Brazil operates under a civil law system, influenced by the Roman-Germanic legal tradition, where laws are codified and interpreted by the judiciary. In this system, statutory law is the principal source of law, which includes the Constitution, laws, decrees, regulations, circulars, ordinances and other normative rules established by government authorities.

At the top of the hierarchy of legal sources is the Brazilian Federal Constitution of 1988. All laws and regulations must comply with its provisions, and any that conflict with the Constitution may be deemed null and void.

In addition to statutory law, there are other sources of law in Brazil, which include: (i) analogy, (ii) customary practices, (iii) legal doctrine and (iv) contracts or other instruments arising from private autonomous power.

Judicial decisions are not considered formal sources of law, but they serve as support for interpreting the law and for decision-making by the courts. Unlike common law systems, they generally do not establish binding precedents. However, rulings from higher courts – such as the Federal Supreme Court (Supremo Tribunal Federal; STF) and the Superior Court of Justice (Superior Tribunal de Justiça; STJ) – may carry persuasive or binding authority in specific cases.

The judiciary in Brazil operates independently of the executive and legislative branches, being divided into federal and state levels, each with its own courts that coexist within specific areas of jurisdiction defined by the Constitution.

Cases generally start in first-instance courts and can be appealed to higher courts. At the state level, most civil and criminal cases are handled by state courts, while federal courts address matters involving federal laws or government entities.

In addition, there are specialised courts and tribunals, such as small-claims courts (Juizados Especiais), the military court system (both state and federal) and the electoral court system.

At the top of the judicial hierarchy are the superior courts, which do not review factual issues but focus on questions of law and constitutionality, ensuring consistency in legal interpretation. The STJ serves as the highest authority for non-constitutional federal matters, including civil, administrative and criminal law. Other specialised superior courts include the Superior Labour Court (Tribunal Superior do Trabalho; TST), the Superior Electoral Court (Tribunal Superior Eleitoral; TSE) and the Superior Military Court (Superior Tribunal Militar; STM), each overseeing specific areas of law.

STF stands as Brazil’s highest judicial body, responsible for upholding the Constitution. It addresses constitutional issues involving public authorities, legislation and fundamental rights, as well as rules on direct actions of unconstitutionality (ação direta de inconstitucionalidade; ADI), habeas corpus and extradition cases.

Registration of foreign investment with the Central Bank of Brazil (Banco Central do Brasil, or BACEN) is mandatory and must be made electronically.

There are specific sectors where foreign investors must obtain prior authorisation from the competent authorities, such as the acquisition of real estate in border areas, which is subject to prior approval by the National Security Council (Conselho de Segurança Nacional), as well as the acquisition of rural properties by foreign individuals residing in Brazil, foreign legal entities or Brazilian entities under foreign control, which are subject to certain legal requirements, in addition to prior authorisation, in accordance with Law No 5,709/1971.

There are also restrictions on foreign participation in various regulated sectors, including aviation, financial institutions, mining and media, which includes ownership and management of newspapers, magazines and other publications, radio and television broadcasting, and telecommunications.

Brazil’s macroeconomic environment in 2025 is marked by increasing public expenditure and a high base interest rate, creating fiscal challenges and limiting credit availability for businesses. The elevated cost of capital has reduced corporate appetite for new financing and contributed to a lower volume of M&A. At the same time, the environment continues to attract foreign investors, as Brazil has the largest economically active population in Latin America and offers multiple opportunities arising from unexplored markets, structural inefficiencies and expanding consumer demand. The upcoming 2026 elections are expected to stimulate public and private investment early in the next cycle, particularly in infrastructure, commodities, and technology-related sectors.

On the regulatory front, Brazil is undergoing a broad transformation of its fiscal and investment framework. A major tax reform, set to begin in 2026 with full transition by 2033, will align the system more closely with OECD standards by consolidating indirect taxes (value added tax; VAT), which is intended to simplify compliance. Recent developments also include new rules for investment funds, modernising their structure and transparency requirements, and changes to dividend taxation to align with international practices. Regulators are also devoting increased attention to digital services, focusing on taxation, data flows and consumer protection in online markets. Additionally, the transfer pricing reform effective since 2024 brings Brazil’s rules closer to OECD principles, enhancing predictability for cross-border transactions.

In summary, Brazil offers a promising yet complex environment for inbound foreign direct investment (FDI). Elevated interest rates and election-driven stimulus raise opportunities, especially in the financial, digital and infrastructure sectors, but success will depend on navigating evolving tax, investment fund and digital services regulation, as well as monitoring fiscal and political risk ahead of the 2026 presidential elections.

In Brazil, the choice of transaction structure depends on the type of target company, the level of control sought, and regulatory, tax and operational considerations. The most common structures include share/asset purchases, mergers and joint ventures.

Share purchases are the predominant method for private company acquisitions. They allow continuity of operations, contracts and licences but transfer all existing liabilities, including tax, labour and environmental obligations. Asset purchases are used when buyers want to avoid assuming historical liabilities, but they can involve multiple registrations, consents and taxes. Mergers or corporate reorganisations are typically used for group restructuring or consolidation. Joint ventures or strategic partnerships are widely used in regulated or strategic sectors, allowing risk-sharing, compliance with ownership restrictions and access to local expertise.

For public company acquisitions, transactions are highly regulated under Brazilian Corporation Law (Law No 6,404/1976) and the Brazilian Securities and Exchange Commission (Comissão de Valores Mobiliários; CVM) rules. Common methods include tender offers, market purchases or mergers, with mandatory offers required when acquiring control. Private company deals are more flexible, governed mainly by contractual arrangements, with a focus on representations, warranties and indemnities.

Key considerations for foreign investors include obtaining regulatory approvals, assessing tax implications (capital gains, withholding and transfer taxes), evaluating liability exposure, complying with BACEN registration requirements, and structuring corporate governance and exit strategies.

