Last November, the prestigious “The Economist” magazine published a very interesting report about Brazilian economy. When most countries were still fighting recession (especially in Europe), Brazil already had shown some growth and early recuperation. Positive signs are seen in many fronts: Boom in exports, new oil fields discoveries, currency stabilization ( for more than 10 years now) , and diminishing of the social gap ( still timid, but constant). In this scenario, Rio de Janeiro is playing a vital role. In addition to the upbeat on the macro-economy state of affairs, billions of dollars in investment are also expected due several gigantic events which will take at the wonderful city.




These events will generate innumerous business opportunities necessary to support them ( construction, Rio real estate, services, etc. ) Some of these events include the FIFA 2014 Soccer World Cup, the Summer Olympic Games of 2016, and the 5th Military World Games, which will take place next year in July. (This year has already showed a preview of this Rio frenzy, with the Red Bull Air Racing and the Speed Boat Class-1 events, to mention a few). So next time when you are thinking about investment possibilities, don´t leave Rio de Janeiro out of your plans or you may regret it. The time to samba is now! Below you will find a copy of this famous “The Economist” article:



WHEN, back in 2003, economists at Goldman Sachs bracketed Brazil with Russia, India and China as the economies that would come to dominate the world, there was much sniping about the B in the BRIC acronym. Brazil? A country with a growth rate as skimpy as its swimsuits, prey to any financial crisis that was around, a place of chronic political instability, whose infinite capacity to squander its obvious potential was as legendary as its talent for football and carnivals, did not seem to belong with those emerging titans. Now that skepticism looks misplaced.



China may be leading the world economy out of recession but Brazil is also on a roll. It did not avoid the downturn, but was among the last in and the first out. Its economy is growing again at an annualized rate of 5%. It should pick up more speed over the next few years as big new deep-sea oilfields come on stream, and as Asian countries still hunger for food and minerals from Brazil’s vast and bountiful land. Forecasts vary, but sometime in the decade after 2014—rather sooner than Goldman Sachs envisaged—Brazil is likely to become the world’s fifth-largest economy, overtaking Britain and France. By 2025 São Paulo will be its fifth-wealthiest city, according to PwC, a consultancy.

Below, the official logo of the Summer 2016 Olympic Games. Some of the events will be held at the Flamengo district in Rio.



And, in some ways, Brazil outclasses the other BRICs. Unlike China, it is a democracy. Unlike India, it has no insurgents, no ethnic and religious conflicts nor hostile neighbours. Unlike Russia, it exports more than oil and arms, and treats foreign investors with respect. Under the presidency of Luiz Inácio Lula da Silva, a formertrade-union leader born in poverty, its government has moved to reduce the searing inequalities that have long disfigured it. Indeed, when it comes to smart social policy and boosting consumption at home, the developing world has much more to learn from Brazil than from China. In short, Brazil suddenly seems to have made an entrance onto the world stage. Its arrival was symbolically marked last month by the award of the 2016 Olympics to Rio de Janeiro; two years earlier, Brazil will host football’s World Cup.

Below, an impressive and prized photo from Jim Skeas:




At last, economic sense

In fact, Brazil’s emergence has been steady, not sudden. The first steps were taken in the 1990s when, having exhausted all other options, it settled on a sensible set of economic policies. Inflation was tamed, and spendthrift local and federal governments were required by law to rein in their debts. The Central Bank was granted autonomy, charged with keeping inflation low and ensuring that banks eschew the adventurism that has damaged Britain and America. The economy was thrown open to foreign trade and investment, and many state industries were privatised. All this helped spawn a troupe of new and ambitious Brazilian multinationals (see our special report).

Some are formerly state-owned companies that are flourishing as a result of being allowed to operate at arm’s length from the government. That goes for the national oil company, Petrobras, for Vale, a mining giant, and Embraer, an aircraft-maker. Others are private firms, like Gerdau, a steelmaker, or JBS, soon to be the world’s biggest meat producer.


Below them stands a new cohort of nimble entrepreneurs, battle-hardened by that bad old past. Foreign investment is pouring in, attracted by a market boosted by falling poverty and a swelling lower-middle class. The country has established some strong political institutions. A free and vigorous press uncovers corruption—though there is plenty of it, and it mostly goes unpunished. Just as it would be a mistake to underestimate the new Brazil, so it would be to gloss over its weaknesses. Some of these are depressingly familiar.




Government spending is growing faster than the economy as a whole, but both private and public sectors still invest too little, planting a question-mark over those rosy growth forecasts. Too much public money is going on the wrong things. The federal government’s payroll has increased by 13% since September 2008. Social-security and pension spending rose by 7% over the same period although the population is relatively young. Despite recent improvements, education and infrastructure still lag behind China’s or South Korea’s (as a big power cut this week reminded Brazilians). In some parts of Brazil, violent crime is still rampant.

