LEGAL, TAX AND OTHER SERVICES
MFC MATIDA FERNANDES & CRAWSHAW LAWYERS & CONSULTANTS
ABOUT US ABOUT US
Our firm is called Matida Fernandes & Crawshaw. We have extensive experience of advising overseas clients operating in Brazil. We specialize in all aspects of tax, both Brazilian and UK. For example, we can help overseas buyers looking to purchase a Brazilian property, and advise on moving funds into the country for that purpose (and out again). We can provide an inclusive package to cover your investment in Brazil – from your initial decision to buy through to the registration of the property in your name. In addition, our services include other aspects of tax or legal advice, accountancy, Permanent Visa applications, and management of properties. Our property-management services
include payment of service bills, handling of rental agreements, maintenance of houses and gardens, installation of alarm and internet video surveillance systems, and property insurance. Luiz Matida Fernandes qualified as a lawyer in SĂŁo Paulo in 2001, and as a tax specialist in 2003. He then qualified in Business Law at the London School of Economics (LSE)
in England, where he became fluent in English. Edward Townsend Crawshaw qualified as a Chartered Accountant with Cooper Brothers (now PricewaterhouseCoopers) in 1967. He left the accountancy profession to go into business, and speaks reasonable Portuguese, French and Spanish.
BRAZIL IS TAX FRI Compared to most other countries, Brazil is tax friendly. Tax on the Purchase
3% (variable) of Local Council Valuation
Annual Tax
1% (variable) of Local Council Valuation
Tax on a Sale
Capital Gains Tax at 15% of the Net Profit
PROPERTY TAXES PAYABLE IN THE UK
SIPP
You are only liable for Capital Gains Tax, currently at 18%/28%. After double taxation relief of the Brazilian CGT this reduces to 3%/13%.
You may wish to hold property through a SIPP in the UK to avoid CGT. You can only do this as a form of commercial investment recognized by HMRC, and this is not normally a practical option
You are also allowed ÂŁ 10,100 of tax free gain p.a. for each spouse (i.e. a married couple is allowed ÂŁ 20,200 p.a.). Unless you have used that annual allowance elsewhere, the profit on which the CGT is calculated would be reduced by that amount.
INHERITANCE TAX
For an example of an overall CGT calculation please see our website.
IN BRAZIL
Note: It is illegal in both Brazil and the UK to underdeclare the selling price and receive the difference in cash or kind, whether in Brazil, the UK or elsewhere.
For ease of probate in Brazil, it is advisable to make a Brazilian will covering your Brazilian assets. We can do this for you.
In addition, money-laundering is considered a serious offence by the Brazilian authorities.
IN THE UK
This is a state tax. It varies between 2% and 8% (Rio Grande do Norte 3%) and is charged at death or on life-time gifts, and is only applied to property. There is no national Inheritance Tax.
As a UK resident, you are liable to inheritance tax (IHT) on your global assets. Because of double taxation relief between the UK and Brazil, any IHT paid in Brazil would be offset against the UK IHT liability.
IENDLY TAXES ON RENTAL INCOME
CPF NUMBER
IN BRAZIL
A foreigner has to have a Brazilian CPF number (a personal identification number) to own a property in Brazil. You must obtain this before you begin the legal process of property purchase. This does not normally present a problem, but the process is best handled by professionals acting for you. We can help you with this.
Any rental income is taxed at 15%. This is calculated on the gross rental received. You cannot offset any connected costs. To counteract this anomaly, it is usual for the rental client to pay certain costs, such as a maid, direct.
IN THE UK Normally, all ongoing costs associated with the property can be offset against rental income. This is in proportion to the time the property is used as a holiday residence by you, and the time it is available for rental. If you were to use the property for two weeks and it was available for rent the rest of the year, then most of the costs could be offset. If you never used the property, then all the costs could be offset. In our experience, the costs allowed could include flights to Brazil to manage the property, and associated costs such as taxis, car hire, hotels etc. The net income would then form part of your UK tax return. It would then be subject to income tax, reduced by the tax already paid in Brazil.
PURCHASE PACKAGE Our purchase package takes you through from your initial contract with the developer to the final registration in your name, including the cost of obtaining a CPF number and greating a Power of Attorney.
