Doing Business In... 2023 Comparisons

The Brazilian legal system is based on civil law, due to the historical influence of French and Roman Germanic jurisdictions. Nevertheless, Brazil has been facing increasing influence of Anglo-Saxon jurisdictions. Please see below some features of the Brazilian organisation of power:

• a federal form of organisation (federal, state and municipal governments);
• a presidential system, where the president of the republic commands the federal executive branch (both as a chief of government and a chief of state);
• a bicameral federal legislative branch (the house of representatives and the senate); and
• the establishment of a Constitutional Supreme Court (Supremo Tribunal Federal – STF).

The Brazilian judiciary is divided into five courts, based on the matters subject to review: (i) Federal Court, with jurisdiction over matters involving the federal administration; (ii) Labour Court, with jurisdiction over matters related to work relationships; (iii) Electoral Court, with jurisdiction over matters associated to the elections for the executive branch; (iv) Military Court, with jurisdiction over disputes involving militaries; and (v) Common Justice, with jurisdiction over all matters not covered by the other courts. 

In order to comply with the constitutional requirement of two-tier judicial authority (princípio do duplo grau de jurisdição), each court is comprised of the judge, the Court of Appeal and the Superior Court, except for the Military Court, which is comprised of the Military Audit and the Military Superior Court. The five superior courts based in Brazil are:

• the Supreme Court, which is a constitutional court at the top of the hierarchy of the judiciary;
• the Superior Court of justice (Superior Tribunal de Justiça – STJ), which is at the top of the hierarchy of the judiciary, resolving matters subject to federal law;
• the Electoral Court (Tribunal Superior Eleitoral – TSE);
• the Labour Court (Tribunal Superior do Trabalho – TST); and
• the Military Court (Superior Tribunal Militar – STM), the latter three of which are superior courts for specialised matters.

The judgment and enforcement of judicial orders are carried out according to the authority of each court, as defined in the Brazilian Constitution.

There are also regional and superior administrative courts, particularly for tax and regulatory matters, such as:

• Conselho Administrativo de Recursos Fiscais (CARF), Tribunais de Impostos e Taxas (TIT) and Conselho Municipal de Tributos (CMT), which are the authorities at the top of the administrative hierarchy for federal, state and municipal tax matters, respectively;
• Tribunais de Contas, which are the authorities entitled to oversee public resources, Tribunal de Contas da União (TCU) when it comes to resources of the federal administration, Tribunais de Contas dos Estados (TCEs) when it comes to resources of the state administrations, and Tribunais de Contas dos Municípios (TCM), when it comes to resources of some of the municipal administrations; and
• Conselho de Recursos do Sistema Financeiro Nacional (CRSFN), which is the authority at the top of the administrative hierarchy for the financial system, including Comissão de Valores Mobiliários (CVM) (securities and exchanges) and Banco Central do Brasil (BCB) (central bank); and
• independent regulatory agencies.

Decisions by administrative courts are subject to being, and commonly are, challenged before judicial courts.

Generally, there are no restrictions on foreign investment in Brazil. However, there are sectors in which foreign investments are structurally limited, such as the following:

• telecommunications – foreign investors can hold up to 30% of licensed telecommunications companies (Law No 4,117/1962); and
• rural real estate – the acquisition and lease of rural real estate is very limited for foreign individuals and companies, as well as national companies with the majority of capital stock held by foreigners/whose controlling shareholder is a foreigner (Law No 5,709/1971 and Report LA-01/2010 by the Attorney General’s Office).

Foreign investments are subject to registration before the Central Bank of Brazil, whether in the form of direct investments or credit (SCE – IED and SCE – Crédito, before 2023 known as RDE – IED and RDE – ROF). Failing to register correct information or any information at all may result in the imposition of fines limited to 10% of the value under registration or BRL250,000, whichever is the lower, in the worst-case scenario (registering false information).

Foreigners are also subject to the same approvals of governmental authorities for change of control or transfer of assets, such as those required in transactions in some regulated industries, such as energy, ports, insurance and financial services. Foreigners are also subject to antitrust authority approvals in situations laid down in the legislation.

Brazil does not have any control of foreign investment similar to the Committee on Foreign Investment in the United States (CFIUS), which may decide on the authorisation of foreign investment on the grounds of national security.

As a rule, there is no need to obtain approval for ordinary investment. In case antitrust or other governmental approval is required, process and timing will vary depending on the governmental branch involved.

