Distribution channels in Brazil: representative, distributor, own entity, marketplace

The short answer

Four routes. A commercial representative under Lei 4.886/1965, who introduces orders and never takes title. A distributor who buys, imports and resells on its own account. Your own Brazilian entity. Or a marketplace.

LC 87/1996 settles the tax half. Import ICMS falls due "do desembaraço aduaneiro" (article 12, IX) and belongs to the state of physical entry, not of clearance (article 11, "d"). Whoever imports becomes the first link of the substitution chain and pays the whole chain's tax up front.

Title settles the contract half. A representative takes none, and the law gives it a minimum indemnity computed on every commission it was paid. A distributor takes title and gets no statutory indemnity. Background: how Brazil's import taxes cascade and importing into Brazil.

The four models side by side

Model	Importer	ICMS at clearance	Risk	Compensation on termination
Commercial representative	The Brazilian buyer, or your entity	Whoever imports	The brand	1/12 of all commissions over the whole representation (art. 27 "j"); plus art. 34 notice
Distributor	The distributor	The distributor, also substituto downstream	The distributor	No formula. Abuse of termination or unamortised investments (art. 473), or unjust enrichment
Your own entity	Your entity	Your entity, also substituto	The brand	Not applicable, intragroup
Marketplace	Your entity if you sell locally	On parcels, 17% to 20% by the buyer's state	The brand	Platform terms

Two hybrids sit between rows two and three, both under IN RFB 1.861/2018. In conta e ordem (article 2) a Brazilian importer clears in its own name while the Receita Federal treats the adquirente as the real importer. In encomenda (article 3) it uses its own funds and resells to a named buyer.

The commercial representative under Lei 4.886/1965

Brands reach for this model first because it reads like a light sales agreement. It is the most heavily regulated of the four.

Article 1 defines the figure as a person or company acting "sem relação de emprego", non-occasionally, mediating business for one or more principals by soliciting proposals or orders. Registration with the regional council is mandatory, and article 5 owes remuneration only to a registered representative. The statute says this is not employment; whether a relationship run with daily subordination survives that description is a labour court question, not reviewed here.

What article 27 puts in the contract

The contract must be written and must cover the term, the territory, the products, exclusivity, remuneration, each side's obligations and the indemnity on termination. Subsection "j" is where the money is.

Termination "fora dos casos previstos no art. 35" carries an indemnity "cujo montante não poderá ser inferior a 1/12 (um doze avos) do total da retribuição auferida durante o tempo em que exerceu a representação".

Read the base carefully. The divisor is twelve. The multiplicand is total remuneration across the whole time the representation ran, not the last twelve months. The base grows every year. Run the arithmetic in the statute and it is plain: at twelve years of steady commissions, a twelfth of the total equals about one year of them.

Modelling it as one twelfth of an annual figure is the most expensive misreading in this area.

Fixed-term contracts get their own formula in paragraph 1: average monthly remuneration up to termination, times half the months of the term. Paragraph 2 closes the workaround: a fixed term once extended, tacitly or expressly, becomes indefinite, so a renewal nobody signed carries the floor with it.

Notice, cause, forum and del credere

Where an indefinite contract has run over six months and the principal terminates without just cause, article 34 requires 30 days of notice or one third of the commissions of the preceding three months.

Article 35 lists the principal's just causes: negligence, discrediting acts, breach of duties, a final conviction for an infamous crime, force majeure. Terminating outside it triggers the "j" indemnity.

Two more rules move the price. Disputes go to the court of the representative's own domicile (article 39), so a brand appointing in a distant state litigates there. And article 43 voids del credere clauses, so the representative cannot guarantee the customer's payment.

The distributor who buys and resells

The Civil Code has a chapter that looks exactly on point, articles 710 to 721, "Da Agência e Distribuição". It is not on point.

Article 710 defines agency as promoting business on another's account for remuneration in a defined territory, "caracterizando-se a distribuição quando o agente tiver à sua disposição a coisa a ser negociada". The code's "distribuição" is an agent holding goods, not a merchant buying stock and reselling at its own risk.

A study published by the São Paulo state court records that the contrato de distribuição mercantil keeps its atypicality: no formula, no fixed notice, no automatic indemnity.

What remains is narrower. Article 473, sole paragraph, covers abuse of the right to terminate, compensating real readjustment costs rather than lost profits, and unamortised investments made for the contract. Articles 884 and 885 give an unjust enrichment claim where the supplier takes the customer base the distributor built.