PRELIMINARY STEPS TO A FORMAL PURCHASE This ebook is directed mainly towards clients buying from an established developer. For purchases from other sources please see our website.
REPATRIATION OF FUNDS There should be no problem in the repatriation of the proceeds of a sale of your property, if you follow the correct purchase and sale procedures. Red tape and bureaucracy are a way of life in Brazil. It can be obstructive. However, to re-iterate, if you introduce capital into Brazil using the correct procedures, repatriation of funds after the sale of a property is straightforward. We can help ensure you follow the correct process.
TRANSMISSION AND REGISTRATION OF PURCHASE FUNDS
REGISTRATION OF THE PROPERTY IN YOUR NAME
Control of Funds Entering the Country
• O nce the registration of the funds is confirmed, the development company will present the sale contract relating to the property to the bank, which will then release the funds to them. • A t that point, your lawyer or agent prepares the various legally-required papers, making up the documentation package relating to the property. They present this to the relevant “Cartório” for registration. A Cartório is broadly similar to a Notary office in, say, France or Spain. The owner of the Cartório is authorized to act on behalf of the government. • T he cartório charges a fee for the registration of the property. This is based on a schedule of charges imposed by the State Government and uses the Council valuation of the property. • O nce the registration of the property is made, your ownership is as secure as it would be in the UK. • T his process should be completed within three to four weeks of the registration of the funds
• T he Brazilian government, through the Central Bank of Brazil (BACEN), records all funds coming into and leaving the country. • To do this, your funds have to pass through an “authorized institution”. In effect, this means almost any Brazilian bank. They ensure that such transactions are properly registered with BACEN.
Transmission of Funds In the case of an individual being the buyer and beneficial owner, purchase funds are transferred from abroad to the development company´s bank account in Brazil and that bank is obliged to register the transaction with BACEN on the purchaser´s behalf. We can monitor this process for you and verify that you have followed the correct procedures. For purchases by limited companies, please see our website.
You should transfer any funds for taxes, legal fees, etc. separately to your lawyer in Brazil. These do not need to be registered, as you cannot capitalize them into the cost of the property.
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APPROXIMATE COSTS RELATING TO THE PURCHASE AND REGISTRATION OF THE PROPERTY Using an exchange rate of R$ 2,50 to the pound, calculated to the nearest £50. £
£
£
£
40,000
80,000
120,000
160,000
1,350
1,350
1,350
1,350
2 – The cost of the certified document issued by the Cartório proving the ownership of the property and confirming that it has no charges;
50
50
50
50
3 – I.T.I.V. at, typically, 3% of local Council valuation;
1,200
2,400
3,600
4,800
4 – Cartório fees:-
650
1,500
2,000
2,600
5 – Registration fees:-
350
700
1,050
1,800
50
50
50
50
£ 3,650
£ 6,050
£ 8,100
£ 10,650
9%
7.5%
6.7%
6.6%
Assuming the Cost of the Property Acquired to be 1 – Purchase Package: Our legal fees for taking the purchase process through from your initial contract with the developer to the final registration in your name, including the cost of obtaining a CPF number and creating a Power of Attorney, (“purchase package”);
6 – Registration number. Total Costs As a Percentage of Purchase Price
OUR SERVICES OUR SERVICES
PERSONALIZED TAX ADVICE LEGAL SERVICES ACCOUNTANCY MANAGEMENT OF YOUR PURCHASE PURCHASE PACKAGE As in most countries, many formalities are unnecessarily complicated and long-winded. They often require hours of queuing as well as experience. Once you have signed a purchase contract with a developer, it is advisable to use professionals such as us to cover all subsequent stages of your purchase. We recommend you ask us to obtain your CPF number, create a Power of Attorney valid in Brazil, arrange the transfer and registration of funds, and administer the registration of the property in your name. We can provide this service as a complete package at a reasonable price.
POWER OF ATTORNEY If you wish us to act for you, the first step will be to create a Power of Attorney valid in Brazil, enabling us to represent you in all aspects of the purchase, registration, etc. Helping you to create your Power of Attorney is included in the purchase package mentioned on the previous page.