National champions and national handicaps

There are new problems on the horizon, just beyond those oil platforms offshore. The real has gained almost 50% against the dollar since early December. That boosts Brazilians’ living standards by making imports cheaper. But it makes life hard for exporters. The government last month imposed a tax on short-term capital inflows. But that is unlikely to stop the currency’s appreciation, especially once the oil starts pumping. Lula’s instinctive response to this dilemma is industrial policy. The government will require oil-industry supplies—from pipes to ships—to be produced locally. It is bossing Vale into building a big new steelworks. It is true that public policy helped to create Brazil’s industrial base. But privatisation and openness whipped this into shape. Meanwhile, the government is doing nothing to dismantle many of the obstacles to doing business—notably the baroque rules on everything from paying taxes to employing people. Dilma Rousseff, Lula’s candidate in next October’s presidential election, insists that no reform of the archaic labour law is needed (see article).




And perhaps that is the biggest danger facing Brazil: hubris. Lula is right to say that his country deserves respect, just as he deserves much of the adulation he enjoys. But he has also been a lucky president, reaping the rewards of the commodity boom and operating from the solid platform for growth erected by his predecessor, Fernando Henrique Cardoso. Maintaining Brazil’s improved performance in a world suffering harder times means that Lula’s successor will have to tackle some of the problems that he has felt able to ignore. So the outcome of the election may determine the speed with which Brazil advances in the post-Lula era. Nevertheless, the country’s course seems to be set. Its take-off is all the more admirable because it has been achieved through reform and democratic consensus-building. If only China could say the same.

Many foreigners when in Brazil, are worried about which taxes he is entitled to pay. In order to facilitate this understanding Belavista Rio published below a summary for real estate investors thinking about investing in Brazil. This post is composed of two sections. The first explains the types of taxes the real estate buyer will run into. The second part names these same taxes but with their original names in Portuguese language.

Generally speaking the taxes and associated costs involved in the buying property process are simple, but we always advise our customers to look for a professional advise of accredited real estate agents in Brazil , lawyers and accountants.




Photo by dckf in Flickr

In Brazil, taxes on ownership of real estate are generally lower than in most Western countries. As an owner of Brazilian real estate you will have to bear the following ongoing costs:

Brazilian Property Taxes

* Annual municipal real estate tax: All owners of Brazilian property (both residents and non-residents) must pay annual real estate tax to the local municipal authorities (" Imposto Predial e Territorial Urbano, IPTU). This usually works out as less than 1 percent of the properties assessed value.

* Income Tax: Tax for non-residents on income in Brazil is normally 25 percent (income tax is levied on a sliding scale of 15 to 27.5 percent) but is reduced to 15 percent for passive income such as from property rentals.

* Corporation Tax: There are various company structures through which you can purchase property in Brazil, all with varying liability to corporation tax. You should consult a tax advisor to see all the options.

* Inheritance Tax: English law states that real property (land and buildings) in Brazil are to be governed and dealt with by local Brazilian law when it comes to inheritance tax.



Photo of Class 1 Speed Boats at Guanabara Bay, in front of Flamengo Beach by Belavista-Rio


Other Brazilian property costs

* Lettings and management charges: There are lots of rental and property management agencies to choose from in the key Brazilian tourist hot-spots and many estate agents will also offer a property management service, including cleaning and maintenance. They may also offer a tenant-finding service for you, at an extra charge. Shop around for the best rates and quality of service.

* Maintenance: Your maintenance costs will depend on the level of maintenance required (or preferred by you) on your property. A full-time housekeeper (5 days a week, 8 hours a day) will cost you $60 to $120 per month and to have someone simply check on the home weekly (cut the grass, etc.), you will probably spend $25 to $60 per month. Alternatively, you can employ a groundskeeper who will live on the property. These property managers will maintain the house and safeguard it. In addition, they can perform helpful tasks while you are in residence, like grocery shopping and helping to arrange transport to and from the airport.



Photo above of Copacabana Umbrella by Neloqua in Flickr

Selling Property in Brazil

* Estate agent’s fees: Negotiation during property sales in Brazil can only be carried out by an accredited real estate agent. The estate agent?s commission is nearly always paid by the vendor, except in exceptional circumstances. Their commission rate (a percentage of the sale or rental value) is determined by the legislation of the local region, through the Real Estate Agents Regional Councils (CREI). Agents' fees normally charge between 5 and 6 percent of the purchase price. With new projects, real estate agents often receive only 3 to 4 percent from the developer.