Commitments will be required insofar as set out in the legislation and regulation applicable to the industry concerned. Commitments are more stringent in regulated sectors. As a general rule, commitments of Brazilians do not differ from those of foreign investors.

The investor can challenge a decision of the authorities not to authorise an investment. Investors can employ some remedies, but the most common is the writ of mandamus (mandado de segurança). Should the investor prove that the law authorises the activity and that the decision of the authority causes imminent damage to the investor, courts can grant an interim decision in a few days. Court decisions can be challenged before courts of appeal and in superior courts, which may delay the operation of businesses. The timing for the final decision of courts is unpredictable and varies on a case-by-case basis.

The most common types of corporate vehicles in Brazil are limited liability companies (sociedades limitadas) governed by the Civil Code (Law No 10,406/2002) and corporations (sociedades anônimas), because shareholders are anonymous to the public, governed by the Law of Corporations (Law No 6,404/1976).

Brazilian companies do not have a minimum (provided that they are not null) or maximum share capital requirement, except if they are otherwise required by regulatory provisions, depending on the industry.

Additionally, corporations can be private (companhias fechadas) or publicly owned (companhias abertas), the latter of which are subject to the authority of the Brazilian Securities and Exchange Commission (Comissão de Valores Mobiliários – CVM), while limited liability companies cannot issue securities and are out of reach of the regulations of the CVM.

Recently, the Civil Code has been amended to allow that limited liability companies have only one shareholder (sociedades limitadas unipessoais). Corporations can also be held by one single corporate shareholder, not a single individual (subsidiária integral) under specific circumstances.

There are five core characteristics of such business vehicles are:

• legal personality;
• limited liability;
• transferable shares;
• centralised management; and
• shared ownership as a consequence of equity capital contributions.

Both limited liability companies and corporations have legal personality, which means that their assets and liabilities are separate from their shareholders.

Shareholders’ liability is in both cases limited to the paid-up capital, so there is a defined cap for the risk of investors (except for situations whereby the corporate veil is pierced, pursuant to the explanation below).

A corporation’s shares (ações) are fully transferable (unless restrictions are included in shareholders’ agreements or in the by-laws of private corporations). Limited liability companies’ shares (quotas) are not securities, which means their transferability is more restricted. Furthermore, ações can have no par value, while quotas must have par value. Whereas corporations (even private corporations under certain circumstances) can issue publicly traded securities, such as shares and debentures, limited liability companies cannot.

Limited liability companies can also adopt some characteristics of corporations, such as the board of directors (conselho de administração), the audit committee (conselho fiscal), the preferred shares (quotas preferenciais), the treasury shares (quotas em tesouraria), and the shareholders’ agreements (acordos de sócios). The articles of association of a limited liability company can set out that the limited liability company be supplementarily governed by the law of corporations.

Resolutions by the shareholders’ meetings of corporations and of limited liability companies are passed by the majority of the shareholders attending the meeting or, in particular circumstances, such as the amendment to the articles of association or approval or corporate reorganisations, by the majority of the capital stock.

Shareholders can put in place a shareholders’ agreement to set out terms and conditions for exercising the control power and the creation of restrictions on the transferability of shares (eg, pre-emption rights, tag-along rights, drag-along rights, put/call options). Shareholders can also set out specific governance rules for the corporation or for the limited liability company, as the case may be.

As a condition for their enforceability, the shareholders’ agreement of corporations must be recorded in the corporate books and filed in the corporation’s headquarters; since the Brazilian Civil Code lays down no rules on the shareholders’ agreement of limited liability companies, there are some strategies to confer enforceability to the instrument, such as: (i) filing the document in the company’s headquarters; and/or (ii) including the company as an intervening part of the shareholders’ agreement; and/or (iii) mentioning in the articles of association that there is a shareholders’ agreement in place; and/or (iv) filing the shareholders’ agreement for registration before the Registry of Companies (Junta Comercial) with jurisdiction over the company.

Historically, limited liability companies have been the most popular corporate type due to their flexibility and lower maintenance costs. With the recent changes to the Law of Corporations (Law No 13,818/2019 and Supplementary Law No 182/2019), with a reduction of bureaucracy and of costs for the incorporation and operation of a corporation, the number of corporations tends to increase. Corporations were traditionally the common vehicle for publicly owned corporations, especially state-owned corporations and private corporations with more complex shareholder relationships and/or seeking to issue securities.

Limited liability companies and corporations are incorporated through the submission of the articles of association/by-laws to the Registry of Companies (Junta Comercial). By that submission, they are also registered before federal and municipal tax authorities as a rule, and before state tax authorities in case they commercialise goods.