Minority investments are usually made via new share subscriptions or capital increases, supported by shareholders’ agreements granting veto and information rights. Control acquisitions, in contrast, generally involve majority share purchases or mergers, potentially triggering Administrative Council for Economic Defence (Conselho Administrativo de Defesa Econômica, or CADE) antitrust review and sector-specific approvals.

Overall, share purchases dominate private transactions, tender offers and mergers dominate public deals, and joint ventures or minority stakes are preferred for entry into regulated sectors or gradual market participation. Structure selection is driven by the desired level of control, risk allocation, tax efficiency and regulatory compliance.

Mergers and acquisitions in Brazil are subject to mandatory notification to the CADE, when they meet certain thresholds established by Law No 12,529/2011. CADE is an agency linked to the Ministry of Justice and Public Security (Ministério da Justiça e Segurança Pública, or MJSP).

The notification requirement applies to transactions involving mergers, acquisitions of control or significant shareholdings, and the establishment of joint ventures or consortia with permanent effects on the market.

Notification is required when, in the year preceding the transaction, at least one of the parties involved had annual gross revenues of BRL750 million or more in Brazil, while the other party had revenues of BRL75 million or more within the country. Market share is not a criterion for mandatory notification, although it is considered when analysing the operation.

Transactions must be notified and approved before completion, and consummation without prior approval may result in fines and eventual annulment of the transaction. The main objective is to prevent excessive market concentration and ensure free and fair in the Brazilian market.

Brazilian corporate governance is primarily governed by the Civil Code, the Corporation Law – as amended – and CVM regulations. The framework emphasises transparency, accountability and the protection of minority shareholders.

The two main corporate forms are the limited liability company (sociedade limitada; Ltda), typically used for private companies, and the corporation (sociedade anônima; SA), commonly used for public companies. The Ltda structure provides greater contractual flexibility and simpler governance, and is suitable for entities that do not require complex governance arrangements or that are fully owned by a limited number of corporate investors, including foreign entities. The SA structure offers more access to capital markets, mandatory financial disclosure, and a formal governance structure with a board of directors and fiscal council.

For FDI, investors may freely incorporate or acquire equity in either form, subject to registration with BACEN. The choice between the SA and Ltda structure carries implications in terms of capital mobility, regulatory oversight and exit strategies. Foreign investors often favour the Ltda for initial operations due to its lower compliance burden, while SA entities are preferred for ventures anticipating public listings or complex joint ventures.

The relationship between companies and minority investors in Brazil is structured by statutory protections under the Corporation Law and, for listed companies, CVM and stock exchange (B3) rules. Minority shareholders are entitled to equal treatment, information rights, tag-along rights and withdrawal rights in specific corporate events.

For private companies (Ltda), minority investors’ rights depend heavily on the articles of association. Typical protections include pre-emptive rights, supermajority voting thresholds for key matters and access to financial information. Under the Corporation Law, minority shareholders are entitled to convene or participate in general meetings and vote on key corporate matters, request information and clarifications from management regarding company affairs, and elect members of the fiscal council through minority representation mechanisms. The Corporation Law ensures tag-along rights in the event of a sale of control and enhanced protections for companies listed on the stock exchange.

Brazilian courts and arbitral tribunals recognise the fiduciary duties of controlling shareholders and administrators, offering minority investors recourse against abusive conduct or oppression. Also, it has increasingly emphasised good faith and transparency in shareholder relations, and arbitration has become the preferred forum for resolving corporate disputes involving minority rights, particularly in high-value investments.

FDI in Brazil is generally not subject to prior governmental approval, except in restricted sectors (eg, nuclear energy, health, media and others). The disclosure and reporting obligations apply under the BACEN RDE-IED system (Registro Declaratório Eletrônico-Investimento Estrangeiro Direto), which requires registration of all foreign equity investments, reinvestments and capital repatriations.

The foreign investor must submit basic information on the investing entity, the ultimate beneficial owner and the financial characteristics of the investment. Reporting obligations vary according to the size and nature of the investee company, with periodic updates required to ensure compliance with the Central Bank’s foreign investment registration framework. In addition, publicly held companies must comply with disclosure rules established by the CVM, covering material facts, significant changes in shareholding structures and regular financial reporting.

Failure to comply with these obligations may lead to administrative penalties and affect the remittance of dividends or repatriation of capital. Compliance ensures transparency, macroeconomic monitoring and alignment with anti-money-laundering standards.

Brazil’s capital markets are the largest and most sophisticated in Latin America, and are centred on B3 (Brasil, Bolsa, Balcão), the country’s only stock exchange and clearinghouse. Although bank financing remains the predominant source of funding for most businesses – especially small and medium-sized enterprises – the use of capital market instruments has expanded considerably. Medium and large companies increasingly seek market-based financing to diversify sources of capital, reduce exposure to bank credit and access longer-term funding.

Corporate debt issuance through debentures, commercial notes and structured credit funds (such as fundos de investimento em direitos creditórios; FIDCs) has grown in volume and complexity, supported by a maturing institutional investor base and international participation. The equity market also plays an essential role, with initial public offerings and follow-on offerings attracting both domestic and foreign investors during favourable market cycles. In addition to traditional instruments, private equity funds (fundos de investimento em participações; FIPs) and real estate funds (fundos de investimento imobiliário; FIIs) continue to drive capital formation in the infrastructure, energy and technology sectors.

A key regulatory milestone was the enactment of CVM Resolution 175/2023 (ICVM 175), which overhauled the rules governing investment funds in Brazil. The reform consolidated and modernised previous regulations, introducing greater flexibility in fund structures, clearer segregation of liability among quota classes and better governance standards. Alongside recent initiatives by CVM and B3 to enhance ESG disclosure and corporate governance, this reform underscores Brazil’s continued progress towards transparency, investor protection and international integration.

