30 March 2020
General situation: As of 30 March 2020, around 4,371 Brazilians and Brazil residents have been infected with the Coronavirus, including 141 casualties. In order to curb down the disease’s transmission, a range of health measures have been implemented at federal, state and municipality level. In São Paulo state, Rio de Janeiro state and many other states, significant confinement rules were imposed in mid-March and are expected to be upheld at least until mid-April. In view of the restrictive measures, many sectors of the Brazilian economy have come to a virtual standstill. The Brazilian government has in recent days enacted a range of emergency measures in order to assist Brazilian companies through these extraordinary times, and more such measures are expected to be implemented as the situation evolves.
Labor Law related measures: On 22 March, two Provisional Measures were published, which resulted in the following immediately applicable modifications to the current Brazilian labor legislation:
– Anticipation of employee vacations: The employer may unilaterally oblige the employees to anticipate their vacations with 48 hours advance notice. Exceptionally, employees which have not yet acquired full vacation rights may also be asked to anticipate their vacations. Special deferral rules apply for vacation pay.
– 25% salary reduction: The employer may unilaterally reduce the salary of employees up to the limit of 25% for as long as the legal minimum salary rules are observed and the employer’s economic and financial situation is substantially affected by the current emergency situation. In case of a salary reduction, we recommend to thoroughly analyze the fulfilment of the applicable legal requirements to ensure that the measure holds up to judicial review.
– Special home office rules: The employer may unilaterally oblige the employees (including interns and apprentices) to work from home, giving 48 hours advance notice. An agreement must be signed by the employer and the employee to define rules for the acquisition and maintenance of IT equipment and reimbursement of expenses incurred by the employee to enable him/her to work from home. Displacement related benefits such as transportation vouchers may be suspended during the home office period. Other employee benefits must be maintained, although certain modifications are permitted as long as agreed by, and not prejudicial to, the employees.
Tax payments: The Brazilian government has yet to establish emergency rules allowing for the postponement of tax payments. For the time being, with minor exceptions, only the payment of the Severance Pay Fund (FGTS) contributions may be postponed and paid in six monthly installments, if duly notified by the taxpayer to the Federal Revenue Services in accordance with the applicable rules.
In the absence of a more comprehensive set of rules, some taxpayers have opted to unilaterally suspend tax payments. This approach will typically result in collection proceedings, except if the taxpayer voluntarily discloses the situation to the tax authorities and pays all outstanding taxes prior to collection proceedings being initiated. An analysis on a case-by-case basis is recommendable. Other taxpayers have already filed lawsuits in court requesting the postponement of their tax obligations. Some of them obtained injunctive relief allowing them to postpone, for 90 days on average, the payment of federal taxes in view of the current extraordinary situation.
Importation of medical products: In order to facilitate the importation of products used in the fight against the coronavirus, the Brazilian government has decided to temporarily eliminate import taxation on several medical products. The reduction applies to ethyl alcohol with alcohol content equal to or higher than 70%, protective gloves and masks, catheters, needles, thermometers as well as resuscitation and respiratory therapy devices. The reduction will remain in force until 30 September 2020. The government also stipulated that the import of these products shall be treated as a priority by the federal public administration agencies.
Public agencies – suspension of services: Due to the coronavirus pandemic, many public agencies in Brazil have temporarily limited or entirely suspended their operations. For São Paulo based companies, the following principal limitations apply:
– São Paulo Trade Board (JUCESP): The attendance to the public has been suspended until 30 April 2020. In practical terms, this means that no shareholder resolutions or amendments to articles of associations of São Paulo based companies may be publicly registered in the meantime. However, the incorporation of new legal entities in São Paulo state remains possible through the electronic system of the Trade Board.
– Federal Revenue Services (Receita Federal): Until 29 May 2020, personal meetings are only possible upon appointment and exclusively in respect to “essential” services. Matters of less importance must be solved via virtual attendance. Deadlines for compliance with administrative proceedings are temporarily suspended.
– Brazilian Patent and Trademark Office (INPI): Attendance to the public has been suspended for an indefinite period of time. Deadlines for compliance with administrative proceedings have for now been suspended until 14 April 2020. The filing of applications for the registration of trademarks remains possible via the electronic system of the INPI.
– São Paulo state court of justice and Federal court of justice: No personal meetings will be scheduled until 30 April, only remote assistance is granted. All legal proceedings are temporarily suspended.
– Notary Public’s Offices (Cartórios de Titulos e Documentos): Some offices have entirely suspended attendance to the public, others have significantly restricted working hours.
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The FCR Law team remains at your disposal in case of questions.
Lukas Rhomberg (firstname.lastname@example.org)
Marcelo Coimbra (email@example.com)
Renata Camilo (firstname.lastname@example.org)
Tel: + 55 11 3294 1600