Brazilian Subsidiary Setup: Accounting, Tax and Payroll Checklist

Registering a Brazilian subsidiary gives the group a tax ID and a legal entity. It does not give it a working finance function. Between incorporation and the first invoice, someone has to choose the tax regime, open the books, configure invoicing, register the company as an employer and agree how numbers will reach headquarters. Decisions made in these weeks are hard to undo later: the tax regime is fixed for the year, the chart of accounts shapes every report, and a missed registration can block the first sale or the first payroll. This checklist covers the accounting, tax and payroll set-up after incorporation.

For the incorporation itself, see how to set up a subsidiary in Brazil.

1. Tax decisions

• Choose the corporate income tax regime. Lucro Real or Lucro Presumido; the Simples Nacional is not available to subsidiaries of foreign groups. The choice is made with the first tax payment of the year and applies to the whole year (see Lucro Real or Lucro Presumido).
• Confirm the activity codes (CNAE) registered for the company. They drive state and municipal registrations, the services tax treatment and the payroll contributions.
• Map indirect taxes per product and service: ICMS, ISS, IPI, and the CBS and IBS that replace PIS, Cofins and, later, ICMS and ISS (see Brazil’s tax reform explained).
• Define the intercompany model: which services, royalties or loans flow between the subsidiary and the group, under which agreements and prices (see intercompany transactions in Brazil).

2. Accounting set-up

• Appoint the accountant registered with the Regional Accounting Council (CRC) who will be responsible for the books, under a written contract with the detailed scope (see how to choose an accounting firm in Brazil).
• Build the chart of accounts with a mapping to the group chart and to the Federal Revenue’s referential chart from day one.
• Agree group accounting policies: capitalization thresholds, depreciation, provisions, revenue recognition and the IFRS or US GAAP adjustments to be made locally.
• Set the monthly calendar: when information is sent, when the close and the reporting package are delivered, and who approves them.
• Record the opening entries: capital contributed, pre-operating expenses paid by the group and any assets transferred.

3. Invoicing and tax registration

• Municipal registration and service invoices (NFS-e) for services companies; state registration and goods invoices (NF-e) if the company sells goods.
• Configure the ERP or invoicing system with Brazilian tax codes, including the CBS and IBS fields now required on electronic invoices.
• Digital certificates (e-CNPJ) for filings and government portals, with clear custody.
• Electronic power of attorney for the accountant in the Federal Revenue’s digital services, limited to the services needed.
• Siscomex registration if the company will import or export (see importing goods into Brazil).

4. Payroll set-up

• Register the company as an employer in eSocial and in FGTS Digital before the first hire.
• Identify the unions and collective agreements that apply to each category of employee (see unions and collective agreements).
• Confirm payroll contribution rates: the workplace accident rate, the FAP and the third-party contributions for the company’s activity code (see the cost of an employee in Brazil).
• Set up benefits required by the collective agreement and those the company chooses to offer.
• Decide how administrators are paid: employment, pró-labore or unpaid appointment (see paying administrators in Brazil).

5. Central Bank, corporate and banking

• SCE-IED: confirm that the capital contribution was recorded under the subsidiary’s code and that events not settled through foreign exchange are declared within 30 days (see SCE-IED reporting).
• Beneficial ownership: keep the CNPJ register updated within 30 days of any change.
• Bank access profiles and approval limits for payments, aligned with group policy (see opening a corporate bank account).
• Corporate records: a place for minutes, powers of attorney and registry filings.

6. Reporting to headquarters

• Agree the content of the monthly package: trial balance, mapped financial statements, cash, headcount, taxes paid and open tax issues.
• Define who in Brazil answers the group’s questions, and in which language.
• Plan the first annual cycle: approval of accounts by April, ECD in June and ECF in July (see compliance calendar for 2027).

How Solidy can help

Solidy already serves subsidiaries of multinational companies in Brazil. Our accounting, tax compliance and payroll teams can take a new subsidiary through these steps, from the choice of tax regime and the chart of accounts to the first payroll and the first reporting package. See our accounting service or talk to our market entry team.