Brazil
Sociedade Limitada, the Cayman Sandwich default, BCB Resolution 520/2025, the 2025-27 CBS/IBS VAT reform.
Brazil is the largest Latin American market and the most structurally complex jurisdiction in this manual. The "Cayman Sandwich" — Cayman holdco → Delaware LLC → Brazilian Ltda. — has been the default structure for VC-backed Brazilian startups for a decade (Nubank, QuintoAndar, Loft all use it). The 2025–26 CBS/IBS VAT reform is reshaping indirect tax through 2027. BCB Resolution 520/2025 is forcing some foreign-incorporated entities serving Brazilian customers to migrate locally.
Entity
The standard Brazilian vehicle is a Sociedade Limitada (Ltda.) registered with the Junta Comercial (state commercial registry; e.g., JUCESP for São Paulo, JUCERJA for Rio). Federal tax ID CNPJ at Receita Federal issued in parallel. State and municipal registrations follow.
Setup process:
- Trade name reservation at Junta Comercial.
- Articles of association (Contrato Social) drafted and signed.
- Registration at Junta Comercial (~2–4 weeks).
- CNPJ at Receita Federal.
- State tax registration (ICMS) where applicable.
- Municipal tax registration (ISS) for service activities.
- NIRE (Junta Comercial registration number) for general commercial activity.
Total elapsed: 6–10 weeks. Fees BRL 5–25K (~$1,000–5,000) for an attorney-led process.
The "Cayman Sandwich" — the default for VC-backed Brazilian startups:
Cayman Islands holdco → Delaware LLC → Brazilian Ltda.
The structure works because:
- Cayman tax neutrality at the top — no withholding on dividends to global investor consortiums.
- Delaware LLC as the operational/IP-holding entity for US-bound activity.
- Brazilian Ltda. for local operations, hiring, and Brazilian-customer billing.
Nubank, QuintoAndar, Loft, MadeiraMadeira, and most Brazilian unicorns use a variation of this structure. Latitud's blog has been the canonical public reference for the mechanics.
For a US-bound B2B SaaS founder with no Brazilian-customer focus, the simpler structure is Delaware Inc parent → Brazilian Ltda. subsidiary — skip the Cayman layer.
FX and tax
Brazilian capital controls have been historically tight. The Banco Central do Brasil (BCB) documents every cross-border wire and requires registration of foreign capital investments under the RDE-IED (Registro Declaratório Eletrônico — Investimento Estrangeiro Direto).
BCB Resolution 520/2025 — effective in 2025, requires foreign-incorporated entities serving Brazilian customers to migrate to a Brazilian incorporated entity. The rule targets cross-border SaaS sellers who were billing Brazilian customers without local presence. For a Delaware-Inc-only structure with Brazilian customers, this resolution is a forcing function — you need a Brazilian Ltda. to continue selling to Brazilian customers compliantly.
Tax — the 2025–27 CBS/IBS VAT reform:
- Replaces the legacy quintet of PIS / Cofins / ICMS / ISS / IPI with two new VATs: CBS (federal Contribution on Goods and Services) and IBS (state-municipal Goods and Services Tax).
- Phased implementation 2025–27; full transition by 2033.
- For tech and software companies, the legacy patchwork of state ICMS variations and municipal ISS rates is being unified — net positive over time, but creates implementation pain through 2027 as ERP, billing, and accounting systems migrate.
Standard Brazilian CIT — 34% effective (25% IRPJ + 9% CSLL) for non-Simples-Nacional entities.
Hiring engineers
São Paulo / Rio / Belo Horizonte 2025 market for software engineers (USD equivalent):
- Junior (1–3 yr): R$4–7K/month (~$800–1,400/month, $9.6–17K/year)
- Mid (3–6 yr): R$96–168K/year (~$18–32K)
- Senior (6+ yr): R$168–240K/year (~$32–46K)
- Top product companies in São Paulo pay senior engineers R$240–360K/year (~$46–69K)
The PJ vs CLT choice — the structural fact of Brazilian engineering hiring:
- CLT (Consolidação das Leis do Trabalho) — formal employment. Mandatory benefits: 13th-month salary, FGTS (8% of salary into severance fund, drawable on certain termination scenarios), 30 days of vacation with 1/3 vacation premium, severance protections. Fully-loaded cost: gross salary × 1.7–1.9.
- PJ (Pessoa Jurídica) — engineer registers as an LLC and invoices the company. Uses Simples Nacional tax regime (6–10% effective tax). No statutory benefits paid by company. Most Brazilian engineers prefer PJ because take-home is significantly higher.
For most tech founders, PJ is the default. The 2021–22 wave of "PJ é trabalhista" lawsuits (claiming PJ should be reclassified as CLT employment) put some pressure on the model, but courts have been generally favorable to the PJ structure when properly documented.
Banking
Itaú Unibanco, Bradesco, Santander Brasil, Banco do Brasil, Nubank Empresas, Inter Empresas — the corporate banking landscape. Itaú is the most foreign-investor-friendly for tech companies. Inter and Nubank Empresas are the modern neobank options (faster onboarding, lower fees, less paperwork).
Realistic timeline for Brazilian corporate account: 4–8 weeks. Heavier paperwork burden than Mexico; comparable to UAE.
US-side banking pairs with Mercury or Brex. Brazil is not on Mercury's banned list. Inbound USD wires require BCB registration via the receiving Brazilian bank — the bank handles the documentation but adds 1–3 days to wire processing.
Pitfalls
Stories
Wins. Nubank — Cayman holdco, NYSE-listed, $50B+ market cap, the canonical Brazilian tech success. QuintoAndar (proptech, Cayman holdco), Loft (proptech), MadeiraMadeira (e-commerce). iFood (food delivery, $5B+ valuation). Wildlife Studios (gaming), Hotmart (creator economy), Ebanx (cross-border payments).
The pattern: Brazilian unicorns scale on the 215M-person domestic market with consumer-fintech and consumer-marketplace plays. The Cayman Sandwich structure has been the default for VC-backed companies for a decade — it's the playbook every Brazilian founder should know cold.
For a US-bound B2B SaaS founder, the playbook is closer to Argentina or Mexico than to Brazil — Delaware Inc parent, simpler structure, US-customer focus. Brazilian engineering talent is excellent, salaries are competitive globally (PJ-route engineers can compete on take-home with US-remote employees on a per-hour basis), and time-zone overlap with US East Coast is workable.
The recommended Brazil-to-Delaware stack
For deeper context: Chapter 1 (incorporation, including Cayman Sandwich), Chapter 3 (transfer pricing), Chapter 5 (LatAm capital landscape).
Notes & sources