The regulation of securities in Brazil is primarily grounded in the Corporation Law and the Capital Markets Law (Law No 6,385/1976), which created the CVM as an autonomous regulatory authority. The CVM supervises issuers, intermediaries, investment funds and market participants, ensuring transparency, integrity and fair competition across all capital market activities.

Listed companies must comply with strict disclosure and reporting rules covering financial statements, material facts and changes in ownership or control. Trading based on privileged information, market manipulation and non-disclosure of relevant events is subject to administrative sanctions. Enhanced governance requirements under B3’s Novo Mercado and Level 2 listing segments also require companies to maintain independent directors and equal rights in tender offers, among other protections.

Foreign investors are allowed full access to the Brazilian capital markets but must observe certain registration and reporting requirements. Every non-resident investor must (i) appoint a local representative and custodian, (ii) register the investment with BACEN through the electronic foreign investment system, and (iii) open a dedicated foreign-investor account for foreign-exchange and tax purposes.

These registrations serve mainly to facilitate taxation, currency conversion and repatriation of funds, and do not constitute prior regulatory approval. However, foreign investors are subject to the same disclosure, ownership and market conduct rules as domestic investors. Foreign portfolio investors are also required to comply with Brazil’s anti-money laundering (AML) and ultimate beneficial ownership disclosure standards, and must ensure that all transactions are executed through authorised intermediaries operating under CVM and B3 oversight.

Together, these requirements aim to balance market openness with investor accountability, allowing full participation by foreign investors while safeguarding transparency and stability in Brazil’s capital markets.

Foreign investors structured as investment funds may freely invest in Brazilian securities or acquire equity in local companies, provided they comply with registration and reporting obligations before the CVM and BACEN. The main regulatory framework governing such entities is CVM Resolution 175/2023, which unified and modernised the treatment of all fund categories, including private equity (FIPs), real estate (FIIs), and receivables funds (FIDCs).

Foreign funds are not required to obtain prior authorisation to make FDI in Brazil, but they must appoint a local representative and custodian and register their positions under the appropriate system – RDE-IED for equity participation and RDE-Portfolio for securities transactions.

Regulatory review applies only to restricted sectors, such as financial services, insurance, media and defence, where specific foreign ownership limits or governmental approvals exist. Exemptions are available for institutional investors meeting transparency and beneficial ownership disclosure standards. In practice, the Brazilian regulators’ primary focus lies in ensuring foreign exchange compliance, tax compliance and anti-money-laundering integrity.

Brazil maintains a sophisticated and consolidated competition law system administered by CADE, an autonomous federal authority linked to the Ministry of Justice. CADE enforces Law No 12,529/2011, which governs both preventive merger control and the repressive enforcement of anticompetitive conduct, including abuse of dominance, cartels and market foreclosure practices. The law applies uniformly to domestic and foreign companies operating in Brazil or whose activities produce effects in Brazilian markets.

At the core of CADE’s preventive jurisdiction lies the concept of the concentration act. This term refers to any transaction capable of producing competitive effects through the integration of previously independent undertakings or through a change in control or material influence. It includes mergers, acquisitions, incorporations, joint ventures, asset transfers and long-term co-operation arrangements that may alter market structure or competitive incentives.

A transaction qualifies as a concentration act and must be notified to CADE when, in the fiscal year preceding the deal, one party (including its economic group) generated BRL750 million in revenue in Brazil and another party at least BRL75 million. Once both thresholds are met, filing is mandatory and suspensive, meaning that the parties cannot close the transaction before clearance. The rule applies equally to foreign-to-foreign transactions that have actual or potential effects in Brazil. There are no exemptions for foreign investors, although internal restructurings, temporary shareholdings by financial institutions and transactions with no competitive impact may be excluded.

Beyond traditional mergers and acquisitions, Brazilian law also requires notification of certain associative agreements – long-term co-operation agreements that resemble joint ventures in their competitive implications. Under CADE regulations, such agreements are notifiable when they last at least two years (including renewals) and entail the joint performance of an economic activity involving risk sharing or shared control over strategic decisions. These rules are especially relevant for foreign investors entering joint ventures or strategic alliances involving shared technology, distribution or data management, which may trigger mandatory notification even in the absence of an equity acquisition.

CADE’s review process is entirely electronic and follows one of two procedural tracks. Simple cases are handled under a summary (fast-track) procedure, generally cleared within 30 days, while more complex cases follow the ordinary procedure, which may take from 90 to 240 days depending on the market inquiry. The General Superintendence (Superintendência Geral; SG) conducts the technical assessment and may unilaterally approve non-problematic cases. More sensitive transactions are referred to CADE’s Tribunal, composed of a president and six commissioners, which issues the final decision.

Clearance must always be obtained prior to closing, and gun-jumping – the premature exchange of sensitive information, co-ordination of commercial conduct or integration of operations before CADE’s decision – is strictly prohibited. Violations may result in fines of up to BRL60 million, the nullification of the transaction and reputational damage.

While merger control is preventive, CADE’s role extends to continuous market oversight. The authority actively monitors the abuse of dominant position, anticompetitive agreements and market foreclosure practices that may arise after an investment is completed. This includes conduct such as predatory pricing, exclusivity arrangements, unjustified refusals to deal and the abuse of control over data or digital infrastructure. The integration of merger review and conduct enforcement within a single agency allows CADE to address both structural and behavioural risks to competition comprehensively.

Even transactions falling below notification thresholds may be subject to ex post review if they generate anticompetitive effects, particularly in digital markets, where companies with modest turnover may hold significant user databases, algorithms or platforms that influence market structure. CADE has increased scrutiny of acquisitions involving data-rich or innovation-driven firms to prevent so-called killer acquisitions.

CADE’s substantive merger review focuses on whether a notified transaction may substantially lessen competition or create or strengthen a dominant position in any relevant market. The analysis begins with defining relevant product and geographic markets and proceeds to assess market concentration, entry barriers, and potential unilateral or co-ordinated effects.

