Pursuant to Normative Instruction RFB no. 1634/16, legal entities enrolled with the CNPJ must inform to the Federal Revenue the chain of ownership interest, until reaching the natural persons characterized as final beneficiaries.
The following are subject to the obligation to disclose the final beneficiary: (i) companies incorporated in Brazil; (ii) Brazilian investment clubs and funds; (iii) banks based abroad which trade foreign currencies with Brazilian banks; (iv) Silent Partnerships (SCPs) linked to the ostensive partners; and (v) companies headquartered abroad that (a) hold rights in Brazil over real estate, vehicles, vessels, aircrafts, bank accounts, investment in the financial or capital markets or equity interest; and/or (b) carry out foreign leasing, equipment rental and chartering of vessels for special transport, import of goods without exchange coverage as a contribution to the capital stock.
As an example, a company headquartered in Brazil controlled by companies abroad should inform who are the final beneficiaries of such companies abroad. The national entities without foreign capital participation must also provide the information about their final beneficiaries. It is considered "final beneficiary" the individual: (i) who ultimately, directly or indirectly, owns, controls or significantly influences the entity; or (ii) on behalf of whom a transaction is conducted.
Significant influence is presumed when the natural person: (i) owns more than 25% of the entity's capital, directly or indirectly; or (ii) directly or indirectly, holds or exercises preponderance in the corporate resolutions and the power to elect the majority of the entity's administrators, even if without controlling it.
The inexistence of a final beneficiary must also be informed. Some entities are exempt from disclosing their beneficiaries, such as: (i) Brazilian public companies or companies headquartered in countries that require public disclosure of all shareholders deemed relevant and are not incorporated in tax havens; (ii) non-profit entities that do not act as trustees and are not incorporated in tax havens, provided that they are regulated and supervised by competent governmental authority; (iii) pension plan entities, pension funds, and similar institutions, provided they are regulated and supervised by a competent governmental authority; (iv) Brazilian investment funds, provided the RFB is informed (via e-Financeira) of the CPF or CNPJ of the quota holders; and (v) investment vehicles domiciled abroad whose shares or securities representing participation are traded in a market organized and regulated by an entity recognized by CVM, subject to certain characteristics.
The information of the final beneficiaries must be accompanied by certain documents defined by the Federal Revenue Service, and the foreign documents must be legalized in the country of origin, translated in Brazil and registered in a Registry of Deeds and Documents.
The deadline for compliance with this obligation is 31.12.2018. The non-disclosure of the beneficiary or failure to complete the documentation required by the Federal Revenue may lead to the following sanctions: (i) suspension of the enrollment in the CNPJ and (ii) impediment to transactions with Brazilian banking institutions, including as to the movement of current accounts, making financial investments and obtaining loans.