* Capital Gains Tax: When real estate is sold in Brazil, vendors must pay tax on the capital gains they have made based on the property?s increase in value over the course of their ownership at a flat rate of 15 percent. This applies to residents and non-residents alike, in accordance with Brazilian legislation. However in practice, sales prices are often understated in the public title deed to avoid or minimize capital gains tax liability. Moreover, a new tax law has recently been introduced, exempting property sales from Capital Gains Tax in the instance where the proceeds are re-invested in another Brazilian property, although this is limited to a declared value of up to BRL180,000 (USD 76,000).

* Utility costs: Sellers are responsible for all the utility costs up until the time of sale.

* Notary fees: Usually paid for by the buyer, but make sure this is clear when you budget for the sale.




Photo of Sugar Loaf by Belavista Rio

Buying Property in Brazil

The Brazilian Real Estate buyer pays the following official transfer-related taxes which include:

* ITBI (Imposto de Transmissão de Bens Imóveis). This transfer tax is a municipal tax on transfers of real estate and rights to real estate. The amount varies from city to city, the average cost is three percent of the market value of the property, but can be higher. It is paid to the City Hall (Prefeitura).

* ITCMD (Imposto Sobre Transmissão Causa Mortis e Doação). State tax on transfers of goods on death-related inventories or donations of real estate. The amount varies from city to city, the average cost is four percent of the market value of the property, but can be higher. It is paid to the City Hall (Prefeitura).

* Costs of executing and registering the deed (between R$700 and R$800, for real estate valued between R$100,000 and R$150,000). It is paid to the Real Estate Registration Notary's Office.

* Brazilian Real Estate Accounting Tax is approximately R$800 for real estate valued between R$100,000 and R$150,000. It is paid to the Notary's Office (responsible for authenticating the purchase papers)

* Brazil´s Navy Alienation Fee: This fee is charged by the federal government for transactions involving real estate located on the coastline or up to 80 metres away from the coastline. It amounts to five percent of the total real estate value
* Municipal Alienation Fee. Some City Halls also charge alienation fees for real estate located in certain municipal areas. This fee is, on average, two percent of the total real estate value.

* Brazilian Bank Fees. If the real estate is acquired through bank financing, the buyer must also be prepared to pay the fees charged by the financial institution, such as real estate evaluation taxes, administrative taxes, credit-opening taxes, real estate insurance and life insurance.

Below, a beautiful panoramic view of the Flamengo neighborhood in Rio, which has seen an increase in its prices of apartments.

Natural Persons Register - Brazilian CPF Requirements

Before buying property in Brazil you will need a Brazilian ID number called a CPF. It is the Brazilian equivalent of a national insurance number or a social security number and can be obtained fairly simply. This number is also a legal requirement as it enables the property buyer to be uniquely identified for taxation and title purposes. Generally they are a few methods of obtaining a CPF.

As an overseas real estate buyer in Brazil, the first necessary step is to apply for a CPF (Cadastro de Pessoa Física). This is essentially an identity card with an attributable number linked to the Brazilian Tax Revenue Agency (Receita Federal). Its original aim was to be used as a form of identification for taxpayers but it has grown to become a necessity for all Brazilians (including those that fall under the non-tax paying threshold).

Below are some guidelines as to what the CPF is; how it can be obtained as well the implications of owning a number (regardless of whether you pay tax or not in Brazil). You may also come across the
‘e-CPF’ which is a card that enables you manage your affairs electronically (particularly useful if you are not based in Brazil).

BELOW, IMAGE - PHOTO OF CPF



Ownership of a CPF number will mean that the Brazilian government will have a record of your name / identity and you will be able to do the following:

• open a bank account (subject to certain visa restrictions);
• purchase Brazilian property / land;
• receive utility bills in your name;
• take our credit cards / loans (although access to
these may be restricted due to the fact that you are
not a Brazilian resident);
• obtain a Brazilian cell phone / telephony contract;
• obtain a Brazilian drivers license / register a vehicle;
• apply for employment;
• undertake day-to-day activities in Brazil such as
booking an internal flight or hiring a car from a local
company (which, more often than not,means you will
get a better deal than the tourist prices).

The number on the card is always eleven digits (the last two digits are the result of an equation of the nine previous ones). The government has several measure to test the validity of the number (there were formerly a number of people who would skew the number in order to evade tax) and, in order to prevent people obtaining more than one registration, the Receita Federal will verify your birth date, voting number and mother’s maiden name.