In sectors characterised by rapid innovation and strong network effects, CADE pays close attention to data-driven mergers that combine large user bases, technological assets and proprietary algorithms. Such integrations can facilitate exclusionary conduct by raising rivals’ costs or restricting access to essential datasets. Even where revenue thresholds are not met, CADE may evaluate whether the acquisition or alliance has the potential to foreclose competitors or reduce innovation incentives.

Beyond merger control, CADE exercises broad oversight of unilateral conduct and market practices, including abuse of dominance, market foreclosure and anticompetitive co-ordination. Dominance is presumed when a company controls at least 20% of a relevant market, though the presumption is rebuttable. Practices such as predatory pricing, exclusivity contracts, tying and bundling, discriminatory conditions and unjustified refusals to deal are subject to investigation when they harm consumer welfare or impede efficient market access. The agency also monitors conduct that limits interoperability or leverages control of essential data to exclude competitors.

CADE’s economic analysis integrates both structural indicators and behavioural evidence, including elasticity measures, diversion ratios, and market test feedback. Horizontal mergers are generally viewed as low risk when combined market shares remain below 20%, while vertical integrations above 30% warrant detailed scrutiny. The authority also examines conglomerate and portfolio effects, particularly in markets where a company’s dominance in one area can influence adjacent markets.

Efficiencies that are merger-specific, verifiable and likely to be passed on to consumers may offset anticompetitive effects. Failing-firm arguments are accepted only when the distressed target would exit the market absent the transaction. In associative contracts, CADE assesses whether the co-operation leads to joint decision-making, co-ordination or information exchange that restricts independent rivalry; purely technical or short-term collaborations are typically cleared swiftly.

Cross-border transactions are common, and CADE co-operates with international counterparts under bilateral and multilateral frameworks.

When CADE identifies potential competitive risks, it may condition its approval on the implementation of remedies or commitments negotiated with the parties through a merger control agreement (acordo em controle de concentrações; ACC). The agreement defines the obligations, timelines and compliance mechanisms.

Structural remedies, such as divestitures of assets, production units or brands, are preferred when they can effectively preserve market rivalry. Behavioural remedies are applied when structural measures are impracticable or unnecessary and typically include obligations to maintain supply contracts, ensure interoperability, grant non-discriminatory access to technology or data, or refrain from exclusivity arrangements. In the digital economy, CADE has increasingly explored data-related commitments in its reviews, including measures aimed at enhancing transparency or preventing the undue combination of user databases where such integration could raise foreclosure risks.

In associative agreements, commitments often address the exchange of competitively sensitive information, exclusivity clauses and confidentiality safeguards. Remedies must be proportionate, time-bound and monitored by independent trustees. Non-compliance may lead to fines or reopening of the proceeding.

CADE holds extensive powers to approve, block or condition mergers and associative agreements. The General Superintendence may summarily approve straightforward cases, while complex transactions are decided by the Tribunal. Tribunal decisions are final administratively but may be challenged before the federal courts, where review is typically limited to procedural grounds and CADE’s economic analysis commands substantial deference.

CADE may also investigate non-notified transactions that later reveal anticompetitive effects, ordering unwinding, behavioural remedies or fines ranging from BRL60,000 to BRL60 million. Enforcement against gun-jumping remains a key priority: early integration of operations, sharing of sensitive information or co-ordinated behaviour before clearance are regularly sanctioned.

Beyond merger control, CADE enforces prohibitions on cartels and abusive conduct, imposing fines based on the company’s Brazilian turnover. The agency monitors markets for exclusionary strategies, refusals to deal, predatory innovation and abuses of data control. Its integrated structure enables a holistic approach that combines merger review with ongoing market surveillance.

For foreign investors, Brazil’s antitrust framework offers predictability, transparency and alignment with international standards. The broad definition of concentration act ensures that any transaction or collaboration capable of affecting competition in Brazil – whether through acquisition of control, associative agreements or data-driven strategies – falls under CADE’s jurisdiction. Early engagement with the local advisers and authority, and antitrust due diligence, are essential for transactions in sensitive sectors, particularly technology, infrastructure and digital markets, ensuring smooth review and minimising enforcement risk in one of Latin America’s most advanced competition regimes.

FDI in Brazil is subject mainly to registration requirements and sector-specific restrictions or approvals in a limited number of strategic areas.

BACEN is the principal authority responsible for the registration and monitoring of FDI in the country. All FDI must be registered electronically through the Electronic Declaratory Registration-Foreign Direct Investment (Sistema de Prestação de Informações de Capital Estrangeiro de Investimento Estrangeiro Direto; SCE-IED) system.

This registration is mandatory but declaratory in nature, meaning it is not a form of prior approval. The Brazilian recipient of the investment (the local company) must complete the registration after the investment funds enter Brazil within 30 days. The information must then be updated periodically or whenever changes occur in the ownership structure, capital or valuation.

Brazil’s legal framework for foreign capital is based mainly on Law No 4,131/1962 and Law No 14,286/2021 (the “New Foreign Exchange Legal Framework”), which modernised and simplified foreign investment procedures. Foreign investors are generally not subject to national security reviews, except where specific sector laws apply. The overall process is designed to encourage investment while preserving national interests in sensitive areas such as land ownership and media.

The approval process may vary according to the sector but generally involves:

• a preliminary legal and regulatory overview of the sector of investment and determination of the ownership structure and level of foreign participation;
• submission of an application to the competent authority to request prior authorisation from the regulatory body, submitting the necessary documents; and
• registration with BACEN.

Foreign companies that do not obtain the necessary prior approval to operate in Brazil may face various consequences, including fines, confiscation of goods and even a ban on operating in the country.

In Brazil, there is no single review authority or uniform test for assessing the security implications of foreign investment. Instead, security-related scrutiny arises only in specific contexts, such as land, border areas, media, telecommunications and financial institutions.

