• Deadline for Reporting Final Beneficiary to Brazilian Federal Revenue Ends on December 31
  • December 28, 2018
  • Law Firm: - Office
  • Are you a United States entity with significant capital or controlling interest in a Brazilian subsidiary? Year-end reporting requirements are fast approaching.

    All entities enrolled before the Brazilian Corporate Taxpayers’ Registry (CNPJ) must inform their ultimate beneficiaries owners (“Final Beneficiary”) until the date of December 31, 2018, by completing the form available in the system in addition to the support documents that may be requested by the Brazilian Federal Revenue during the process of analyzing the information provided.

    According to the Brazilian Federal Revenue normative, the Final Beneficiary is defined as the individual that holds control or significantly influences the legal entity to be registered before the CNPJ, which occurs when the individual (i) holds, directly or indirectly, more than 25% of the entities’ corporate capital; or (ii) holds or exercises, directly or indirectly, preponderance in the corporate decisions and has the power to appoint the majority of the entities’ officers, even without controlling it; or (iii) there are also legal entities (not individuals) treated as Final Beneficiaries for the purposes of the normative, such as publicly-held companies, non-profit entities, multilateral organizations, governmental entities, etc.

    In case of the foreign entities do not provide the required information within the term determined, they may have the CNPJ suspended, preventing the execution of banking transactions (these entities will not be able to negotiate with any financial institutions, as well as make use of checking accounts, financial investments, and take bank loans).

    The requirement was established by the Federal Revenue through the Normative Ruling No. 1,634 of May 6, 2016, and its amendments, as well as by ADE Cocad No. 9/17. However, its legality, it is being subject of discussion, just as the types of supporting documents that will be accepted by the Federal Revenue.

    We also highlight that, as of December 24, 2018, the Brazilian Federal Revenue will operate with reduced public service system, due to the final year’s holidays, in accordance with the Ministry of Planning Regulation No. 10.960/2018.