquisitions and joint ventures

Buying a Brazilian company

An acquisition brings clients, licences and a team on day one, but it also brings the target’s history. Due diligence in Brazil covers federal, state and municipal tax certificates, labor claims, lawsuits, protests, corporate books and environmental issues. Labor and tax liabilities in particular can follow the business even in an asset deal.

Large deals may need prior approval from the Administrative Council for Economic Defense (CADE). Under Law 12,529/2011, notification is mandatory when one group had gross revenue in Brazil of at least R$ 750 million and another of at least R$ 75 million in the previous year, and the deal cannot close before approval. As of October 2026, those thresholds, set in 2012, are still in force, although the government is studying an increase. For a ready-made vehicle without operations, see our guide on shelf companies.

Joint ventures

A joint venture with a Brazilian partner can open access to clients, licences or public contracts. It can take two forms:

• Contractual. A consortium (consórcio) under articles 278 and 279 of the Corporations Law has no legal personality and suits specific projects, such as infrastructure or energy works.
• Corporate. A jointly owned Ltda or S.A., governed by its articles and a shareholders’ agreement. In an S.A., agreements filed at the company’s head office bind the company under article 118 of Law 6,404/1976.

Whatever the form, negotiate deadlock resolution, transfer restrictions, non-compete terms and exit mechanisms before signing. Those clauses decide who controls the Brazilian business when the partners disagree.

How to choose your Brazil market entry route

Five questions usually settle the choice:

1. Do you sell goods or services? Goods can reach Brazil through an importer. Services sold from abroad trigger taxes on the client’s side, such as withholding income tax, contributions on imported services and, in some cases, CIDE, which makes a foreign invoice less competitive than a local one.
2. Must you invoice locally? Large Brazilian clients and public bodies often prefer or require a Brazilian supplier with a CNPJ. If so, a subsidiary is unavoidable.
3. Do you need staff in Brazil? For one or two people over a short period, an EOR can work. For a team that sells and manages clients, a subsidiary is safer.
4. Is the activity regulated? Financial services, health products, energy and telecoms require licences that are granted to Brazilian entities, sometimes with minimum capital.
5. Is there a partner who adds real value? Then a joint venture or a distribution agreement may beat building alone, provided the exit is negotiated up front.

Finally, consider the people. A subsidiary needs at least one administrator, who may live abroad if a resident representative is appointed. Read our guide on choosing a legal representative before you decide who signs for the Brazilian company.

Questions investors ask