Companies With Investments In Brazil: Remind Your Employees Residing In The Country To Declare Assets Held Abroad By April 5th, 2013

Brazilian companies, Brazilian individuals, and foreigners residing temporarily or permanently in Brazil who have assets abroad must submit the Declaration of Brazilian Capital Abroad (Declaração de Capitais Brasileiros no Exterior - the "Declaration") to the Brazilian Central Bank ("BACEN"). If a resident has assets in an amount equivalent to or more than US$100,000, that resident must file an annual Declaration. If the assets are equivalent to or more than US$100,000,000, that resident must file quarterly Declarations. The penalties for non-compliance are significant: up to R$250,000 (approximately US$125,000) per occurrence. Please note that the submission of this Declaration is in addition to, and separate from, the Income Statement filed with the Brazilian Revenue Agency (SRF) on an annual basis.

Who Must File the Declaration?

Resolution BACEN n. 3.854/2010 provides that companies incorporated in Brazil and individuals resident in Brazil, as defined by the Brazilian tax legislation, must present the Declaration to BACEN annually if they hold assets abroad in an amount equal or superior to US$100,000, and quarterly if they hold assets abroad in an amount equal or superior to US$100,000,000.

Normative Instruction SRF n. 208/2002 defines as resident in Brazil the individual who:

a) resides in Brazil permanently;

b) has left the country to work abroad in service to the Brazilian government;

c) has entered the country under a permanent visa (for example, as an investor or manager of a Brazilian subsidiary of a foreign company);

d) has entered the country under a temporary visa:

i. to work under an employment contract; or

ii. and stays in the country for more than 184 days within the last 12 months;

e) is a Brazilian citizen who became a non-resident and subsequently returns to Brazil with the intention to remain permanently; and

f) has left the country temporarily or permanently without presenting the Declaration of Definitive Departure of the Country, as prescribed by the Brazilian legislation (only during the first 12 months after departure).

What Assets Must Be Declared?

The Declaration must include deposits in bank accounts, loans, mortgages, leasing transactions, direct investments, portfolio investments, investments in derivatives, real estate, among others.

Documents proving the existence and amount of these assets, such as corporate, accounting and financial documents, must be kept by the declarant for five years after the base date...