As a general rule, companies can be incorporated within one week, unless their corporate purpose is complex (develops many economic activities) and/or state tax authorities require that their facilities go under inspection.

After incorporation, companies may be required to issue licences before authorities are able to develop their activities, as the case may be. The most common licences are the foreign trade licence for import/export purposes (RADAR) and licences requiring environmental special care when it comes to activities related to natural resources.

The incorporation process can be time-consuming and bureaucratic if the formation requires previous approvals of governmental authorities, such as companies in the financial and insurance sectors.

Publicly owned corporations are subject to reporting and disclosure obligations to the Brazilian Securities and Exchange Commission and the market. The most important regulated reporting and disclosure obligations instruments are the following:

• Reference Form (Formulários de Referência) – full and updated report of the corporation, including aspects such as control ownership, corporate governance, negotiation of stocks, related-party transactions, auditors’ reports and so on; and
• Material Facts, Communications to the Market and Notices to Shareholders (Fatos Relevantes, Comunicações ao Mercado and Avisos aos Acionistas) – published communications by the corporation to stakeholders on material and strategic information for the development of business and negotiations of stocks.

Reporting and disclosure obligations by privately-owned corporations and limited liability companies are much less burdensome. Although it is true that there have recently been several changes to the legislation of corporations when it comes to reporting and disclosure obligations, relevant differences are still in place.

Publications of corporate documents and financial statements are restricted to free electronic platforms for corporations with annual revenues limited to BRL78 million. Corporations are subject otherwise, for instance, to publishing their financial statements in gazettes and registering them before the Registry of Companies, while limited liability companies are not.

Another significant difference is that the assignment of shares has to go under an amendment to the articles of association for limited liability companies, which is registered before the Registry of Companies in order to be enforceable against third parties, while corporations only have to register those changes in their corporate books.

Privately owned corporations and limited liability companies have in common the obligation to annually approve their managements accounts, pursuant to 3.5 Directors’, Officers’ and Shareholders’ Liability.

Managers of corporations and limited liability companies shall be individuals domiciled in Brazil or abroad; in case they are domiciled abroad, it is necessary that managers maintain an attorney-in-fact in Brazil for receiving communications for the period of three years after they have left their position.

The management of corporations is composed of at least one executive officer and a board of directors composed of at least three members; the board of directors is optional, except for publicly owned corporations, therefore, the management of corporations can be structured as one or two tier.

Although limited liability companies generally implement and are managed by one single manager/officer or a few managers/officers, shareholders can also implement a two-tier structure with officers and a board of directors, provided that they are governed by the Law of Corporations.

Officers have sole power to act on behalf of the company, subject to the separation of powers and duties by the company’s articles of association/by-laws, while resolutions by directors are decided collectively by the board and directors do not have powers of representation. The managers and the board of directors exercise their powers generally, limited to a threshold (alçada) prescribed by the articles of association/by-laws, that is the financial limit from which it is required that decisions are taken to the scrutiny of shareholders themselves.

Publicly owned corporations also have regulatory requirements of representation of workers in their board of directors, as well as independent directors. There is a growing number of public corporations with no defined controlling shareholder and public corporation listed in high-ranked corporate governance indexes such as Novo Mercado, in which the majority of directors is independent.

The audit committee is also a very important part of management structures in Brazil. Its purpose is to oversee management performance and analyse the financial situation of the company. It is generally created in companies where minority shareholders are interested in having additional control mechanisms on managers elected by controlling shareholders.

Directors and officers have fiduciary duties before companies and stakeholders. Therefore, they are liable for their acts on negligence, recklessness or wilful misconduct and for breaching the law or the by-laws/articles of association.

Annual shareholders’ meetings have to take place in limited liability companies and corporations within four months after the end of the fiscal year regarding financial statements and the managements accounts. Once the shareholders approve the accounts, managers are exempt from liability due to the exercise of their duties.

Generally, shareholders are not liable for the company’s liabilities. However, acts of misuse of the company by the shareholder can lead to the lifting the legal veil (by deviation from the corporate purpose or confusion of assets: desvio de finalidade or confusão patrimonial, respectively). Furthermore, notwithstanding such requirements by the Civil Code, when it comes to the special regulation of tax, labour, consumer and environmental matters, courts are authorised by law to pierce the corporate veil, even without any personal liability by the shareholder.

