The Brazilian market offers significant opportunities for foreign companies, but it also has tax, corporate, labor and regulatory particularities that deserve attention from the very start of the project. A well-planned structure reduces risks, avoids rework and provides greater security throughout every stage of setting up the operation. Having an experienced local team allows the subsidiary to be formed in an organized way, meeting legal requirements and preparing the company to begin its activities with greater predictability.
Brazil is the largest economy in Latin America and has a domestic market of more than 200 million consumers. Its territorial size, economic diversity and strategic position in South America make it one of the leading destinations for companies seeking a permanent presence in the region.
Foreign investment is concentrated mainly in industry, infrastructure, energy, agribusiness, mining and technology. In many of these segments, demand for equipment, technical know-how and specialized solutions keeps growing, creating room for international companies.
Beyond the domestic market, Brazil can also serve as a platform for regional expansion. The country is part of Mercosur, an economic bloc made up of Argentina, Paraguay and Uruguay, plus associated countries, easing commercial access to neighboring markets. For many companies, setting up a subsidiary in Brazil is the first step toward operating in other South American countries.
Workforce
Brazil has a skilled workforce, especially in economic hubs such as São Paulo, Rio de Janeiro and the South region. On the other hand, labor law sets specific obligations regarding hiring, payroll charges, occupational health and safety, making proper planning important before operations begin.
Politics
Politically, Brazil is a consolidated democracy, with regular elections held by popular vote. Although the political environment is marked by strong polarization between different ideological currents, the country maintains stable institutions and an electoral system internationally recognized for how quickly results are counted.
As in many emerging markets, changes of government can shift economic priorities, industrial policies and sector incentives. Even so, Brazil’s institutional environment offers a significant degree of predictability for long-term investment. Projects in sectors such as infrastructure, industry, energy, agribusiness and technology continue to attract investment regardless of electoral cycles.
Taxation
The Brazilian tax system is known for its complexity, combining federal, state and municipal taxes that vary according to the activity performed and the tax regime chosen. Since 2026, the country has begun the transition to the largest tax reform in its history, gradually replacing part of the current structure with the so-called Dual VAT, made up of the CBS (a federal tax) and the IBS (a state and municipal tax). Implementation will be completed progressively by 2033.
This scenario reinforces the importance of tax planning as early as the company-formation stage. Depending on the activity carried out and how the business operates, there are regimes and instruments that can significantly reduce the tax burden on certain transactions.
Setup cost
One aspect that often draws foreign investors’ attention is the setup cost. Because of the exchange-rate difference between the Real and currencies such as the Euro and the Dollar, several initial expenses become proportionally lower for international companies. Depending on the intended structure, certain operations can start with a virtual office, a lean team and investments considerably below those seen in Western Europe or North America.
Legal certainty
Brazil’s legal framework offers well-established mechanisms to protect foreign investment. International companies can form local subsidiaries, duly register their investments with the competent authorities and run operations securely within the rules applicable to each sector.
Brazil was the world’s 3rd-largest destination for Foreign Direct Investment in 2025
Source: CNN Brasil (OECD data)
The largest economy in Latin America
Source: Statista
A large-scale market and an environment favorable to long-term investment
Source: World Bank
