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moreIn December 07th, 2016 and January 24th, 2017 the Central Bank issued the Circular nº 3.814 and the Circular nº 3.822 which amended the regulations regarding the RDE-IED (Electronic Registration Statement - Direct Foreign Investment) and created new obligations that must be observed in the current year. These alterations were motivated under the need to improve and simplify the RDE-IED system, which is an electronic registration statement of direct foreign investments in a Brazilian company.
Therefore, the Central Bank developed an automatic registration of foreign investments for the operations involving: a) the inflow of foreign capital; b) the conversion into direct foreign investment; c) the transfers regarding registered foreign capital (such as the conversion of foreign loan into direct investment); d) the international shares and stocks; and e) the remittance of profits and dividends, interests on own capital and capital return. These registers are made automatically using the information presented on the exchange operation or on the international transfer into national currency registers.
The Circular nº 3.814/2016 revoked the obligation of the prior registration at RDE-IED regarding the payment to foreign investors of profits, dividends, interests on own capital and investments return by capital reduction or dispose to nationals. Therewith, two bureaucratic measures are now extinct to the following kinds of remittance to abroad: prior registration of the remitted amount and later registration of the actual amount remitted.
In other cases, however, the manual recording at RDE-IED system will still be necessary within 30 days from the respective event, such as: (a) the entry of goods with the purpose of capitalization of Brazilians societies, (b) corporate reorganizations e (c) profits or dividends payments, (d) participation transfer or capital restitution using foreign resources or whose resources are used for making payments in the country.
Despite the fact that this change resulted in the automation of a few registers, the Circular nº 3.814 of 2016 brought the obligation of periodic reporting regarding information never before imposed. In this regard, all companies that receive direct foreign investments are now obligated to maintain updated its paid-in capital, equities amount as well as the paid-in capital made by foreign investors at RDE-IED system, on annual basis, at least.
This update shall be made within 30 day period from the event that chngede the participation of the foreign investor in the company and periodically, accordingly to the deadlines below listed: (a) the companies which received foreign capital whose net worth and assets are lower than R$ 250 million must update their data annually until March 31st, using the reference date of December 31st, of the prior year; On the other hand (b) the companies which received direct foreign investments with net worth or assets equal or higher than R$ 250 million must update their data quarterly, noting the following schedule: (i) until June 31st (using the reference date of March 31st); (ii) until September 30th, (using the reference date of June 30th); (iii) until December 31st (using the reference date of September 30th); and (iv) until March 31st of the following year (using the reference date of December 31st).
It is important to emphasize that the periodic information must be observed already in 2017 year regarding the reference date of December 31st 2016, since both Circulars came into force on January 30th, 2017. Last, but not least, as per as to the new regulations the liability for the registration procedure of foreign investment lies with the company that receives the investment and not with the foreign investor anymore.
EQUIPE RSM BRASIL
Marcelo Sampaio - marcelo.sampaio@rsmbrasil.com.br
Head of TAX
Viviane Pereira -viviane.pereira@rsmbrasil.com.br
Legal Consultant
