EN 
BR In the cases we have attended to over the last few years, the main point of concern for many of those who have to make the Declaration of Final Departure from the Country (DSDP) is how to maintain a bank account in Brazil, or how the CDE accountthe special bank account for non-residents. Naturally, we have been keen to keep up with legislative changes in this area, and 2023 will begin with important changes.
The non-resident account should change from 2023, when the New Foreign Exchange Law comes into force1Law no. 14.286/2021regulated by BCB Resolution 277/2022Articles 67 and 68 and Annex II.. The aim of New Foreign Exchange Law is to consolidate legislation on the Brazilian foreign exchange market, Brazilian capital abroad and foreign capital in the country, as well as regulating the provision of information to the Central Bank of Brazil.
The New Foreign Exchange Law only deals with foreign exchange issues (Central Bank) and not income tax (Federal Revenue Service). However, because of this issue, many doubts have arisen about how it will affect non-residents who maintain economic ties with Brazil, especially when it comes to banking operations and international remittances.
The aim of this article is to compare the current non-resident account rules with those that are due to come into force in 2023. We will also comment on what we have publicly proposed that the Central Bank change, in the interests of Brazilians and foreigners who live abroad and need to open bank accounts in Brazil.
What can we expect from the Central Bank from 2023?
The New Foreign Exchange Law came into force on December 31, 2022. Throughout 2022, the Central Bank opened public consultations to discuss different aspects that will change, the first of which is the non-resident account, now renamed the "non-resident account in reais". The New Foreign Exchange Law says that the non-resident account in reais will be the same as a normal bank account, except for what the Central Bank says should be different2See Law no. 14.286/2021, art. 5, §4..
Between May and July 2022, Bacen published Public Consultation Notice 90/2022 on its website.3See text of Public Consultation No. 90/2022 at Public Consultation SystemClick on the "Closed Consultations" option and search for the consultation number. Unfortunately, the Central Bank doesn't have the best search structure for these documents.The aim of the meeting was to disseminate proposals designed to regulate not only the non-resident account, but also various aspects of the foreign exchange market included in the text of the New Foreign Exchange Law.
There were also 2 more public consultations on specific topics: (i). on foreign capital in the country, foreign direct investment operations and foreign credit, between July and September 2022, and (ii). on Brazilian capital abroad, in November and December 2022. It is clear that the aim is to simplify and consolidate rules, but without radical changes.
With the entry into force of these changes, the current rules for non-resident accounts, laid down in the Circular no. 3.691/2013have been completely replaced.
How does the non-resident account work these days?
A CDE account is the latest incarnation of the old "CC5 account", so called because it originated in the Circular Letter no. 05/1969 of the Central Bank. In the 1990s, in the scandal that led to the Banestado CPI, money laundering operations and currency evasion to tax havens were discovered using these accounts.
The misuse of CC5 accounts has led to stricter Central Bank regulations, which have imposed various restrictions on the use of non-resident accounts. The Central Bank's strictness is aimed at the institutions authorized to open this type of account, so that the banks become responsible for the transactions carried out.
This led to a reasonable increase in the cost for financial institutions to offer this type of account to clients. Because of this disproportionate cost, many institutions chose not to open the non-resident account, or to pass on the compliance costs to clients4Because of this, most banks don't offer non-resident accounts to their customers, or they offer accounts with much higher fees..
The New Foreign Exchange Law resolves the issue of money laundering in a different way. Brazilian banks authorized to operate foreign exchange are responsible for ensuring the reputation of the banks they deal with abroad, assessing the quality of the financial supervision to which they are subject and knowing whether and how they have adopted internal controls to combat money laundering and terrorist financing.5See Law no. 14.286/2021, art. 6..
