Choosing Between a Branch and a Subsidiary in Brazil

Foreign companies expanding into Brazil face a key decision: open a local branch of the foreign company or form a separate Brazilian subsidiary. While both options are available, forming a subsidiary is generally the preferred approach.

A subsidiary is a new legal entity formed under Brazilian law. Although it’s owned by the foreign parent company, it operates independently. A branch, on the other hand, is not a new company. It’s simply the foreign entity registered to operate in Brazil.

To open a branch, a company must formally apply to the federal government. This process requires extensive documentation, including proof of the company’s existence abroad, a copy of its bylaws or articles of incorporation, details about its officers and directors, and recent financial statements - all properly legalized and translated into Portuguese.

Branches often make sense for companies intent on preserving a unified global brand or corporate structure. Think of international banks that operate under the same name around the world. Still, even giants like Apple, Nestlé, and Toyota have opted to form subsidiaries in Brazil.

Forming a subsidiary is typically faster, easier, and more flexible than setting up a branch. No federal government approval is required. Instead, the company is registered directly with the state trade board, or junta comercial, often in a matter of days.

Ultimately, there’s no right or wrong way to do it. Whether to register a branch or form a subsidiary is a matter of choice and depends on a company’s goals and long-term strategy for doing business in Brazil.