The main laws applicable to employment relationships in Brazil are the Constitution, the Consolidation of Labour Laws (Decree-Law No 5,452/1943 or Consolidação das Leis do Trabalho – CLT) and international conventions such as International Labour Organization (Organização Internacional do Trabalho – OIT).

Recently, there was an important reform of labour laws, mainly to the CLT (Law No 13,467/2017 or Labour Reform), with the goal of updating and loosening the legislation towards modern forms of employment.

Collective bargaining agreements are also an important part of employment relationships because they generally prevail over individual agreements in case they are more beneficial to the employee. Collective bargaining agreements are divided between collective agreements (acordos coletivos), entered into by and between companies and a union of employees, and collective conventions (convenções coletivas), entered into by and between a union of employers and another union of employees.

Not only laws and regulations are important for a complete understanding of employment relationships in Brazil, because case law also plays a vital role. Labour courts are a specialised segment of the judiciary and it is not reckless to say that they are biased towards employees, even though the Labour Reform implemented several important controls to balance this.

The employment agreement entered into by and between the employer and employee is the instrument that formalises their type of employment relationship. Although employment agreements are the basic element of individual employment relationships, they are not the only governing agreement.

Employment agreements contain the main terms and conditions governing the employment relationship. Verbal agreements are also possible based on the general assumption applicable to employment relationships pursuant to which reality prevails over formalities. In practice, very simple labour contracts are put in place to set out the rules governing the employment relationship, given that the law, the collective bargaining agreements and the case law play an important role in defining the obligations, duties and rights of an employee.

The duration of employment contracts can be determined in certain cases, or undetermined otherwise. Law prescribes that employment relationships are possible for a definite term under the following circumstances:

• due to the nature of the employment relationship;
• due to transitory activities; and
• due to the performance of a trial period.

Additionally, the definite term can be renewed only once, but cannot exceed the total period of two years.

The maximum working time applicable to salaried employees is set forth by the Constitution as 44 hours, which shall be reduced in particular employment relationships (eg, healthcare). Exceeding hours shall be regarded as compensation or overtime in terms and conditions specifically negotiated – overtime is subject to at least 50% of increment to the hour value.

Employees working on weekends or holidays are especially burdensome for employers, since employees are entitled to at least 100% of increment to the hour value. Night shift employees are entitled to receive a premium of at least 20% for their hour value compared to employees working during the day, and reduced daily working hours of 12.5%.

Overtime hours are regulated by working hours control for companies with over 20 employees and shall occur under extraordinary circumstances, otherwise employment relationships shall be considered as abusive.

Employees working for fewer hours than general employees shall be regarded as part-time workers, which is prescribed by Convention OIT No 175. Pursuant to such regulation, the salary and certain labour benefits, such as vacation for part-time employees shall be proportional compared to that of general employees.

Part-time employment relationships shall be limited to 30 working hours per week or 26 working hours per week with the possibility of six overtime working hours. Those are the minimum working hours for general employees.

Brazil is an “employment at will” jurisdiction, which means that employment contracts can be terminated with or without cause. Recently, the Supreme Court decided that the presidential decree excluding Brazil from Convention OIT No 158 is valid (ADI 1,625), thereby validating termination of employment contracts without cause.

The main difference between termination with or without cause is that the employer is subject to the payment of indemnification/severance to the employee when it comes to termination without cause, which includes the following:

• full payment during the notice period of 30 days or more;
• 13th salary;
• Vacations with an additional stake of one third;
• FGTS with an additional stake of 40%;
• bank of hours and/or overtime; and
• unemployment insurance.

A termination agreement by settlement can be subject to ratification before a labour judge/court, provided that employer and employee are both represented by attorneys. Recently, the Labour Superior Court has decided that the employer is able to obtain full release from the employee in this context, if requested, and avoid future claims (RR 11644-98.2020.5.15.0129).

Collective redundancies and mass termination by employers are subject to intervention by unions. Recently, the Supreme Court has decided that an authorisation by or entering into an agreement with the union is not necessary for that purpose, but they are entitled to participate in the negotiations (RE 999,435).

Employees are bound by unions, even though their association as their collective representatives is not compulsory based on the constitutional principle of freedom of association. Recently, the Supreme Court has decided that only employees participating in unions (sindicalizados) are subject to the payment of assistance contributions (contribuições assistenciais), but the matter is still subject to opposition (ARE 1,018,459).

Unions are unique on their respective geographic scope, which can include a city, a state or the whole country, each of which is independent, given the autonomy of sub-national entities within the federal organisation. There are unions comprising the territory of a city, state or the whole country. Hierarchically, a group of unions is a federation and a group of federations is a confederation.

