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When the exporting company is unaware of the target market, its cultural aspects and customs, legislation and technical barriers, and intends to avoid spending on market research, an alternative to be taken into account is the use of a representative, better known as an Agent (international).
The Agent figure may also be necessary to enable some types of negotiation, for example, when the final user abroad has the skills (and preference) to import their products directly, but the sale was made through a third company, and this same company will be responsible for installation and technical assistance, therefore, it needs to receive remuneration for this sale.
We can't miss this business opportunity due to lack of knowledge, can't we?
However, for its correct application, it is important to observe the characteristics of the Brazilian legislation related to the payment of the commission of this Agent not resident in Brazil.
Given the importance of the theme in exports, let's understand what the Agent Commission is, what the options are and which one is preferable in practice.
What is an export agent commission?
An agent or representative (of the exporter) is an intermediary between seller and buyer. Due to certain services rendered, this agent receives a remuneration, better known as Agent Commission.
Payments of this commission due on exports can be made in three ways:
In Graphic Account;
To be remitted;
By Deduction on the Commercial Invoice.
The applicable legislation for these cases can be found mainly in the RMCCI and in Portaria Secex nº 23, of 07/14/2011, Section XV.
Graphic Account
In this option, we have two main characteristics: (i) the export exchange value does not include the portion related to the Agent Commission; (ii) the commercial invoice and the withdrawal cover the amount of the Agent Commission.
Therefore, the Agent Fee amount is not included in the export exchange contract amount, it will be included in the commercial invoice and the withdrawal.
Basically in this option, once the exporter receives the payment, he will make the currency exchange contract only in relation to the value of the good, already excluding the Agent Commission amount, that is, this commission amount will not be converted from dollars to reais, for example.
The exporter will inform the agent's bank details and the bank will make the transfer in foreign currency.
Example:
FOB price of Sale: USD 10,000.00
"Graphic Account" Commission of 10%: USD 1,000.00
Buyer will pay USD 10,000.00 to seller. When the amount is available to the exporter's account, he will make an exchange contract in the amount of USD 9,000.00 and will ask the bank for the USD 1,000.00 to be sent to the Agent as a commission.
To be remitted
With this option, the rate of export exchange contract, of commercial invoice and the money receiving, include the commission amount, different from the option “On Graphical Account”.
The export value will be fully received by the exporter. Payment of the commission will be made by means of a financial transfer in favor of the beneficiary of the commission.
It is also possible to pay in a currency other than that indicated on the DU-E (Brazilian government export registration). The parity that references the currency purchase rate, available at SISBACEN, transaction PTAX800, option 5, relative to the business day prior to the exchange contracting must be used.
Example:
FOB price of Sale: USD 10,000.00
10% “To be Remitted” commission: USD 1,000.00
Buyer pays USD 10,000.00 to seller. When the value is available to the exporter's account, he will make an exchange contract in the amount of USD 10.000.00. At a later time, he will contact the bank again and transfer the commission exchange rate (USD 1,000.00) to be sent abroad.
This option is a little less advantageous if these payments are not unified, since at each contract (both receiving and sending foreign currency) there will be exchange contract costs. It is a better option for commissions accumulated over a certain period and paid at once.
Deducted from the Invoice
With the option of deduction on the commercial invoice, it is important to note its characteristics:
the commercial invoice amount includes the commission amount;
the export exchange contract and money receiving value does not include the commission amount.
The commission amount must already be deducted from the invoice before the export, so the importer will pay less, and the amount of this commission must be paid by the importer directly to the Agent.
Example:
FOB price of Sale: USD 10,000.00
10% “By Deduction on the Commercial Invoice” commission: USD 1,000.00
The export will be receive USD 9,000.00 (in the invoice it mentions the deduction of the USD 1,000.00 commission and totals USD 9,000.00 on the invoice). The importer will pay the exporter the USD 9,000.00 referring to the goods and will pay USD 1,000.00 referring to the Agent Commission (which, in general, is usually in the same country as the importer).
This option is the most common to be used, as that way the importer will have access to the percentage of the Agent Commission. Very important information for topics related to compliance with local legislation, as it happens here in Brazil and we will see below.
If the negotiation does not allow the value of the commission to be evident to the importer, one of the options above can always be used.
How does the export agent commission work?
As it is a sales commission linked to an export, as we have seen, this commission will always be linked to an exchange contract and will have its own rules.
At DU-E, upon registration, the percentage of the commission must be informed for each item of the Electronic Invoice and likewise the type of commission (in "Graphical Account", "By Deduction from the Commercial Invoice" or "To be Remitted ”) will be informed by the exporter directly to the bank.
The Agent Commission must be calculated on the value of the goods at the place of shipment, that means, on the FOB value.
The commission percentage has rules to be followed by Secex Ordinance No. 23, which limit the percentages according to the chapters of the Mercosur Common Nomenclature (NCM/SH):
However, it is important to remember that the theme “Agent and Agent Commission in exports” is always about this representative being outside Brazil.
As well as for representatives/agents within the country, these commissions will be the object of providing services to the exporter, for which invoices (Brazilian fiscal document - Nota Fiscal) for the provision of services will be issued and payment will be made in national currency.
Agent Commission on Export: We can conclude that the modalities "Deduct from the Invoice" and "Graphic Account" are financially more advantageous
When we think about the three modalities, we can verify that the "To be Remitted" option requires that the full amount received is first converted into Reais (BRL), to be later converted again into the selling currency and then sent to the agent, in this modality we will have at least the payment of two exchange contracts with the bank, besides the probable exchange differences.
On the other hand, the option "Graphic Account" will require the whole available value in the exporter's account, and then only the commission value will be remitted abroad for the agent's payment (in this case without contract the exchange rate, still in dollars, for example). For negotiations where it is not interesting that the importer knows about the agent's commission, this is the most suitable option.
Finally the option "By Deduct of the Invoice" allows the importer to just send the exporter the payment for the goods and pay locally the amount of commission, as the agent is usually in the same country of him.
In our experience the "Graphic Account" payment is the most used modality, but each case must be analyzed and so it is important to know the three options.
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