The determining factor is control and influence, not the structure of the investment. Partnerships, sovereign investors and minority shareholders are treated according to the same principles, with greater attention only when national interests, sovereignty or defence considerations may be directly affected.

Foreign investors operating in Brazil are generally required to comply with a range of economic, social and environmental commitments, ensuring that their activities align with the country’s development goals and regulatory standards. These obligations vary by sector but typically include:

• job creation for Brazilian workers;
• minimum capital investment requirements, particularly in strategic sectors such as infrastructure, renewable energy and manufacturing;
• environmental impact assessments (EIAs) prior to undertaking projects in environmentally sensitive industries such as mining, energy and agriculture;
• local content requirements, obliging investors in sectors like oil, gas and construction to prioritise Brazilian goods, services and labour;
• joint venture obligations in certain strategic or sensitive industries (eg, defence, telecommunications, media), where foreign investors may need to partner with Brazilian entities;
• compliance with domestic legislation, including labour, tax, environmental and anti-corruption laws;
• sector-specific licensing and approvals, particularly in regulated areas such as infrastructure, energy and mining;
• adherence to corporate governance standards that promote transparency, accountability and ethical business practices;
• periodic reporting obligations, requiring the submission of operational and financial information to Brazilian authorities to demonstrate compliance with legal and contractual commitments;
• reinvestment requirements, which may encourage or oblige investors to reinvest a portion of their profits into local projects that foster job creation or regional development; and
• non-compete obligations, applicable in certain cases to prevent foreign investors from engaging in direct competition with local enterprises for a defined period or under specific conditions.

Foreign investors who are denied investment authorisation by Brazilian authorities have the right to challenge such decisions in court. As a general rule, investors are expected to exhaust administrative remedies before resorting to judicial action, unless the refusal clearly violates a constitutional or legal right.

At the administrative level, the investor may request clarification by the relevant regulatory authority and, where permitted, file an appeal within the agency or to a higher administrative body. The specific procedure depends on the authority involved and the applicable regulations.

In case the administrative options are exhausted or deemed ineffective, the investor may file a lawsuit before the Brazilian judicial courts. In general, common options include a civil lawsuit, writ of mandamus (mandado de segurança) and constitutional claims.

Although judicial proceedings in Brazil may take several years, the timeframe for challenging a decision will depend on the type of legal action being pursued. When successful, such legal challenges may result in the annulment of the decision and, in some cases, the subsequent approval of the investment.

Non-compliance with registration obligations may lead to administrative penalties, fines and difficulties in remitting dividends or repatriating capital. In regulated sectors, conducting an investment without required authorisation can render the transaction void or subject to regulatory sanctions.

The penalties depend on the type of activity carried out by the foreign company and the applicable laws and regulations. In general, the following consequences should be considered.

• Administrative sanctions: These may include fines imposed by regulatory agencies, as well as the suspension or revocation of licences, permits or concessions necessary for operating in Brazil.
• BACEN penalties: Failure to register foreign capital with the Central Bank may result in fines, restrictions on profit remittances or capital repatriation, and possible exchange rate- or tax-related liabilities.
• Civil and criminal proceedings: In cases involving sensitive or strategic sectors, particularly those related to national security, violations may trigger civil and criminal proceedings. Sanctions may include asset forfeiture, revocation of ownership rights and court injunctions or prohibitions on future participation in the relevant sector.

Given these potential risks, it is essential that foreign companies wishing to operate in Brazil seek specialised legal and regulatory advice prior to entering the Brazilian market or executing any investment transaction.

Proper legal guidance ensures compliance with Brazilian law, minimises exposure to sanctions and safeguards the investor’s ability to operate lawfully. Non-compliance may have serious consequences, including financial losses, reputational damage or even prohibition from conducting business in the country.

FDI in Brazil is generally liberal and not subject to prior governmental approval, except in specific sectors governed by national interest, security or regulatory policy. The legal environment is open, transparent and anchored in constitutional guarantees of equal treatment for domestic and foreign investors.

Nonetheless, a range of special regimes and oversight mechanisms apply depending on the nature of the investment, its structure and the sector of operation.

Foreign Exchange and BACEN Registration

All cross-border equity and debt investments are subject to foreign exchange registration with BACEN under the RDE-IED system. This registration is declaratory, not discretionary: it is designed to record inflows, reinvestments and remittances, enabling the investor to repatriate capital and dividends in the future.

Companies receiving foreign investment must register the foreign shareholder’s details, including the country of origin, corporate structure and ultimate beneficial ownership, as well as the value and currency of the contribution. Updates are required annually for companies with assets or net equity below BRL300 million and quarterly for those above this threshold.

In parallel, foreign exchange transactions must be executed through authorised financial institutions and comply with the AML and counterterrorist financing regulations issued by BACEN and the Financial Activities Control Council (Conselho de Controle de Atividades Financeiras; COAF). Recent reforms under the New Foreign Exchange Legal Framework have further modernised the regime, simplifying procedures and enabling greater flexibility in the use of foreign currency accounts.

Sector-Specific Regulatory Regimes

While Brazil’s general FDI framework is open, certain industries remain subject to sector-specific authorisation or ownership restrictions. These controls are not typically discriminatory but reflect strategic or public interest considerations. The principal sectors include the following.