There are four main roles associated with unions as employee representatives:

• participating in and negotiating collective bargaining agreements;
• providing complimentary services to employees, such as healthcare;
• serving as the interface between government and employees in the context of formulation and implementation of public policies regarding labour relationships; and
• filing collective lawsuits for the benefit of employees as principals.

The following taxes are generally applicable to employment relationships in Brazil governed by the CLT:

• income tax – the employer is subject to paying monthly withholding income tax which is discounted from the employee’s salary based on a progressive scale (based on a rate between 15% and 27.5%, if not exempt), while the employee pays the adjusted ordinary annual amount due;
• social security contribution – the employer is subject to paying a monthly withholding social security contribution which is discounted from the employee’s salary (based on a rate between 7.5% and 14%), plus an amount also levied monthly on the total payroll; and
• severance fund contribution (Fundo de Garantia do Tempo de Serviço – FGTS) – deposited ad valorem by the employer based on the employee’s salary (based on a general rate of 8%, even though there are exceptions).

The following taxes are also paid exclusively by employers based on their payroll:

• labour workplace risk contribution (Risco Ambiental de Trabalho – RAT);
• education salary contribution (Salário Educação);
• family salary contribution (Salário Família); and
• S system contribution (Sistema S).

In general terms, a legal entity incorporated in Brazil is deemed to be resident in the country. Accordingly, a non-resident may solely be taxed in Brazil through a subsidiary or a branch. Although Brazilian legislation does not specifically contain a “permanent establishment” concept, a non-resident company may be taxed in Brazil if it (i) has a fixed place of business (de facto companies); or (ii) has an agent in Brazil who has the power to sign agreements that bind the non-resident.

The following taxes are generally applicable to businesses in Brazil:

• Corporate Income Tax (Imposto de Renda sobre a Pessoa Jurídica – IRPJ);
• Social Contribution on Net Profit (Contribuição Social sobre o Lucro Líquido – CSLL);
• Social Integration Programme (Programa de Integração Social – PIS);
• Social Security Financing Contribution (Contribuição para o Financiamento da Seguridade Social – COFINS);
• Tax on Imports (Imposto de Importação – II);
• Tax on Exports (Imposto de Exportação – IE);
• Excise Tax (Imposto sobre Produtos Industrializados – IPI);
• Tax on Credit, Foreign Exchange and Insurance Transactions (Imposto sobre Operações de Crédito, Câmbio e Seguro – IOF);
• Contribution of Intervention on the Economic Domain (Contribuições de Intervenção no Domínio Econômico – CIDE);
• Tax on the Circulation of Goods and Services (Imposto sobre a Circulação de Mercadorias e Serviços – ICMS), which is subject to the authority of states; and
• Tax on Services (Imposto sobre Serviços de Qualquer Natureza – ISSQN), which is subject to the authority of municipalities.

Congress is currently discussing the substitution of ICMS, ISSQN, IPI, PIS and COFINS by a single Value Added Tax (VAT).

Dividends paid in Brazil, as well as remittances abroad, are currently not subject to taxation in Brazil.

The main tax credits are related to taxes calculated under a non-cumulative regime, such as IPI, ICMS, and PIS and COFINS. In this case, credits are generally originated from essential expenses or acquisition of raw materials, as the case may be.

There are many tax incentives in Brazil, but the government has already expressed its intention to reduce them because of its need to increase revenues and maintain fiscal balance. The main tax incentives are the following.

• Dividends – withholding tax exempt regardless of whether the beneficiary is resident in the country.
• “Simples” – a special tax programme for small entrepreneurs (microempresas – ME e empresas de pequeno porte – EPP) uniting the relevant taxes (IRPJ, CSLL, PIS, COFINS, IPI, ICMS, ISS and Contribution for Social Security)
• Zona Franca de Manaus and free trade zones – products manufactured are exempt from IPI.
• Financial instruments (real estate and agriculture credit notes and certificates of receivables or LCI/LCA and CRI/CRA, incentivised debentures) – exempt from income tax for individual investors.
• Regime Especial de Incentivos para o Desenvolvimento da Infraestrutura (REIDI) – acquisitions of capital goods for infrastructure projects are exempt from PIS and COFINS.

Tax consolidation is not available in Brazil.

Thin capitalisation rules deny deductibility of interest expenses if the debt-to-equity ratio exceeds 2:1. If the lender is located in a tax haven or is subject to a privileged tax regime, such threshold is lowered to 0.3:1.