With that, the non-resident account may have less stringent rules. This change in the Central Bank's stance can be seen in the easing of the Central Bank's restrictions on non-resident accounts over the last few years:
| Circular no. 3.691/2013 (original wording) | BCB Resolution No. 4/2020 | BCB Resolution 137/2021 (last version before the New Foreign Exchange Law) |
|---|---|---|
| It could just be a deposit account (i.e. current account), and must have characteristics that allow them to be readily identified | (no changes) | CHANGE: It could be (i). deposit account (current account) or also (ii). payment account (prepaid card), and must have characteristics that allow them to be readily identified |
| It can only be opened in bank branch authorized to operate foreign exchange | (no changes) | CHANGE: It can only be opened in: (i). bank authorized to operate foreign exchange (deposit accounts) or (ii). in institution authorized to operate on the foreign exchange market (prepaid card accounts)6The Central Bank keeps an updated list of institutions authorized to operate in the foreign exchange market. |
| Sisbacen account registration is mandatory | (no changes) | CHANGE: Registration of deposit account in Sisbacen is mandatory Prepaid card accounts need to be registered only in specific situations7If there is a transaction (i) of an amount equal to or greater than R$100,000.00 (one hundred thousand reais) or (ii) resulting from an operation subject to foreign capital registration. |
| You must register with Sisbacen at the time of opening account | (no changes) | CHANGE: You must register with Sisbacen within 2 working daysfrom the date on which registration becomes compulsory |
| Accounts for non-residents are always individual, not joint (reasonUse of the account for transfers in the interests of third parties is prohibited) | (no changes) | (no changes) |
| Circular no. 3.691/2013 (original wording) | BCB Resolution No. 4/2020 | BCB Resolution 137/2021 (last version before the New Foreign Exchange Law) |
|---|---|---|
| Movements in Brazilian Real from a non-resident account to a normal bank account, or vice versa, are treated as an international transfer of Brazilian Real (TIR). | (no changes) | (no changes) |
| IRR movements or exchange operations can be carried out for any amount. | (no changes) | CHANGE: IRR movements or exchange transactions from deposit account can be made in any amount. IRR movements with prepaid card accounts are limited to R$ 10 thousand per operation. Exchange transactions can be of any value. |
| Documentary evidence of IRR movements of at least R$ 10 thousand. It is compulsory to identify (i). the source and destination of the funds, (ii). the nature of the payments, and (iii). the identity of the depositors of amounts in these accounts as well as the beneficiaries of the transfers made. If there is tax to pay, the bank is responsible for requesting proof of payment. | CHANGE: Documentary evidence of IRR movements of at least R$ 100 thousand. It is compulsory to identify (i). the source and destination of the funds, (ii). the nature of the payments, and (iii). the identity of the depositors of amounts in these accounts as well as the beneficiaries of the transfers made. If there is tax to pay, the bank is responsible for requesting proof of payment. | (no changes) |
| Exchange operations from Brazilian reals to foreign currency can be carried out freely, as long as the conversion is not done in the interests of third parties (i.e. funds are held in the name of the same holder). | (no changes) | (no changes) |
| Circular no. 3.691/2013 (original wording) | BCB Resolution No. 4/2020 | BCB Resolution 137/2021 (last version before the New Foreign Exchange Law) |
|---|---|---|
| Amounts can only be credited to a non-resident's account through: (i). debit from the same bank account; (ii). a cashier's check, crossed, with information on the back of the check about the nature of the transfer and the destination of the funds; (iii). TED from another bank, stating the nature of the transfer. Debiting amounts is similar, but allows TED or DOC and cashier's checks. | (no changes) | CHANGE: Operations less than R$ 10 thousand can be made by any means of payment, including cash (paper money). Operations at least R$ 10 thousand can be made between financial institutions (TED, DOC), by check and by Pix, with no special rules. A transaction of at least R$ 10,000 on a post-paid payment account (e.g. by credit card) is prohibited. |
| Circular no. 3.691/2013 (original wording) | BCB Resolution No. 4/2020 | BCB Resolution 137/2021 (last version before the New Foreign Exchange Law) |
|---|---|---|
| Banks must report transactions in reais to the Central Bank within 2 working days: (i). of at least R$ 10 thousand e (ii). subject to foreign capital registration, regardless of value. | CHANGE: Banks must report transactions in reais to the Central Bank within 2 working days: (i). of at least R$ 100 thousand e (ii). subject to foreign capital registration, regardless of value. The other R$ 10 thousand to R$ 100 thousand can be reported by means of a monthly file. | CHANGE: Banks must report transactions in reais to the Central Bank within 2 working days: (i). of at least R$ 1 million e (ii). subject to foreign capital registration, regardless of value. The other R$ 100 thousand to R$ 1 million can be reported by means of a monthly file. |
Nowadays, the Central Bank's concern is less about exchange control (preventing the dollar from entering and leaving Brazil freely) and more about obtaining information for statistical use and to guide the Central Bank's monetary policy (for example, deciding to intervene in the exchange market, raising the SELIC rate, etc.). This also helps to simplify the rules for the non-resident account in reais.
