BRAZIL LAW AND PRACTICE Contributed by: Alan Campos Elias Thomaz, Juliana Sene Ikeda, Ricardo Barretto Ferreira da Silva and Camila Sabino Del Sasso, Campos Thomaz Advogados
law. Other specialised superior courts include the Superior Labour Court ( Tribunal Superior do Trabalh o; 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, responsi - ble for upholding the Constitution. It addresses con - stitutional issues involving public authorities, legisla - tion and fundamental rights, as well as rules on direct actions of unconstitutionality ( ação direta de incon- stitucionalidade ADI), habeas corpus and extradition cases. 1.2 Regulatory Framework for FDI 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 Naciona l), as well as the acquisition of rural proper - ties by foreign individuals residing in Brazil, foreign legal entities or Brazilian entities under foreign con - trol, 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 owner - ship and management of newspapers, magazines and other publications, radio and television broadcasting, and telecommunications. 2. Recent Developments and Market Trends 2.1 Current Economic, Political and Business Climate Brazil’s macroeconomic environment in 2025 is marked by increasing public expenditure and a high base interest rate, creating fiscal challenges and lim -
iting 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 con - sumer 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 tran - sition 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 struc - ture 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 finan - cial, 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.
3. Mergers and Acquisitions 3.1 Transaction Structures
In Brazil, the choice of transaction structure depends on the type of target company, the level of control sought, and regulatory, tax and operational consid -
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