A CPF number can be obtained, on average, between 45-60 days and there are three main ways of applying depending on whether you want to do it through your nearest Brazilian Consulate; via an approved public owned body (Banco do Brasil or the Correio); or by direct use of a professional (acting as a power of attorney on your behalf):

1) Online Application (outside of Brazil)

You may find that procedures vary according to whichever jurisdiction you are in (Google the phrase ‘Brazil Consulate CPF [your country]’ and there will be detailed information) but the following instructions will apply to most cases:

(i) Print the application CPF form using this form:

CPF Application Form

(ii) Fill the form using a black ball point pen;

(iii) Make a photocopy for your own records and take the original along with your passport and birth certificate to the Brazilian Consulate. There will be a charge which will depend on which consulate you are applying through (should not be more than $50US).

Please note if you are planning on obtaining CPF numbers for other members of your family, you should refer to the Consulate to find out exactly what will need to be provided;

You will subsequently be sent a pin code which will enable you to access the number via the website. However,
this will not mean that you will be able to open a bank account, purchase real estate etc. as you will need to have possession of the plastic card. You will need to visit the Receita Federal in Brazil – taking your passport, birth certificate and address to mail the CPF card. You can expect to receive your card from anywhere between 2 weeks to 3 months. You can trace the progress of your application using the following link:

Trace the progress of your CPF application

1)... select ‘Exterior’, and then enter the receipt code number in the ‘Código de Atendimento‘ field and the date on the consular receipt in the ‘Data de Atendimento‘ field.)

Banco do Brasil branches photo below, where CPF forms can be found...



2) Apply via the Banco do Brazil ( Bank of Brazil ) or Correio ( Brazil Post Office)

If you are in Brazil, you can apply for the CPF via any Banco do Brasil (Bank of Brazil) or Correio (Post Office) (there are plenty but you should find a translator if you do not speak Portuguese). You will need to take the following:

(i) Your original passport;

(ii) Your birth certificate with the names of your mother and father;

(iii) An address of where the CPF can be sent to in Brazil;

You will subsequently be sent a federal tax bill of a minimal amount that will need to be paid. Once the Receita Federal receives this payment and viewed the above, you will be sent the card within fourteen days.

3) Using a Professional ----> Check with Belavista Rio. We can supply a CPF in 24 hours.

Many investors choose to instruct a professional to act on their behalf in order to keep the whole CPF process hassle free and simple. A premium is often charged but it is often better to pay this than go through the rigmarole of applying yourself (particularly if you do not speak Portuguese).

The following two procedures will be followed:

(i) You will be sent a ‘signature’ card issued by a Brazil based cartório (notary’s office) and a formulário de procuração (a document to confirm that you would like the agent or lawyer to act as a power of attorney) to sign;

(ii) You will have to send certified copies of your original passport and birth certificate (by your local Brazilian Consulate);

You can also use the Brazilian Post Office ( called Correios in Portuguese) to find the CPF form...





Remember to ensure that an correspondence and documentation are sent using FED-EX, DHL or other reputable delivery service with a tracking system. Using an agent to undertake this process also means that you do not need to have a Brazilian address as it will be sent to their office (and subsequently forwarded on to yourself).


Other Points to observe...

It should be noted that the CPF is directly linked to your credit score in Brazil. For example, if you were to purchase a contract cell phone and miss payments - the company will report your ‘black mark’ to the relevant government agency and it will remain on file (this will effect your ability to borrow for some time in the future). Furthermore, unlike referencing agencies in many other countries that adopt a scale of credit-worthiness, a Brazilian CPF is either clean or tainted (ie. there is no middle ground).

Keeping Up-to-Date

The fact that you have a CPF will mean that any direct/indirect income producing activities you undertake in Brazil will be subject to taxation which is automatically calculated based on compulsory declarations as stated by the Receita Federal, some of which are as follows:

• if you earn over $12,696 reais income;
• if you receive a lump-sum payment of greater than $40,000 reais (through the sale of an asset, for example);
• if you are a shareholder, proprietor, partner or co-operative involvement in a Brazilian company;
• if you have ownership of property or land over the value of $80,000 reais;
• if you have disposed of an asset that is subject to capital gains tax in the eyes of Brazilian law;
• if you are involved with any kind of transaction on the stock exchange;
• if you have achieved a gross revenue for any business activity in Brazil of more than $63,480 reais;
• if a previous years loss is being offset against a current years loss and the amount falls under the threshold, then full declaration would be needed to be submitted;



Again, we would strongly suggest to obtain professional legal and tax advice when conducting your real estate business in Brazil - particularly when it comes to making the obligatory declarations as above.

Should you not have to pay income tax (for example if you obtain a CPF number and choose not to undertake in any business in Brazil), you will still need to send an `exempt report’ or go to the nearest Receita Federal office in order to keep the number activated.

Any Questions?

Please feel free to contact us with regards to any questions about obtaining a CPF in Brazil.