OPENING A BANK ACCOUNT PAYMENT OF ANNUAL TAX, SERVICE BILLS, ETC., ON YOUR BEHALF APPLICATION FOR A PERMANENT VISA You can visit Brazil as frequently as you want – so long as any one visit is 90 days or less, and the total is 180 days or less in any 12 month period.
A Permanent Visa would entitle you to live in Brazil 365 days per year. It lasts three years and is renewable. That is advantageous, but there is the downside (to most people) of being brought into the Brazilian tax system – i.e., becoming a “tax- resident”. Applying for a Permanent Visa, for most applicants, is fairly complicated and takes time. We can help you with this.
ALARM SYSTEMS AND INTERNET VIDEO SURVEILLANCE In our own properties, we make extensive use of alarm systems and internet video surveillance, which are extremely good value. (see our Fee and Costs Structure) [link to section IX on page 14 of the website] With the internet video surveillance, you can watch your home, garden, pool on your laptop or smartphone from anywhere in the world.
PROPERTY INSURANCE
Surprisingly, it is rare in Brazil for property to be insured. However, a non-resident owner might well wish to have the security of knowing that the value of his Brazilian property is protected in this way. It is extremely cheap.
PROPERTY MAINTENANCE GARDEN MAINTENANCE
FEE AND COSTS STRUCTURE Our fees are reasonable and generally much lower than other professionals charge in Brazil. We will normally give you a quote in advance. Some charges are standard. Where the time involved is more difficult to predict, we work at hourly rates of £50 for directors and £20 for other levels of staff. We can usually give an estimate of likely total cost and, if applicable, place a cap on the total charge that can be made.
Examples of Standard Charges:1–A complete purchase package covering the application for your CPF Number; creating a Power of Attorney; all stages of the property purchase from the point when you sign the contract with the developer, including the control of the transfer of your funds, the BACEN registration of those funds, all paper work involved in these matters, and the payment of the I.T.I.V. tax and all fees etc., up to final registration of the property in your name in the Cartório
£ 1,350
2 – Drawing up a simple will covering your Brazilian assets 3 – Property maintenance; inspection once a month and a monthly report to you by e-mail, depending on location,
£ 250
p.a. from £ 120
4 – An alarm system installed and operational, including six sensors, siren, two remote controls and automated telephone calls to nominated people (you will need a telephone line)
£___
5 – Internet Video Surveillance System installed and operational, including six cameras, but not including provision of a computer
£ ___
6 – A basic computer, for the surveillance system, supplied and connected
£ ___
CONTACT US CONTACT US Contact us via the website, e-mail or fax this check-list to us with your contact details.
CHECK LIST If interested, please tick appropriate space: Purchase Package, which includes: CPF Number and Power of Attorney Personalized Tax Advice Drawing-up a Brazilian Will Application for a Permanent Visa Payment of Annual Taxes, Service Bills, etc. Handling Receipt of Rental Income Alarm System and Internet Video Surveillance Property Insurance Property Maintenance Garden Maintenance
Your Contact Details: Name .................................................................................................. e-mail .................................................................................................. Telephone: L andline ......................................................................... Mobile ............................................................................ Country of Residence .......................................................................
Our e-brochure is an introduction to the basics of buying property in Brazil. For information on a particular aspect of our service, click on the FIND OUT MORE buttons on each page to link to the relevant pages on our website.
Rua São José, 2.168 – Lagoa Nova Natal, Rio Grande do Norte Brazil – Cep 59.064-150 phone 0055-84-32065699 fax XXXX-XX-XXXXXXXX Contact Details Luiz Eduardo Matida Fernandes e-mail: matidafernandes@hotmail.com mobile number 00-55-84-99542302 Edward Crawshaw; living in Brazil but frequently in England and Spain e-mail: edwardtcrawshaw@hotmail.com Brazilian mobile 00-55-84-99370037 English mobile 00-44-7973412601 Spanish mobile 00-34-667545263
MFC
www.matidafernandesecrawshaw.com Rua São José, 2.168 – Lagoa Nova Natal, Rio Grande do Norte Brazil – Cep 59.064-150 phone 0055-84-32065699 fax XXXX-XX-XXXXXXXX