How does the new Central Bank regulation change the non-resident account?
The new Central Bank regulations standardize the requirements for opening, maintaining and operating non-resident accounts in Brazilian reals, while maintaining some minor differences, summarized below:
| BCB Resolution 277/2022 (after the New Foreign Exchange Law) |
|---|
| It could be (i). deposit account (current account) or also (ii). payment account (prepaid card). CHANGE: It can be opened, maintained or closed under the same conditions as accounts held by residents, unless expressly excepted. |
| Accounts can be opened by any institution authorized to operate in the foreign exchange market 14The Central Bank keeps an updated list of institutions authorized to operate in the foreign exchange market. In practice, there is no change, as only banks can open deposit accounts (current accounts). |
| CHANGE: Elimination of the obligation to register the account with Sisbacen, regardless of the type of account |
| CHANGE: Elimination of the obligation to register the account with Sisbacen, regardless of the type of account |
| Accounts for non-residents are always individual, not joint (reasonUse of the account for transfers in the interests of third parties is prohibited) |
| BCB Resolution 277/2022 (after the New Foreign Exchange Law) |
|---|
| CHANGE: Transfers in Reais from a non-resident account to a normal bank account, or vice versa, are treated as an international transfer of Reais (TIR), but only in specific situations, which are of no interest to individual account holders.15Transactions carried out in the interests of third parties from Brazilian Real accounts held by institutions domiciled or headquartered abroad, subject to financial regulation and supervision in their country of origin and held at banks authorized to operate in the foreign exchange market, embassies, consular offices and international organizations. |
| IRR movements or exchange transactions from deposit account can be made in any amount. CHANGE: IRR movements with prepaid card accounts are limited to R$ 100 thousand per operation. Exchange transactions can be of any value. |
| CHANGE: Elimination of the need for documentary evidence of transactions in Reais carried out from accounts held by individuals |
| CHANGE: Difference between ordinary accounts and non-resident accounts in foreign exchange transactions eliminated |
| BCB Resolution 277/2022 (after the New Foreign Exchange Law) |
|---|
| CHANGE: No restrictions other than those for a regular account. There are exceptions, but none of them apply to individual account holders16Transactions carried out on behalf of third parties from accounts in Brazilian reais held by an institution domiciled or headquartered abroad that is subject to financial regulation and supervision in its country of origin and held at a bank authorized to operate in the foreign exchange market are still subject to restrictions. Transactions of up to 10,000 can be made by any means of payment, but transactions of at least R$ 10,000 are subject to the same restrictions as the legislation prior to the New Foreign Exchange Law.. |
| BCB Resolution 277/2022 (after the New Foreign Exchange Law) |
|---|
| CHANGE: The need to report transactions in reais carried out in one's own name to the Central Bank has been eliminated, regardless of the amount17Transactions carried out in the interest of third parties from accounts in Brazilian reais held by an institution domiciled or headquartered abroad subject to financial regulation and supervision in its country of origin and held at a bank authorized to operate in the foreign exchange market are still reported, regardless of the amount, as are transactions of at least R$ 10,000 carried out by embassies, consular offices and international organizations.. |
Despite maintaining some limitations on non-resident accounts, the new regulations have removed important restrictions, such as the obligation to register these accounts in the Central Bank's system (Sisbacen) beforehand.
In fact, the above changes are more generous than those proposed by the Central Bank in the Public Consultation opened in July 2022. At that time, it was still proposed to document for the bank self-interested banking transactions worth at least R$ 1 million, or subject to foreign capital registration, regardless of the amount. This requirement has now been eliminated for good. This type of restriction was only maintained for foreign institutions authorized to operate these accounts in Brazil in the interests of third parties, which is not the case for individual account holders.
As you can see, this is not a radical change, but it is innovative enough to relieve the bank of several formalities, which should make it possible to reduce the costs of the non-resident account.
Conclusion
The new legal framework for the foreign exchange market has already brought several improvements to the non-resident account, even before the New Foreign Exchange Law came into force. During this period of adaptation, the Central Bank issued resolutions that relaxed the requirements imposed on the non-resident account, so that some banks, which previously did not offer the service, began to include the non-resident account in their catalogs at more accessible rates.
