Annually Brazilian companies must deliver numerous ancillary declarations, and the content of this information may vary according to government requirements. This fact makes us visualize the Big-Data of information that the Brazilian government owns and that easily leads us to conclude that its breadth, more and more, has been growing.
Labor, accounting, tax and financial information: The Brazilian government seeks to know and understand everything!
Therefore, when we speak of Electronic Declaratory Registration (RDE), we enter into the obligations related to the rendering of accounts of financial transactions. The RDE is nothing more than a system of the Central Bank of Brazil that registers all operations of foreign capital in Brazil or of Brazilian capital abroad. The records are classified into four pillars:
- Brazilian Capitals Abroad (RDE-CBE)
- Investments in Portfolio (RDE-PORTFOLIO)
- Registration of Financial Operations
- Foreign Direct Investment (RDE-FDI)
The last one, RDE-IED, is the manifestation of investments of foreign origin in Brazilian companies. For this type of declaration, it is understood that a Brazilian company has support in the capital from investors (whether individuals or companies) who do not reside in Brazil.
The frequency of this declaration is annual or quarterly, depending on the size of the company.
Updates of declarations must be made always that the receiving company makes a capital increase, initial investment, updating of shareholders’ equity or capital, payment of dividends or interest on capital, purchase or sale of companies and, finally, dissolution/sale off. Besides, every time that there is a return of capital abroad.
Deadlines for updating the RDE-IED Registry
Here, we need to separate the submission of events into two categories: Registration Updates and Update of Periodic Information.
Registration Updates: Updates are intended for events that change the foreign investor’s shareholding, for example. Mandatory, the updating must occur within 30 days.
Regarding the changes related to foreign exchange operations or international transfers in Reais (BRL), the deadline starts on the same day of liquidation from the exchange transaction or bank transfer. The update also must occur within 30 days.
Update of Periodic Information: here we have two scenarios for the registration. The first, for companies that do not reach the ceiling of BRL 250,000,000.00. The second possibility covers companies with assets or shareholders’ equity equal to or bigger than BRL 250,000,000.00.
For companies receiving of Foreign Direct Capital and possessing assets equal or superior to BRL 250,000,000.00, the following schedule applies:
- Until March 31, relative to the base date of December 31 of the previous year;
- Until June 30, as of the base date of March 31;
- Until September 30, pertinent to the base date of June 30;
- Until December 31, applicable to the base date of September 30;
If the deadline for delivery of the event coincides with holidays, weekends or days when there is no expedient at the Central Bank of Brazil, the deadline will be extended until the first working day thereafter.
Companies that have assets below of 250 million, the declaration must be sent annually, until March 31st.
RDE-IED Portal: Registering your company
Firstly, if the investor company does not yet have a CNPJ (National Registration of Legal Entities), it must be registered at CADEMP and forward a copy of its Article of incorporation, or registration certificate to the e-mail address firstname.lastname@example.org. If the investor is a natural person, it is necessary that it has a CPF (Individual Taxpayer ID), issued directly at the IRS or through diplomatic representations of Brazil in your country.
Moving forward, the next step is to accredit the company receiving the investment in the SISBACEN Portal. After the accreditation, is made the data inclusion of the foreign investor, corporate structure, and other corporate information are included.
With this, you just need to fill in the following information:
1. Current Corporate Structure: Registration data of all shareholders, counting on active or inactive investors (residing on Brazilian territory), active or inactive, paid-in capital, shareholders’ equity, and the company’s cadastral status. Corporate events (capitalizations, assignments and swaps, corporate reorganization, etc.) must also be registered.
2. Economic and Financial Statement: At this stage, the following data is presented by the receiving company:
|Information to declare||Description|
|Paid-in Capital||Specify the total paid-in capital of the receiver, including shares or quotas, properties of equity instruments|
|Equity||Inform the total value of the net worth of the receiving company;|
|Active assets||The total value of the receiving company’s assets;|
|Liabilities assets||The total amount of liabilities due (without equity of the company);|
|Profits and Losses||–|
|Shared Profit on the base period||–|
|The estimated value of the company||–|
|Valuation Method||Specify the company’s valuation method based on its estimated value. At this stage, it does not matter if the model applicable to your company is: Stock exchange listing; Existing negotiation; Discounted cash flow; Other forms of evaluation; Net worth;|
|Income and expenses arising from the evaluation of assets (impairment)||–|
|Income and expenses from exchange variation||–|
|Participation in voting power (%)||Voting power basically implies the voting capital of the organization. That is, the volume of common shares that gives voting power and participation in the company’s corporate resolutions;|
|Investor’s country of origin||–|
|Country of controller||–|
3. Management of mandatory agents: The function of representatives of the recipient and the role of agents of the investor.
4. Investment Transactions;
As another arm of the government for information gathering, the RDE-IED is fundamental not only to ensure respect for the legal aspects of financial operations in Brazil but also for the correct operation of businesses that have foreign capital.
This is a summary of what you are faced with when declaring RDE-IED. The level of the peculiarity of the information goes beyond the above summary. Therefore, we recommend that you contact your legal representative.
Failure to comply with the RDE-IED rules, or the provision of incongruent, incomplete or outdated information implies in penalties established by Laws Nos. 4,131/ 1962 and 11,371/2006, and Circular 3,857/2017.