Recently, new transfer pricing legislation was enacted in Brazil, complying with OECD practices (Law No 14,596/2023). In that regard, there is an express provision determining the full adoption of the arm’s length principle.

This new transfer pricing methodology is mandatory for calendar year 2024, however, the taxpayer may make an election for early adoption (for 2023).

There is an anti-evasion rule expressly prescribed by the National Tax Code (Código Tributário Nacional – CTN) that authorises tax authorities to disregard evasion transactions. Recently, the Supreme Court decided that such legislation is constitutional, but the enactment of a new piece of legislation is necessary for the purpose of entitling the Federal Revenue Service (Receita Federal do Brasil – RFB) to such an authority.

For gun-jumping prevention, transactions involving merger control are subject to notification and approval by the antitrust authority, called Administrative Council of Economic Defence (Conselho Administrativo de Defesa Econômica – CADE). The criteria for notification depends on the parties involved pursuant to their annual gross sales or turnover in Brazil. The main legislation within the Brazilian antitrust framework for that matter is the Brazilian Competition Law (Law No 12,529/2011, with legal thresholds for mandatory notification updated by Interministerial Ordinance No 994/2012), the characterisation of business groups pursuant to Ordinance CADE No 33/2022 and CADE’S Internal Regulation (Statutes of CADE).

In general, merger control transactions must be submitted to CADE by notification if they meet the following cumulative thresholds: (i) at least one of the business groups involved in the transaction has registered an annual gross sales or total turnover, in Brazil, equivalent to or above BRL750 million, in the year prior to the transaction; and (ii) at least another business group involved in the transaction has registered an annual gross sales or total turnover, in Brazil, equivalent to or above BRL75 million, in the year prior to the transaction. The adherence to the business group is based on distinguished criteria for companies and investment funds.

Transactions that are subject to mandatory approval by CADE are not allowed to be fully implemented (consummated) until there is a final decision by the authority, otherwise they are subject to a breach of law by gun-jumping.

Additionally, mergers shall also be subject to approval by independent agencies, depending on their respective industry, such as banking (Central Bank of Brazil – BACEN), telecommunications (Agência Nacional de Telecomunicações – ANATEL) and power (Agência Nacional de Energia Elétrica – ANEEL).

There is no deadline prescribed by law for the merger notification, but its completion is subject to the CADE’s scrutiny. Generally, merger control notifications are submitted after the parties have signed a binding agreement, such as a share purchase agreement, while the approval by CADE, as well as an independent agency as the case may be, are some of the conditions precedent for closing the transaction.

The relevant documents of the parties and the transaction, as well as an analysis of the impact of the transaction on the market, including market shares of each party, shall be attached to the merger control notification.

There is a fast-track procedure and an ordinary procedure for merger control notifications. The ordinary procedure is meant to be adopted for complex transactions, while the fast-track procedure is for transactions in general, that pose minor effects on competition. Both fast-track and ordinary procedures are decided by CADE’S General Superintendence (Superintendência-Geral – SG), when it understands that the merger must be cleared without restrictions. Otherwise, if SG decides to approve it with restrictions or reject it, then SG will present an objection to CADE’s Tribunal. The Tribunal can also review a transaction upon request by third-parties or one of its members in order to uphold or overturn (either totally or partially) SG’s decision to approve it without restrictions. 15 days after it is published, SG’s decision becomes definitive.

Fast-track procedures take up to 30 days, while ordinary procedures take up to 240 days.

Cartels are subject to enforcement by both civil (including the administrative authority) and criminal jurisdictions in Brazil, although CADE is the specialised authority most capable of overseeing and punishing cartels.

The definition of cartel by CADE is the following: “any agreement or concerted practice between competitors with the purpose of establishing fixed prices, divide markets, establish quotas or restrict production, adopt pre-arranged positions in a public bidding, or whose object is any other variable competitively sensitive”.

The legal framework regarding cartels is composed by the Competition Law, as well as Law of Crimes against the Economic Order (Law No 8,137/1990), the Criminal Code (Decree-Law No 2,848/1940), the Improbity Law (Law No 8,429/1992), Law of Public Bids (formerly Law No 8,666/1993, within a transition period/vacatio legis into Law No 14,133/2021) and Anti-corruption Law (Law No 12,846/2013).

Cartels are not rarely structured internationally. Therefore, cartels are enforceable in Brazil provided that they also produce effects on competition in the Brazilian jurisdiction, regardless of where they were carried out. CADE has institutional relationships with many OECD member countries and usually engages in co-operation efforts in the context of cross-border multi-jurisdictional investigations.