• Financial institutions are regulated by the National Monetary Council (Conselho Monetário Nacional; CMN) and BACEN. Foreign participation in banks and insurance companies requires prior authorisation, which has been liberally interpreted in recent decades. Authorisations are granted through decrees following Central Bank analysis of prudential and corporate governance criteria. However, regulatory reforms in the past decade fostering fintech innovation have significantly expanded access for foreign investors through new categories of digital financial institutions and payment service providers.
• Aviation remains partially regulated, though reforms have liberalised foreign ownership. Under Law No 13,842/2019, the 20% cap on foreign voting capital in Brazilian airlines was eliminated, allowing full ownership by foreign investors subject to reciprocity and safety oversight by the National Civil Aviation Agency (Agência Nacional de Aviação Civil; ANAC).
• Media and broadcasting are still restricted under Article 222 of the Constitution, which limits foreign ownership of journalistic and radio broadcasting companies to 30% of total and voting capital, directly or indirectly.
• Mining and natural resources are subject to concessions and licensing from the National Mining Agency (Agência Nacional de Mineração; ANM). Although foreign participation is generally permitted, acquisitions of mineral rights or equity in companies operating within border areas (faixa de fronteira) a 150-kilometre strip along national borders – require prior authorisation from the National Defence Council (Conselho de Defesa Nacional; CDN) due to sovereignty and security considerations.
• Energy and infrastructure projects, including power generation, transmission, and oil and gas exploration, fall under the jurisdiction of the National Electric Energy Agency (Agência Nacional de Energia Elétrica; ANEEL) and National Agency of Petroleum, Natural Gas and Biofuels (Agência Nacional do Petróleo, Gás Natural e Biocombustíveis; ANP), respectively. These sectors are fully open to foreign capital but subject to licensing, concession or authorisation procedures ensuring compliance with environmental, technical and public service obligations.
• Health services are largely open to foreign investors since the passage of Law No 13,097/2015, except for blood and organ banking.
• Defence and cybersecurity industries remain sensitive. Acquisitions of control in defence suppliers or companies engaged in dual-use technologies may trigger review by the Ministry of Defence. Foreign investors are advised to conduct prior consultations when acquiring assets in these fields.

Real Estate and Rural Land Restrictions

While foreigners may freely acquire urban real estate in Brazil, acquisitions of rural land or property located within border zones remain subject to constitutional and statutory limitations. These restrictions stem from Law No 5,709/1971 and its regulations, which aim to preserve national sovereignty over agricultural and strategic lands. Foreign individuals or legal entities must obtain authorisation from the National Institute for Colonization and Agrarian Reform (Instituto Nacional de Colonização e Reforma Agrária; INCRA), and additional approvals are required when the property exceeds certain size thresholds or is located near national borders. A Brazilian company controlled by foreign shareholders is considered a “foreign entity” for these purposes, meaning indirect control can trigger the same restrictions.

Sanctions, Anti-Money Laundering and Compliance Regimes

Brazil implements international sanctions through legislation and executive decrees aligning with United Nations Security Council determinations. The Central Bank, COAF and CVM all enforce financial sanctions and monitor suspicious transactions under the Anti-Money Laundering Law (Law No 9,613/1998), as amended by Law No 14,478/2022.

Foreign investors are expected to maintain robust compliance programmes addressing AML, anti–bribery and sanctions screening. The Brazilian Anti-Corruption Act (Law No 12,846/2013) imposes strict liability on legal entities for corruption of public officials, both domestic and foreign, and requires the implementation of integrity mechanisms. These obligations are increasingly scrutinised during public procurement and infrastructure concessions involving foreign sponsors or multilateral financing.

Data Protection, Cybersecurity and Digital Regulation

In addition to financial and sectoral oversight, FDI in data-intensive or technology sectors may engage data protection and cybersecurity regulations. The Brazilian General Data Protection Law (Lei Geral de Proteção de Dados, or LGPD; Law No 13,709/2018) establishes comprehensive rules for the processing of personal data, requiring foreign companies operating in Brazil or handling the data of individuals located in Brazil to appoint a local representative and comply with data subject rights, security obligations and cross-border transfer restrictions.

The National Data Protection Authority (Autoridade Nacional de Proteção de Dados; ANPD) oversees compliance for data protection, with increasing jurisdiction over AI and digital markets regulation, and may impose fines up to 2% of a company’s Brazilian revenue (capped at BRL50 million per violation). Investors acquiring companies with large user databases, AI systems or digital platforms should conduct privacy and cybersecurity due diligence, as non-compliance can significantly affect valuations and regulatory exposure.

Environmental and Social Licensing

Environmental approval is a cornerstone of project finance and infrastructure investment. Brazil’s National Environmental Policy (Law No 6,938/1981) and its implementing regulations require an EIA/environmental impact report (relatório de impacto ambiental; RIMA) for projects with significant environmental effects, such as mining, energy or transport infrastructure. Federal, state or municipal environmental agencies issue licences at different stages (preliminary, installation and operation). Foreign investors must ensure compliance with these multi-level procedures, which can affect project timelines.

Conclusion

Brazil’s regulatory landscape for foreign investment combines openness with selective oversight in sectors of strategic, financial or environmental relevance. Most foreign investments proceed without prior approval, subject only to BACEN registration, tax compliance and sectoral licensing where applicable. However, projects involving defence, border lands, media, data or critical infrastructure require heightened scrutiny and co-ordination with specialised agencies.

Foreign investors are encouraged to conduct early regulatory mapping and engage local counsel familiar with Central Bank, sectoral and compliance regimes, ensuring full alignment with Brazil’s evolving legal standards and international investment best practices.

Brazil’s tax system is complex and multilayered, with powers divided among the federal, state and municipal governments. Companies operating in Brazil are subject to a combination of corporate income tax (imposto de renda da pessoa jurídica; IRPJ), social contribution on net profits (contribuiçãosocialsobreolucrolíquido; CSLL), value added and turnover taxes, and payroll-related contributions.

Corporate profits are taxed under two primary regimes: the actual profit regime, in which tax is calculated on accounting profit adjusted for statutory inclusions and exclusions, and the presumed profit regime, which applies simplified presumptive margins to gross revenue. The actual profit regime is mandatory for large companies and financial institutions, while the presumed profit regime is available to smaller entities. The combined nominal corporate tax rate, comprising 25% corporate income tax (IRPJ) and 9% social contribution (CSLL), results in an overall effective rate of approximately 34%.

