Changes in the Foreign Capital Reporting System – SCE-IED and SCE-Crédito – as of November 01, 2023

In line with the provisions of the new Foreign Exchange Framework (Law No. 14, 286, of December 29, 2021), as well as Central Bank of Brazil (“BCB”) Resolution No. 281, of December 31, 2022, as amended (“Resolution No. 281/2022”), and BCB Resolution No. 337, of August 22, 2023, as amended (“Resolution No. 337/2023”), as of November 01, 2023, the changes in the Foreign Capital Reporting System will enter into force, seeking to modernize, simplify and streamline foreign exchange transactions.

The Foreign Capital Reporting System corresponds to: (i) “SCE-Crédito” (formerly known as RDE-ROF) – foreign investment through credit (loan); (ii) “SCE-IED” (formerly known as RDE-IED) – foreign direct investment (stake in Brazilian companies not listed in the stock exchange market); (iii) “CDNR” – Non-Resident Declaration Registry; and (iv) “SCE-Portfolio” – foreign investment in the financial and capital markets.

The main changes in the Foreign Capital Reporting System that will enter into force as of November 01, 2023, are as follows:

• End of simultaneous foreign exchange transactions, to be replaced with declaration records in SCE-Crédito for the following events:

• • conversion of debt into equity (foreign direct investment);
  • conversion between different types of external credit;
  • conversion between types of external credit flow;
  • assumption of external credit (change of debtor) in the “direct loan” and “debt instrument” categories;
  • renegotiation of external credit (change of rate, term, etc.) in the “direct loan” and “debt instrument” categories; and
  • change of residence of the external loan creditor to Brazil or abroad.

• Possibility of recording information relating to the onerous transfer of credits and creation of a specific purpose classification code (code 46239), as well as a declaration record in the event of a “non-onerous transfer of credit”.
• Two new codes have been introduced, 72980 (Principal) and 72997 (Interest), to classify foreign exchange transactions of up to USD 50,000.00.

In addition, as previously published in our Client Alert of August 23, 2023 (available at Demarest – Client Alert Resolução BC 277/2023), under the terms of Resolution No. 337/2023, as of November 01, 2023:

• The codes for classifying foreign exchange transactions are reduced from 174 to 95, and the codes for identifying foreign exchange transaction groups are extinguished;
• The transaction amount will be the only criterion used to determine if a foreign exchange transaction should be classified according to the simplified or detailed list of codes; and
• Transactions of up to BRL 250,000.00 in a Brazilian Reais non-resident account involving third parties´ interests can be classified according to the simplified code list.

Our Banking and Finance team is available to assist our clients and partners with any clarifications on this matter and other related topics.