Distribution Channels – Part II
Exporters may opt to secure independent professional services or companies to act as their commercial representatives in Brazil, compensating them through commissions based on sales volumes.
These professional services do not import directly, but focus on identifying Brazilian clients for imported products.
Commission payments, generally calculated on the basis of the FOB value of the transaction, may combine three modalities commonly employed in Brazil:
- Memorandum Account: the commission amount is deposited in a Brazilian bank, which, following payment to the exporter, proceeds to transferring the negotiated commission to the commercial representative.
- Receivable: the Brazilian bank pays the total amount of the bill of sale to the exporter, who then transfers the commission directly to the commercial representative. This requires a trustworthy financial relationship between the
- Deductible: in this case the importer deducts the commission from the transaction amount, transferring it directly to the commercial representative. As in the case above, this modality requires a high level of trust between the parties.
- IMPORTANT: Exporters are urged to carefully select their commercial representative and to restrict the related activities to the representative’s local market, whether an entire region, state, or city, given the breadth and complexity of the Brazilian market.
Opening an Office in Brazil
Exporters that find promising opportunities in the Brazilian market may choose to open a local office to maintain direct and ongoing contacts with potential importers.
The office could also assume primary responsibility for the pertinent import procedures, in which case it must be registered as a commercial import firm.
There are no administrative, currency, or customs impediments to opening a branch office of a foreign company in Brazilian territory. Indeed, affiliates may be controlled either by Brazilian or foreign shareholders. Affiliates are considered domestic companies for purposes of all the applicable business liability, tax, legal, and public registration and licensing requirements.