Company formation in brief

In the variety of legal and organisational forms of companies permitted to be established in Venezuela, the most popular among foreign investors may include:

• Sociedad Anónima (S.A.) - company limited by shares
• Compañía Anónima (C.A.) - limited liability company
• Foreign Company branch

Foreign investors have to register a company first in the Trade Register and, subsequently, in the Foreign Investment Agency or any other duly authorized agency in order to obtain access to the entire range of trade and industry areas in Venezuela.

A company where more than 49% of shares are held by non-residents is deemed to be a foreign company in Venezuela. If foreigners hold from 19.9% to 49% of shares in a company, it is deemed to be a joint venture, and if foreigners hold less than 20% of shares in a company, it is deemed to be a typical local company. A company is also deemed to be a joint venture if at least 30% of its capital is held by the Government or by a Government-controlled institution.

Sociedad Anónima (S.A.) & Compañía Anónima (C.A.)

The establishing of both Sociedad Anónima (S.A.) and Compañía Anónima (C.A.) requires at least two persons. After the company is registered, all its shares may be transferred to the sole shareholder.

Limited liability company’s charter capital may vary from US$10’000 to US$1’000’000 (US$1 is approximately VEF 2). There are no minimum or maximum charter capital for establishing a corporation.

Shareholders are required to subscribe for the entire capital, and at least 20% of the capital must be paid up at the time of incorporation. Once the shares are fully paid up, the shareholders are not liable for the company's debts.

Joint stock corporation may publicly transfer its shares and offer them to third parties. Limited liability company may not publicly transfer its shares and offer them to third parties without the shareholders majority’s approval.

The corporation and the company are managed by the Board of Directors.

Foreign Company branch

Instead of establishing an individual company in Venezuela, foreign investors may choose to open a branch. To do this, they have to duly register the decision of the parent company’s board of directors in respect of opening a branch in Venezuela and to submit the parent company’s Charter and Memorandum of Association to the Registrar. All documents need to be translated into Spanish by a certified translator.

Branches may operate in the same sectors of the economy as local companies. A branch need to have a local legal representative having full authority to represent the parent company in Venezuela on any matters.

All companies with foreign participation have to submit reports on their compliance with the status of a company with foreign investments each year, in particular:

• financial statements audited by independent certified accountants of Venezuela;
• minutes of the shareholders’ meetings on the capital increase, reduction or transfer, if any;
• minutes of the shareholders' meetings on dividend distribution and due tax payment;
• investors have to submit a dividend transfer notice;
• foreign investors may transfer dividends of 100% of the company’s total annual income in Venezuela each year.

It takes up to two months to register a company with foreign investments in Venezuela.

The income tax rate is the same for all companies in the country, excluding oil industry companies charged with an additional income tax (royalty). The Ministry of Energy and Petroleum of Venezuela may reduce the royalty rate for labour-intensive oil projects.

Tax at the source varies depending on the type of payment, namely:

• payment of loans of financial institutions located outside Venezuela
• payment for technological services
• payment for technical support
• payment for intermediary, marketing, consulting and other support services

Companies’ gross profit is charged with a municipal tax, depending on the type of activity.

Companies are also charged with asset tax, capital gains tax and value-added tax.

There is no currency control in Venezuela. Authorized banking institutions may purchase and sell foreign currency without restrictions and for any types of transactions.
All transactions related to foreign investments, dividends, repatriation of capital, as well as transfers of technological services payment and remuneration, interest and underlying profit from foreign loans, are performed at a floating exchange rate established by the Central Bank of Venezuela on the daily basis.

Venezuela is not a tax heaven or offshore jurisdiction, and a concept of Venezuela tax exempt company (and/or Venezuela offshore company, International Business Company, trust, foundation etc. registration) does not exist in Venezuela as such. A company formation in Venezuela could be arranged with a professional registered agent providing incorporation, virtual office and other corporate services in Venezuela. To set up a company in Venezuela is possible by correspondence, but to open a bank account in Venezuela will, most probably, require a personal visit.

Venezuela Double Taxation Agreements

Austria, Barbados, Belarus, Belgium, Brazil, Canada, China, Cuba, Czech Republic, Denmark, France, Germany, Indonesia, Iran, Italy, Korea, Kuwait, Malaysia, Mexico, Netherlands, Norway, Palestine, Portugal, Qatar, Russia, Saudi Arabia, Spain, Sweden, Switzerland, Trinidad and Tobago, Turkey, United Arab Emirates, United Kingdom, USA, Vietnam.

99 classical offshore, onshore and midshore jurisdictions of Europe, America, Middle East, Asia, Africa and Oceania


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