The new changes created for 2023 bring non-resident accounts even closer to ordinary bank accounts. It is true that the proposed rules do not eliminate all the problems with non-resident accounts, but compared to the current rules, they open doors for foreigners and non-resident Brazilians to easily open and maintain these accounts.
It is expected that there will be greater competition between banks and other institutions to offer non-resident accounts, and consequently reduce the costs of opening and maintaining these accounts. The challenge of investing in Brazil while living abroadBut it's still going on, and should be our next front of the firm's work on behalf of clients and society.
On this blog you will always find relevant, up-to-date information on the subject and guidance on how to avoid problems with the tax authorities and other authorities. Feel free to tell us about your experience, share the content with other friends who need guidance and contact us by e-mail at contato@tersi.adv.br or via WhatsApp. Click here to send a message now.
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References:
- 1Law no. 14.286/2021regulated by BCB Resolution 277/2022Articles 67 and 68 and Annex II.
- 2
- 3See text of Public Consultation No. 90/2022 at Public Consultation SystemClick on the "Closed Consultations" option and search for the consultation number. Unfortunately, the Central Bank doesn't have the best search structure for these documents.
- 4Because of this, most banks don't offer non-resident accounts to their customers, or they offer accounts with much higher fees.
- 5
- 6The Central Bank keeps an updated list of institutions authorized to operate in the foreign exchange market.
- 7If there is a transaction (i) of an amount equal to or greater than R$100,000.00 (one hundred thousand reais) or (ii) resulting from an operation subject to foreign capital registration.
- 8The Central Bank keeps an updated list of institutions authorized to operate in the foreign exchange market.
- 9The Central Bank keeps an updated list of institutions authorized to operate in the foreign exchange market. In practice, there is no change, as only banks can open deposit accounts (current accounts).
- 10If there is a transaction (i) of an amount equal to or greater than R$100,000.00 (one hundred thousand reais) or (ii) resulting from an operation subject to foreign capital registration.
- 11Transactions carried out in the interests of third parties from Brazilian Real accounts held by institutions domiciled or headquartered abroad, subject to financial regulation and supervision in their country of origin and held at banks authorized to operate in the foreign exchange market, embassies, consular offices and international organizations.
- 12Transactions carried out on behalf of third parties from accounts in Brazilian reais held by an institution domiciled or headquartered abroad that is subject to financial regulation and supervision in its country of origin and held at a bank authorized to operate in the foreign exchange market are still subject to restrictions. Transactions of up to 10,000 can be made by any means of payment, but transactions of at least R$ 10,000 are subject to the same restrictions as the legislation prior to the New Foreign Exchange Law.
- 13Transactions carried out in the interest of third parties from accounts in Brazilian reais held by an institution domiciled or headquartered abroad subject to financial regulation and supervision in its country of origin and held at a bank authorized to operate in the foreign exchange market are still reported, regardless of the amount, as are transactions of at least R$ 10,000 carried out by embassies, consular offices and international organizations.
- 14The Central Bank keeps an updated list of institutions authorized to operate in the foreign exchange market. In practice, there is no change, as only banks can open deposit accounts (current accounts).
- 15Transactions carried out in the interests of third parties from Brazilian Real accounts held by institutions domiciled or headquartered abroad, subject to financial regulation and supervision in their country of origin and held at banks authorized to operate in the foreign exchange market, embassies, consular offices and international organizations.
- 16Transactions carried out on behalf of third parties from accounts in Brazilian reais held by an institution domiciled or headquartered abroad that is subject to financial regulation and supervision in its country of origin and held at a bank authorized to operate in the foreign exchange market are still subject to restrictions. Transactions of up to 10,000 can be made by any means of payment, but transactions of at least R$ 10,000 are subject to the same restrictions as the legislation prior to the New Foreign Exchange Law.
- 17Transactions carried out in the interest of third parties from accounts in Brazilian reais held by an institution domiciled or headquartered abroad subject to financial regulation and supervision in its country of origin and held at a bank authorized to operate in the foreign exchange market are still reported, regardless of the amount, as are transactions of at least R$ 10,000 carried out by embassies, consular offices and international organizations.
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