Brazil does not treat partnerships as fiscally transparent. All corporations, whether domestically or foreign-owned, are considered independent taxpayers. Branches of foreign companies are rare in practice, as they require prior authorisation and are subject to the same taxation as local entities. Most foreign investors therefore establish an Ltda or SA, both considered Brazilian tax residents if management is located in Brazil.

Indirect taxation currently involves three main levies: Programa de Integração Social (PIS)/Contribuição para o Financiamento da Seguridade Social (COFINS) (federal social contributions on revenues), imposto sobre circulação de mercadorias e serviços (ICMS; state-level value added tax on goods and certain services) and imposto sobre serviços (ISS; municipal service tax). To simplify this fragmented structure, Brazil is implementing a landmark tax reform. The reform is intended to introduce a dual VAT system – the contribution on goods and services (contribuição sobre bens e serviços; CBS) at the federal level and the tax on goods and services (imposto sobre bens e serviços; IBS) at the subnational level – between 2026 and 2033. This modernisation aims to reduce cumulative taxation, harmonise compliance rules and align Brazil’s indirect tax system with international standards.

Brazil’s international tax regime is also being modernised. Concerning transfer pricing, Law No 14,596/2023 adopted a new, OECD-aligned transfer-pricing framework based on the arm’s-length principle, replacing the former fixed-margin model. Thin-capitalisation rules restrict interest deductibility on related-party debt exceeding twice the investor’s equity participation or involving lenders in low-tax jurisdictions.

Dividends distributed from profits determined under Brazilian tax law were exempt from withholding income tax for many years. However, a 2025 reform reintroduced a withholding rate of up to 10% on dividends.

Interest payments to non-resident lenders are subject to 15% withholding income tax, or 25% when the beneficiary is resident in a low-tax or privileged tax regime. Royalties, management fees and technical service fees paid abroad are also subject to 15% withholding, plus a 10% contribution for intervention in the economic domain (contribuição de intervenção no domínio econômico; CIDE) on royalties and technical services.

Brazil has signed over 35 double-taxation treaties, which typically reduce withholding tax on interest and royalties to between 10% and 15%. Treaty relief depends on beneficial ownership and compliance with anti-treaty-shopping provisions.

Cross-border services may also trigger PIS/COFINS import and municipal ISS if the service is rendered or utilised in Brazil. Careful contract structuring is therefore necessary to prevent double or cascading taxation.

Given the complexity of Brazil’s multi-layered tax framework and its ongoing reform, a comprehensive tax planning strategy is strongly recommended for any new venture or investment in Brazil. Early assessment of corporate structure, financing arrangements and potential tax exposures is essential to ensure efficiency, compliance and predictability in the long term. Brazil also offers sectoral and regional incentives. Foreign investors often combine these incentives with treaty-based planning in jurisdictions.

Cross-border acquisitions frequently employ debt-pushdown strategies, allowing the acquirer to deduct interest on acquisition financing subject to thin-capitalisation and transfer-pricing rules. Asset acquisitions enable buyers to step up the tax basis of fixed assets for depreciation, while share acquisitions may achieve similar effects through post-acquisition mergers that revalue goodwill under specific conditions.

Companies may carry forward net operating losses to offset up to 30% of annual taxable income, though group consolidation is not allowed.

Capital gains realised by non-residents on the sale or disposal of Brazilian assets or shares are subject to taxation in Brazil at progressive rates, generally increasing with the size of the gain. The applicable rate is typically lower for modest gains and higher for substantial transactions, ensuring proportional treatment across different investment scales.

When both the seller and buyer are non-residents, the buyer must appoint a Brazilian tax representative to withhold and remit the tax. Gains realised by investors based in low-tax or privileged tax jurisdictions are subject to a higher flat rate, reflecting anti-avoidance and transparency policies.

Double-taxation treaties may reduce or eliminate Brazilian taxation on capital gains, although most preserve the right to tax gains derived from real estate or significant shareholdings in Brazilian companies. Transactions executed on the B3 stock exchange may be exempt for eligible foreign investors registered under Brazil’s foreign portfolio investment regime, provided the investor is not resident in a low-tax jurisdiction.

Brazil enforces a combination of specific and general anti-avoidance measures. The so-called General Anti-Avoidance Rule (GAAR), provided in the National Tax Code, authorises tax authorities to disregard artificial transactions that conceal the true nature of operations. However, its practical application remains limited and subject to interpretation, as no implementing regulation has been issued to define procedural safeguards or criteria for its use.

Transfer-pricing regulations, now fully aligned with OECD standards under Law No 14,596/2023, require documentation and benchmarking for all related-party cross-border transactions. Accepted methods include the comparable uncontrolled price (CUP), transactional net margin method (TNMM) and profit split approaches.

Controlled foreign company (CFC) rules require Brazilian shareholders to recognise profits of foreign subsidiaries on an accrual basis when the subsidiary is located in a low-tax jurisdiction or benefits from a privileged regime, with similar provisions to individuals holding offshore entities or trusts. Thin-capitalisation rules restrict interest deductions.

Penalties for tax evasion or fraud may reach 150% of the unpaid tax, in addition to interest and potential criminal liability.

The Constitution guarantees several fundamental labour rights, including minimum wage and limits on working hours, for example. Nonetheless, employment relations in Brazil are primarily governed by the consolidationoflabourlaws (CLT), which sets out the core framework for individual employment contracts, working conditions, termination rules and employee benefits. The CLT applies to nearly all employees working under subordination, regardless of the employer’s nationality. Complementary legislation and case law provide further guidance on specific topics such as health and safety, discrimination and remote work. Certain sectors are also subject to specific regulations issued by the Ministry of Labor or professional regulatory bodies.