The 90-day notice in article 720 belongs to agency: the same publication says a court instead fixes the period the distributor needs to readjust. Articles 715, 718, 719 and 721 could not be obtained verbatim and are cited by number only.

With a representative the exit cost is a formula you can compute on signing day. With a distributor it is a fact-finding exercise about investment and who built the customer base.

ICMS substitution and the shelf price

ICMS-ST is why a distribution model that works on a spreadsheet can fail in Brazil.

Article 150, paragraph 7 of the Constitution, introduced by EC 3/1993, lets the law make one taxpayer responsible for a tax "cujo fato gerador deva ocorrer posteriormente". LC 87/1996 names that party substituto tributário and adds a "margem de valor agregado" for operations still to come.

Convênio ICMS 142, of 14 December 2018, limits the regime to goods in Anexos II to XXVI, across 25 segments. Several are what consumer brands export: food, cosmetics and personal hygiene, medicines, electronics, alcoholic drinks other than beer.

São Paulo places manufacturers and importers among the substitutos, so an importer pays its own ICMS at clearance and the chain's ICMS at the same moment. The state calls the margin IVA-ST.

The consequence is structural. Tax on the whole chain is paid by the first link, on an assumed retail price the state has already fixed, so the shelf price sits inside the tax base before the goods leave the port. A distributor with thin capital will push that burden back at you in price talks.

Interstate rates, the 4% import rate and DIFAL

Resolução do Senado Federal 22, of 19 May 1989, sets the general interstate rate at twelve per cent, and 7% from 1990 for shipments from the South and Southeast into the North, Northeast, Centre-West and Espírito Santo.

Imported goods have their own rate. Resolução do Senado Federal 13, of 25 April 2012, sets 4% on the interstate leg from 1 January 2013, for unprocessed goods and processed goods whose Conteúdo de Importação exceeds 40%. RICMS/SP article 52 carries 4%, 7% and 12% alongside the state's 18% internal rate.

DIFAL rests on EC 87, of 16 April 2015. Sales to a final consumer in another state use the interstate rate, and the difference against the destination state's internal rate goes to that state, paid by the recipient where it is a taxpayer and by the sender where it is not. Lei Complementar 190, of 4 January 2022, regulates the non-taxpayer case. The STF validated collection from 2022 in ADI 7066, 7070 and 7078 in late November 2023, a point taken from a legal news source because the court's own domains would not serve their pages. State rates: ICMS by state.

Your own entity against a distributor

If the distributor imports, import ICMS, PIS/COFINS-Importação and the chain's ST arise there. PIS/COFINS-Importação is charged on the customs value at 2.1% and 9.65% for goods. The brand stays a foreign seller: no Brazilian credits, no visibility into the ST base, no control of a shelf price the state has already assumed.

If your own entity imports, all of that moves to you, and so does substituto status. You gain the credits and the base, and you carry the gap between paying the chain's tax at clearance and recovering it through sales.

A foreign legal entity needs its own CNPJ where it holds Brazilian assets or an interest in a Brazilian company, and an administrator resident abroad must appoint a Brazil resident to receive judicial service. Both routes assume an accredited importer: RADAR and Siscomex, and setting up a Brazilian company.

Marketplaces

A brand sells on a Brazilian marketplace either through a local entity, with ordinary import and ICMS treatment, or cross-border by parcel under Programa Remessa Conforme, which certifies sellers to charge the tax at purchase.

Situation	Imposto de Importação
Up to US$ 50 customs value, inside the programme	0%
Above US$ 50 up to US$ 3,000, inside the programme	60%, less the equivalent of US$ 30
US$ 0.01 to US$ 3,000, outside the programme	60%, no deduction

Customs value is goods plus freight plus insurance. State ICMS applies on top at 17% to 20% by the buyer's state, under Convênio ICMS 81/2023 as internalised by the states.

Any guide still quoting 20% on parcels up to US$ 50 is describing a rule that no longer applies. That rate arrived with Lei 14.902, of 27 June 2024, ran to 11 May 2026, and was zeroed by Medida Provisória 1.357, of 12 May 2026, for declarations registered from that date. The zero rate is confirmed from Receita Federal pages updated 12 June 2026; whether the MP was converted into law was not. More than 60 companies hold certification by ADE, among them Shein, Mercado Livre, Amazon and Shopee.

The reform already reaches platforms. LC 214/2025, article 23, requires a digital platform, "inclusive a domiciliada no exterior", to register for IBS and CBS. If it does not, the taxes are collected on remittances by the institution handling the foreign exchange: the bank withholds.

