Foreign Access to Rural Land in Brazil: What’s at Stake?

Understanding the Legal Landscape

Since the 1970s, Brazil has imposed restrictions on foreign access to rural land as a means of protecting national sovereignty and strategic resources. The legal framework, primarily established by Laws No. 5,709/1971 and No. 8,629/1993, limits the ability of foreign individuals, foreign entities, and Brazilian companies under foreign control to acquire or lease rural properties.

These operations often require prior approval from governmental bodies, such as INCRA (the National Institute for Colonization and Agrarian Reform), and must follow a series of legal procedures. Failure to comply with these rules may result in the nullification of the transaction—posing a significant risk to investors unaware of the legal complexities.

Pressure for Reform and Judicial Developments

Although the laws remain unchanged, there is growing pressure for reform. Draft Bill No. 2,963/2019, currently under discussion in Congress, seeks to relax restrictions for Brazilian companies with foreign capital. At the same time, two key cases before the Supreme Federal Court (ADPF 342 and ACO 2,463) challenge the binding legal opinion that currently enforces the existing restrictions.

A decision in either case could reshape the legal framework, potentially expanding—or further limiting—foreign access to rural land.

Legal Workarounds: Structures and Strategies

While Brazilian legislation lacks a definition about the acquisition and leasing of rural properties by foreigners, to navigate these restrictions, legal and corporate advisors have developed alternative structures that allow foreign involvement in rural operations without direct ownership. From a Real Estate perspective, common mechanisms include surface rights, assignment of use, usufruct arrangements, and rural partnerships—all designed to ensure that control over land use remains legally compliant.

From a Corporate perspective, in many cases, investors also turn to dual-company models: a “LandCo” (a Brazilian-controlled company that legally owns the land) and an “OperationalCo” (a foreign-controlled company that manages agricultural production). When structured correctly, this separation between ownership and operation can be effective—but it must follow strict formalities to avoid being classified as a simulation or circumvention of the law.

Legal Actions on the Rise

It worth mentioning that these alternative structures to overcome the restrictions – which has been working well – were recently challenged under some public-interest lawsuits, under the argument they are “simulated” corporate structures. If courts validate this arguments, many past and current transactions could be challenged as void, potentially disrupting a wide segment of Brazil’s agribusiness sector.

What Lies Ahead for Foreign Investors

While the law has not changed, judicial interpretation is evolving. A shift in how courts define “foreign control”- particularly in indirect or corporate forms – could put widely used investment structures at risk.

Foreign investors and agribusiness stakeholders must be proactive: conduct thorough legal due diligence, remain up to date with legislative and judicial developments, and explore robust, compliant alternatives to secure their long-term presence in Brazil’s rural economy.

Manucci Advogados has been closely following the progress of this matter and is prepared to assist our clients in assessing risks and making decisions concerning structures to acquire and/or lease rural properties in Brazil.