If convicted, cartels and their members are subject to sanctions, including fines based on the gross sales (from 1 to 20%), imprisonment, prohibition to enter into agreements with or being granted tax benefits from public authorities, and registration and publication of wrongdoing.

It is possible to enter into settlement agreements with CADE, such as a leniency agreement or a cease-and-desist commitment, in which the antitrust authority dismisses investigations into course, but requires confession in the case of cartels.

The Brazilian Competition Law prescribes offensive practices to competition, including concerted practices, such as cartels, as well unilateral exclusionary practices, such as predatory pricing, price discrimination, price squeeze, tying, resale price maintenance, exclusive dealing and refusals to deal, among others.

Unilateral conduct and economic dependency rules are based on a substantive test by CADE pursuant to the Competition Law, in which levels of market share in a previously defined relevant market, entry barriers, rivalry, economic impacts, efficiencies and pros-cons of the practices are analysed (Rule of Reason). Other variables can be brought about, mainly through economic methodologies (econometrics).

There is an extensive list of potential unilateral conducts pursuant to the Competition Law, which is not a numerus clausus list. The agent’s intent, if a legal entity, is disregarded in this case, except for criminal law. Antitrust violators are subject to fines based on gross sales (from 0.1% to 20%), among other sanctions. Cease-and-desist commitments are also available for suspending and terminating investigations.

Patents are intellectual property rights upon inventions and utility models prescribed by the Industrial Property Law – LPI (Law No 9,279/1996, as amended). The main difference between those two kinds of intellectual property is better explained through their legal requirements for registration.

Inventions have the following characteristics:

• novelty, which means they were not presented to the public;
• inventive activity, which means they are not an obvious outcome for experts; and
• industrial applicability, which means they can be used or produced by any kind of industry.

Utility models are objects of practical use with the following characteristics:

• industrial applicability;
• presenting a new shape or structure; and
• involving an inventive act, resulting in a functional improvement of use or fabrication.

Additionally, there is a legal list of items not regarded as inventions or utility models for the purpose of registration as patents, such as discoveries, scientific theories, mathematical methods, purely abstract conceptions, and so forth. There is also a legal list of items which cannot be registered as patents, such as goods against morale, public safety, public order and public health.

The length of protection of patents of inventions is 20 years and 15 years for utility models, counting from the filing of the request. Except for registration rights already granted, and excluding pharmaceutical and healthcare products or proceedings, there is no minimum extended term for patents.

Registration requests are filed before the National Institute for Industrial Property (Instituto Nacional de Propriedade Industrial – INPI) and are subject to the analysis of the fulfilment of formal and material legal requirements.

Holders of patents are entitled to enforcement rights to prevent third parties from exploring products and proceedings derived from their invention or utility model.

There are both criminal and civil remedies against whoever breaches the entitlement of patents. Criminal remedies include detention and fines, while civil remedies include indemnification rights, search and seizure, and injunctions against the exploration of inventions and utility models.

Trade marks are intellectual property rights upon distinctive and visually perceptible signs, which can be extended for products or services, certification, or collective signs.

The length of protection of trade marks is ten years counting from the registration, but it can be extended for equal and successive periods, provided that a new request is filed one year before the expiration of the length of protection, or six months after the expiration, subject to an additional payment in this case.

Registration requests are filed before the INPI and are subject to the analysis of the fulfilment of formal and material legal requirements.

Holders of trade marks are entitled to enforcement rights to secure the sole use of their trade mark.

There are both criminal and civil remedies against whoever breaches the entitlement of trade marks. Criminal remedies include detention and fines, while civil remedies include indemnification rights, search and seizure, and injunctions against the use of trade marks.

Industrial designs are intellectual property rights upon a plastic ornamental form of an object or an ornamental group of lines and colours applied to a product that fulfils the following characteristics:

• novelty, which means they were not presented to the public;
• originality related to external structure, which means it results in a distinctive visual configuration;
• industrial fabrication; and
• not a purely artistic piece.

The length of protection of trade marks is ten years counting from their registration, but it can be extended for three successive periods of an additional five years, provided that a new solicitation is filed one year before the expiry of the length of protection, or 180 days after the expiry, subject to an additional payment in this case.

Registration requests are filed before the INPI and are subject to the analysis of the fulfilment of formal and material legal requirements.

Holders of industrial designs are entitled to enforcement rights to secure the sole use of their industrial design.