Why there are no market share percentages here

No official statistic for marketplace share exists in Brazil. IBGE publishes trade volume with no breakdown by platform. The rankings in circulation come from a commercial audience measurement firm and count site visits, not revenue; its open figure is an aggregate of 33.6 billion visits in the twelve months to December 2025. The best known paid study is paywalled and describes growth in online retail sales, not share. A percentage assembled from that would be a guess wearing a decimal point.

Scale can be stated from first-party material. Mercado Libre's own Brazil report, on 2024 data, records more than 5.8 million entrepreneurs and small businesses on its platforms, R$ 90.4 billion in small-business sales, and 19 distribution centres. It claims no market share.

Whether a platform requires a CNPJ from a seller is platform policy, and no first-party source for the individual marketplaces was verified.

Retail concentration, measured two ways

IBGE's Pesquisa Anual de Comércio for 2024, published 29 July 2026, puts net operating revenue for trade at R$ 7.7 trillion: 48.7% wholesale, 41.4% retail, 9.9% vehicles and parts. Its concentration indicator R8, the share of the eight largest companies, is 8.7%.

The 49th ABRAS ranking with NielsenIQ, published 27 April 2026, measures grocery retail only: R$ 1.145 trillion in chain turnover for 2025, 9.02% of GDP, across 439,728 stores. At the top, Grupo Carrefour Brasil at R$ 123.5 billion, Assaí Atacadista at R$ 84.7 billion and Grupo Mateus at R$ 43.5 billion, through a trade publication.

Across all trade Brazil is fragmented, so a distributor sells you a long tail no single account replaces. Inside grocery the head of the ranking is a short list of names. The two measures cannot be merged.

Logistics and where the warehouse goes

Brazil covers 8,515,767.049 km² across 5,570 municipalities, and goods move mostly by road. Infra S.A. figures, released with the national logistics plan in August 2026, put 54% of cargo movement on road, 27% on rail, 19% on waterways and under 1% by air. The source does not say whether that is tonne-kilometres or tonnage.

Road distances from Brasília, IBGE statistical yearbook, reference year 2022:

Destination	Road distance from Brasília
São Paulo	1,015 km
Rio de Janeiro	1,148 km
Porto Alegre	2,027 km
Belém	2,120 km
Recife	2,220 km
Fortaleza	2,285 km
Manaus	3,490 km

The same yearbook publishes straight-line distances, but from São Paulo (Manaus 2,685.3 km, Recife 2,124.4 km, Rio de Janeiro 358.2 km). Two series, two origins, so they cannot be subtracted to give a detour ratio.

Where the warehouse sits changes the tax position. Import ICMS goes to the state of physical entry. Interstate shipments carry 4%, 7% or 12%. A sale to a consumer in another state pulls in DIFAL, and ICMS-ST is paid up front by the first link.

The tax reform, and why it bears on a decision made now

EC 132, of 20 December 2023, created IBS, shared between states, the federal district and municipalities, and CBS, a federal contribution. The implementing statute, Lei Complementar 214, of 16 January 2025, was already amended by Lei Complementar 227, of 13 January 2026. Citing LC 214 unchecked means citing a 2025 text.

2026 is a test year. ADCT article 125 sets IBS at a state rate of 0.1% and CBS at 0.9%, and joint guidance from the IBS committee and the Receita Federal, 12 December 2025, relieves taxpayers meeting their accessory obligations from paying either. Coverage saying the new taxes are already collected has the mechanics wrong.

The rest is in the ADCT: from 2027 CBS applies in full and PIS and COFINS go, from 2029 to 2032 ICMS and ISS fall by declining fractions, and from 2033 both are extinguished.

Counting from 2026 to the end of the transition set out in the ADCT, the ICMS and ST logic still governs for several more years, and the structure built now has to survive the switch. Article 23 is already in the new system, which makes cross-border selling the one channel where the reform is a present concern.

How to choose

For presence without a Brazilian importer, the commercial representative is the direct route. Price the "j" floor against the full life of the relationship, set the term deliberately, assume the article 39 forum, drop any del credere clause.

Where the goods sit in an ICMS-ST segment and you would rather not fund the substitution gap, a distributor importing on its own account moves that burden off the brand, at the cost of the credits and of the shelf price.

Where the substitution base effectively sets your retail price, only the own-entity route puts that base in your hands. It needs a CNPJ, an accredited importer, a resident attorney for service, and working capital.

