Rural Real Estate in Brazil: Restrictions on Foreign-Controlled Companies
On August 21, 2026, the Brazilian Federal Supreme Court (STF) published the appellate decisions in Action Against the Violation of a Constitutional Fundamental Right (ADPF) No. 342 and Original Civil Action (ACO) No. 2.463, which were jointly tried on April 23. The Court unanimously confirmed that a company organized in Brazil but with a majority of its equity interest held by foreign investors is subject to the same restrictive regime applicable to foreigners for the acquisition and leasing of rural real estate.
Article 1, paragraph 1 of Law No. 5.709/1971 treats as a foreign entity any Brazilian legal entity in which foreign individuals or legal entities holding a majority of the equity interest participate, provided that they reside or have their principal place of business abroad. Article 23 of Law No. 8.629/1993 extends the same regime to leasing. Accordingly, having a Brazilian tax identification number (CNPJ), principal place of business, and management in Brazil does not remove these restrictions.
The issue dates back to 1995, when Amendment to Constitution No. 6 eliminated from the Constitution the distinction between a Brazilian company and a Brazilian company with national capital. The Sa o Paulo Disciplinary Board of the Courts subsequently instructed notary offices in the state of Sa o Paulo that they were not required to apply the rule; the Federal Government and the National Institute for Settlement and Agrarian Reform (INCRA), relying on an opinion issued by the Office of the General Counsel for the Federal Government and approved in 2010, took the opposite position. The STF has now resolved the dispute: it denied the ADPF, granted the ACO, and rejected the Sao Paulo guidance.
The decision does not prohibit foreigners from acquiring land; rather, it confirms the applicable limits and regulatory controls. Transactions are subject to prior authorization by INCRA, and the aggregate area of rural land owned by foreign individuals and entities treated as foreign may not exceed 25% of the total area of any given municipality. In addition, individuals and entities of the same nationality are subject to a limit of 40% of that threshold, equivalent to 10% of the municipality’s total area.
The acquisition of large tracts of land is subject to authorization by the National Congress, while properties located within the Border Zone (Faixa de Fronteira) — extending 150 kilometers along Brazil’s land borders — require approval from the National Defense Council.
For foreign investors, the practical consequence is that incorporating a Brazilian subsidiary does not neutralize the applicable regime. The issue is particularly relevant to the agricultural, forestry, food, biofuels, and renewable energy sectors, which frequently access land through leasing rather than outright acquisition.
The cases have not yet become final and unappealable and remain subject to motions for clarification. However, the merits were decided unanimously by the Full Bench. Any relaxation of the current rules would therefore depend on Congress. Bill No. 2.963/ 2019, which has been approved by the Senate and is currently under consideration by the Chamber of Deputies under an expedited procedure, proposes a new framework governing the acquisition, ownership, and leasing of rural real estate by foreign investors and, among other changes, would remove these restrictions specifically for Brazilian companies controlled by foreign capital.
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For more information on the above or other matters, please contact Maristela SA Rossetti (mar@rraa.com.br) or Gilberto Rossetti (gmr@rraa.com.br).
This article is based on publicly available information and given for informational purposes only. It is not intended as legal advice or as a comprehensive analysis of the matters referred to herein.