There are both criminal and civil remedies against whoever breaches the entitlement of industrial designs. Criminal remedies include detention and fines, while civil remedies include indemnification rights, search and seizure, and injunctions against the use of industrial designs.

Copyright is an intellectual property right of material and moral nature upon authorship prescribed by the Software Law and Copyright Law (Laws No 9,609/1998 and 9,610/1998, respectively, as amended).

The length of protection of copyright of material nature is from the date of creation until 70 years from the day after the creator’s death, except for anonymous or pseudonymous work, which lasts for 70 years from the first publication. The length of protection of moral rights derived from copyright is unlimited and they are not subject to the statute of limitations. When it comes to software, the length of protection is of 50 years from the day after the year of publication or the year of creation, if unpublished.

Holders of copyright are entitled to enforcement rights, regardless of registration, to secure the sole use of their piece.

There are both criminal and civil remedies against whoever breaches the entitlement of copyright. Criminal remedies include detention and fines, while civil remedies include indemnification rights, search and seizure, and injunctions against the use of pieces protected under copyright.

Other IP rights protected under Brazilian law are the following:

• geographical indications (Law No 9,279/1996);
• plants or “cultivares” (Law No 9,456/1997);
• electrical circuits (Law No 11,484/2007); and
• genetic resources (Law No 13,123/2015).

In addition to the protection of IP rights, the Antitrust Laws also play a central role in protecting the trade secret and considering unlawful competition.

The main regulation of the Brazilian legal framework on data protection is the General Data Protection Law enacted in 2018 (Law No 13,709/2018 or Lei Geral de Proteção de Dados – LGPD), which was undeniably influenced by the General Data Protection Regulation – GDPR of the European Union. Also, the Constitution was amended in 2022 to prescribe that data protection is a constitutional fundamental right of natural persons (Constitutional Amendment No 115/2022).

There are other laws and regulations applicable to data protection, such as:

• Consumer Defence Code (Law No 8,078/1990 or Código de Defesa do Consumidor– CDC);
• Civil Code (Law No 10,406/2002);
• Information Access Law (Law No 12,527/2011 or Lei de Acesso à Informação – LAI);
• Internet Civil Framework (Law No 12,965/2014 or Marco Civil da Internet); and
• Regulations issued by the National Authority on Data Protection (Autoridade Nacional de Proteção de Dados – ANPD).

Processing data of natural persons is subject to the scope of the LGPD. The legal definition of “processing of personal data” is very broad and almost any procedure is embedded therein. There are legal hypotheses that enable processing general or sensitive personal data, such as consent, compliance with a legal or regulatory obligation by the controller, or the use in judicial, administrative and arbitral proceedings.

Data processing within LGPD’s geographical scope are the following:

• within the Brazilian territory;
• with the purpose of providing goods or services to, or processing data of, individuals within the Brazilian territory; and
• based on data collected within the Brazilian territory.

The LGPD and the data protection framework have extraterritorial effects. A foreign company targeting customers in Brazil is most likely within LGPD’s geographical scope based on its purpose of providing goods or services to individuals within the Brazilian territory.

It is also necessary to ensure the adequacy of international transfer of personal data according to the legal hypotheses and requirements specifically prescribed by law. For instance, one of the possible legal grounds for international transfer of personal data is that the country where the data is transferred offers protection mechanisms equivalent to the LGPD.

The agency in charge of enforcing data protection rules in Brazil is ANPD, but there are other agencies with authority on that matter, such as the National Consumer Secretariat (Secretria Nacional do Consumidor – SENACON) and the PROCON foundation (Fundação de Proteção e Defesa do Consumidor), a self-regulatory entity present in every State, whose authority is related to consumer relationships.

For that reason, conflicts of authority are likely when it comes to data protection. There is a legal provision mandating that ANPD co-operates and communicates with other authorities within its scope of authority.

The most relevant upcoming legal reform sponsored by the government is the Tax Reform with the purpose of converting five taxes (IPI, PIS, COFINS, ICMS and ISS) into one VAT. For that purpose, there is a bill running in congress aiming to amend the Constitution.

The government has also published an agenda of economic reforms, including the following:

• a new legal framework for guarantees (Bill of Law PL No 4,188/2021);
• a new legal framework for the liquidation of financial institutions (Bill of Law PLP No 281/2019);
• a new legal framework for private insurance (Bill of Law PLC No 29/2017); and
• incremental institutions for the protection of investors within the capital markets (Bill of Law PL No 2,925/2023).