In addition to traditional employment, many companies, particularly in the technology, services, and creative sectors, engage professionals under the so-called pessoa jurídica (PJ) or independent contractor regime. This model allows individuals to provide services through their own legal entities, offering tax efficiency and contractual flexibility. However, it also raises classification risks when the relationship presents characteristics of subordination. The STF is currently examining cases related to the status of app-based drivers and delivery workers, which may redefine the legal boundaries between employment and independent contracting in Brazil.

Collective bargaining plays a central role in Brazilian labour relations. A trade union must represent employees, and employers belong to an employers’ union for their economic sector. Collective agreements or conventions negotiated between these unions commonly address topics such as salary adjustments, benefits and working hours. While works councils, as known in some European jurisdictions, do not exist in Brazil, employee representation at the company level may occur through a union or the Internal Commission for Accident Prevention (Comissão Interna de Prevenção de Acidentes; CIPA).

Foreign investors entering the Brazilian market should be aware that local employment relationships are generally formalised through written contracts and registered with social security and tax authorities. Compliance with payroll obligations, severance fund deposits (fundo de garantia do tempo de serviço; FGTS) and social contributions is essential. In addition, Brazilian labour laws and case law are highly protective of employees. This often leads to a litigation-intensive environment, although recent reforms have sought to provide greater contractual flexibility and reduce judicial disputes.

In Brazil, employee compensation typically includes a fixed cash salary, performance bonuses, profit-sharing (participação nos lucros e resultados; PLR) and statutory benefits such as paid annual leave, a 13th salary and FGTS contributions. Depending on the collective bargaining agreement, many employers also offer supplementary benefits like private health insurance, meal vouchers and private pension plans. Equity-based incentives, including stock options or restricted shares, are more common in multinational and high-growth companies/startups.

In mergers, acquisitions or changes of control, employment contracts generally transfer automatically under successor liability principles, ensuring continuity of rights and benefits. However, variable or equity-based plans often require review, as change-of-control clauses may trigger accelerated vesting or bonus payments. Due diligence focuses on identifying potential labour liabilities and ensuring compliance with compensation obligations.

In Brazil, employees’ rights are strongly protected under labour law and established case law. In an M&A transaction or a change of control, the treatment of employment relationships depends on the transaction’s structure. In cases of a merger or asset deal where the employer entity changes, it may be necessary to terminate existing employment agreements and pay the corresponding severance and notice, followed by re-hiring by the acquiring company. Conversely, in share deals, where the employing entity remains the same, employment contracts typically continue automatically, and employees are not entitled to severance solely because of a change of control.

Employees are only entitled to statutory termination payments if dismissed without cause by the new employer. Collective bargaining agreements in force at the time of the transaction remain binding on the successor entity and must be observed after closing. While there are no mandatory works councils or collective approvals required to complete a transaction, due diligence normally includes a review of compliance with labour and union obligations to mitigate post-closing risks and liabilities.

Intellectual property (IP) is not generally a central factor in Brazil’s formal screening of FDI. There is no dedicated FDI review process focused on IP ownership or transfer. However, IP assets often form a key element of valuation and due diligence in cross-border transactions, particularly in technology, pharmaceuticals and agribusiness.

When IP rights are transferred as part of an investment, registration with the Brazilian National Institute of Industrial Property (Instituto Nacional da Propriedade Industrial; INPI) is required for patents, trade marks and technology transfer agreements to be effective against third parties. Recent changes to Brazil’s Foreign Exchange Legal Framework and BACEN Resolution No 277/2022, have simplified cross-border payments, allowing certain royalty remittances without prior registration of contracts with the INPI or BACEN, although registration remains advisable for legal certainty and, in certain cases, for tax purposes.

Certain strategic sectors – such as defence, telecommunications, and oil and gas – may be subject to additional scrutiny due to national security or public interest concerns. In these cases, authorities may examine the ownership and use of sensitive technologies or trade secrets, even though there is no separate IP-specific approval mechanism.

Brazil provides robust protection for IP, aligned with international standards such as the Paris Convention and the Agreement on Trade-Related Aspects of Intellectual Property Rights (the “TRIPS Agreement”). Patents, trade marks, industrial designs, copyrights and trade secrets are all recognised and enforceable. The INPI is responsible for granting industrial property rights, while copyright arises automatically upon creation.

In practice, delays in examination remain a challenge, especially for patent applications, though recent reforms and digitalisation have improved processing times. Compulsory licensing is possible in limited cases, such as public interest or anticompetitive behaviour, but it is rarely applied. Software and biotechnology enjoy protection, although pure algorithms, business methods and certain genetic materials are excluded from patentability.

Enforcement is carried out through judicial courts and administrative measures, with increasing use of border control actions and digital enforcement mechanisms. Overall, the jurisdiction is viewed as offering reliable IP protection for investors, despite INPI’s backlog.

Note that, to date, Brazil does not have specific legislation on AI. As a result, AI-generated works are protected under the existing IP framework, which attributes rights only to human authors or inventors. This means that the ownership of works created by AI is usually attributed to the individual or legal entity that directed the AI.

The LGPD, which was enacted in 2018 and entered into force in 2020, establishes a comprehensive framework governing personal data processing by public and private entities. The LGPD applies extraterritorially, extending to foreign companies that process the data of individuals located in Brazil, even if the processing occurs abroad.

The ANPD oversees enforcement and has broad powers to issue guidance, conduct audits and impose administrative sanctions. Penalties are capped at BRL50 million per infraction. However, the enforcement of the law remains at an early stage, with a gradual increase in supervisory activity and sector-specific guidance.

In 2024, the ANPD issued Resolution CD/ANPD No 19, which provides detailed rules for international data transfers. It recognises mechanisms such as standard contractual clauses, global corporate rules and specific consent, aligning Brazil’s framework with global standards. Foreign investors should therefore ensure compliance with the principles of transparency, purpose limitation and security, and verify that any cross-border data transfers rely on an approved mechanism under this regulation.