For small, light, consumer-facing products the question is not platform fees. It is whether cross-border parcels beat holding stock locally, and that flips at the US$ 50 line and again at US$ 3,000.

Where the market is unproven, conta e ordem or encomenda clears goods through a Brazilian importer without an entity of your own.

Sources

• Commercial representation: Lei 4.886, of 9 December 1965, articles 1 to 5, 27 with paragraphs 1 and 2, 34, 35, 36, 39 and 43, from planalto.gov.br, as amended by Lei 8.420/1992 and Lei 12.246/2010. Registration requirements from CONFERE, first-party on its own rules. The reclassification risk is stated from article 1 alone; labour case law was not reviewed.
• Agency and distribution: article 710 quoted verbatim from a published opinion of the Rondônia state tax authority, which reproduces the text. Atypicality of the reselling distribution contract, the 90-day notice in article 720, its non-application to distributors, and the grounds for payment on termination (article 473, sole paragraph, and articles 884 to 885) from a study published by the São Paulo state court in its Cadernos Jurídicos series. The referring character of article 721 is confirmed through a legislative document, not the code text. Verbatim wording of articles 715, 718, 719 and 721 was not obtained, because planalto.gov.br serves the Civil Code truncated to automated retrieval; cited by number only.
• ICMS substitution: Constitution article 150, paragraph 7, as introduced by EC 3/1993. LC 87/1996 articles 6, 8 and 10. Convênio ICMS 142, of 14 December 2018, from confaz.fazenda.gov.br. SEFAZ-SP's own substitution page for the treatment of importers as substitutos, IVA-ST and Portaria CAT 42/2018.
• Interstate rates and DIFAL: Resolução do Senado Federal 22, of 19 May 1989, and Resolução do Senado Federal 13, of 25 April 2012, from official sources, with RICMS/SP article 52 for current applicability. EC 87, of 16 April 2015, and Lei Complementar 190, of 4 January 2022. The STF ruling in ADI 7066, 7070 and 7078 comes from a legal news publication because the court's domains do not serve pages to automated retrieval; secondary.
• Import taxation and import models: LC 87/1996 articles 11, 12 IX and 13 V. Lei 10.865/2004 articles 7 and 8. IN RFB 1.861/2018 articles 2 and 3, with Portaria Coana 6/2019, from the Receita Federal import clearance manual. Lei 9.430/1996 articles 18 to 24 for transfer pricing in encomenda. IN RFB 2.119, of 6 December 2022, Anexo VIII. DREI's manual for registering a limitada.
• Remessa Conforme: Receita Federal programme pages, tax page last updated 12 June 2026, for current rates, the historical 20% rate from 1 August 2024 to 11 May 2026, and the certified company list. Lei 14.902, of 27 June 2024, and Medida Provisória 1.357, of 12 May 2026; the status of that MP in Congress was not confirmed. Parcel ICMS at 17% traced through Minas Gerais Decreto 48.702, of 6 October 2023, since the CONFAZ page for Convênio ICMS 81/2023 did not respond.
• Tax reform: EC 132, of 20 December 2023, with ADCT articles 125, 126, 128 and 129. Lei Complementar 214, of 16 January 2025, articles 21, 22 and 23, and Lei Complementar 227, of 13 January 2026. Test year guidance published jointly by the IBS management committee and the Receita Federal on 12 December 2025.
• Retail and marketplaces: IBGE Pesquisa Anual de Comércio 2024, published 29 July 2026. The 49th ABRAS ranking with NielsenIQ, published 27 April 2026, reported through a trade publication because the association's own page serves only PDF links; secondary. Mercado Libre's Brazil impact report on 2024 data, first-party on its own operations. Aggregate e-commerce traffic from a commercial audience measurement firm, which counts visits and not revenue; secondary, and not a market share. No marketplace share percentages appear here because no verifiable source for them exists. Supplier requirements of the retail chains are not published in verifiable form and are not stated here.
• Logistics: IBGE geographic data for area and municipality count. IBGE Statistical Yearbook 2023 for road distances from Brasília (DNIT as underlying source, reference year 2022) and, as a separate series, straight-line distances from São Paulo. The modal split of 54%, 27%, 19% and under 1% comes from Infra S.A. figures released by the Ministry of Ports and Airports on 12 August 2026, with no unit of measurement or reference year stated.

Facts on this page were checked on 7 September 2026. Two areas move fastest: the cross-border parcel regime changed on 1 August 2024 and again on 12 May 2026, and LC 214/2025 was amended by LC 227/2026 within a year of enactment. Check the date on any source before relying on it, including this one.