Doing Business in Brazil

9. Brazilian Exchange Control

09/05/25

9. Brazilian Foreign Exchange Control

Understanding Brazil’s foreign exchange (“FX”) control framework is critical for businesses and investors. Historically characterized by a highly regulated and often complex environment, Brazil has recently implemented significant legislative changes aimed at modernizing and simplifying its FX landscape, aligning it more closely with international best practices. This chapter provides a concise overview of the key transformations within Brazil’s foreign exchange system.

9.1. Evolution of Foreign Exchange Control

For decades, the Brazilian FX market operated under a stringent system primarily governed by Law No. 4,131 of 1962 and various regulations from the Central Bank of Brazil (“BACEN”) and the National Monetary Council (“CMN”). This framework often necessitated prior authorization for transactions, imposed strict capital flow limits, and demanded extensive documentation. While intended to manage balance of payments and protect national industries, its complexity frequently deterred foreign direct investment.

A pivotal shift occurred with the enactment of Law No. 14,286 on December 29, 2021 (the “New FX Law“). This landmark legislation, fully effective since January 2023, represents the most comprehensive overhaul in over six decades. Its primary objectives are to simplify rules, reduce bureaucracy, enhance legal certainty, and further integrate the Brazilian economy into the global financial system. Subsequent resolutions from BACEN provide detailed implementation guidelines.

9.2. Brazil’s Exchange Rate Regime

Brazil operates a managed floating exchange rate regime, also known as a “dirty floating exchange rate.” While the exchange rate, primarily against the U.S. dollar, is largely determined by market forces (supply and demand), BACEN retains a crucial role. It intervenes selectively through spot market operations and derivative instruments (e.g., foreign exchange swap contracts) to mitigate abrupt volatilities and maintain market functionality, without directly fixing the rate. These interventions aim to align the exchange rate with economic fundamentals, preserve price stability, and offer predictability for economic agents.

9.3. The New Foreign Exchange Framework: Most Important Changes

The New FX Law fundamentally reshapes how foreign exchange operations, Brazilian capital abroad, foreign capital in Brazil, and information reporting are managed. Its core principle is market liberalization, shifting from a prohibitive framework to one that permits operations unless explicitly restricted.

9.3.1. Key Legislative Provisions (Law No. 14,286/2021):

  • Liberalized Operations: FX operations can now be “freely carried out, without value limits,” provided they comply with existing legislation. Exchange rates are “freely agreed upon” between authorized institutions and clients. The simplification of foreign exchange settlements is notable, with a reduction in the number of FX categories for small-value operations (up to US$50,000) from over 200 to just 8 categories, and the waiver of the obligation to sign foreign exchange contracts for certain operations, granting greater speed to transactions.
  • Expanded Use of Foreign Currency in Brazil: The law broadens the situations where obligations payable in Brazil can be denominated in foreign currency, including international trade contracts and transactions where one party is a non-resident. It also permits foreign currency accounts for strategic sectors (e.g., oil, energy).
  • Cash Entry and Exit: Individuals may now carry up to US$10,000 (or equivalent) in cash without intermediation by an authorized institution, aligning with international standards. Amounts exceeding this limit require processing through authorized FX institutions and may demand proof of origin/destination.
  • Occasional Sale of Foreign Currency Between Individuals: The new legislation now permits the occasional purchase and sale of foreign currency in cash between individuals, limited to US$ 500 per transaction, without requiring intermediation by an authorized institution. This measure enhances flexibility in the use of foreign currency in everyday situations, such as selling leftover travel funds, without constituting professional currency exchange activity.
  • Flexibility for Brazilian Capital Abroad: Brazilian companies are authorized to hold foreign currency resources outside Brazil, including those from external financing. The payment of obligations — such as commissions, taxes, or imports — can be made directly from the overseas account. However, the sending of these resources to third-party accounts remains subject to proof of connection with the company’s contractual obligations. There is no longer a mandatory immediate internalization of captured funds, enhancing international cash management.
  • Non-Resident Accounts in BRL: The legislation expands the opening of Brazilian Real (BRL) accounts by non-residents, promoting broader international use of the Brazilian currency.
  • Simplified Financial Operations Register (“ROF”): The ROF is now mandatory only for operations exceeding US$1 million or with terms equal to or greater than 360 days, significantly reducing compliance burden for smaller transactions.
  • Client Responsibility for Classification: Clients are responsible for classifying the purpose of FX operations, with institutions providing necessary support.

9.3.2. Implementing Regulations: Operational Aspects

BACEN Resolution No. 277/2022 (updated by BCB Resolution No. 337/2023) details the principal operational aspects of the new framework:

  • Reduced Categories and Enhanced Transparency: The number of FX categories for small-value operations (up to US$50,000) has been significantly reduced, simplifying processes. The “Valor Efetivo Total (“VET”, or Total Effective Value)” disclosure ensures greater transparency regarding exchange rates, taxes, and fees. This value, expressed in BRL per unit of foreign currency, considers the exchange rate, applicable taxes, and any fees charged. For client operations up to US$100,000, institutions must inform the VET before the operation.
  • Expanded Authorization for Institutions: Beyond traditional banks, specific types of payment institutions (e.g., electronic money issuers) are now authorized to perform client FX operations up to defined limits, fostering increased competition and innovation.
  • Export and Import Rules Flexibility: Export revenues and import payments can now be made in BRL or foreign currency, with specific rules for early payments (up to 360 days, or 1800 days for certain large equipment/machinery imports) regardless of the commercial negotiation currency, offering greater flexibility in international trade.
  • Electronic Foreign Exchange (eFX) Services: A specific framework has been introduced for eFX services, covering various digital payment solutions and unilateral transfers, with clear transparency requirements.
  • Foreign Currency Accounts in Brazil: the legislation outlines the specific entities allowed to hold foreign currency deposit accounts in Brazil, including tourism agencies, foreign embassies, international organizations, postal service providers, international credit card issuers, non-residents (transitorily in Brazil), federal/state/municipal government entities, energy sector companies, insurers, non-resident transporters, and oil/gas exploration companies. Each category has specific conditions and limitations on account movements.
  • Documentation and Due Diligence: While the new law aims to simplify, institutions still maintain discretion to request or waive supporting documents based on their risk assessment, always in compliance with anti-money laundering and counter-terrorism financing (AML/CFT) regulations, specifically Circular No. 3,978 of 2020. Institutions must retain proof of client consent and operation details for at least ten years.

9.4. Non-Resident Investments

Joint Resolution No. 13/2024 (BACEN/CVM), effective January 1, 2025, significantly updates the framework for non-resident investments in Brazilian financial and securities markets:

  • Unified and Equal Access: Non-resident investments can now access the “same financial instruments and modalities available to resident investors,” promoting a level playing field.
  • Exemptions from Representation: Crucially, the resolution introduces important exemptions from the requirement to appoint a representative in Brazil and obtain CVM registration for certain non-resident corporate and individual investors, particularly for smaller investments or those conducted through BRL accounts.
  • Local Fund Flow Requirement: A general prohibition is established against making payments and financial movements from foreign accounts for investments covered by this resolution; funds must typically flow into and out of Brazil through the domestic financial system.

9.4.1. Reporting Obligations to BACEN

Despite liberalization, robust reporting remains vital for macroeconomic statistics, supervision, and Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) compliance.

  • General Mandate: BACEN maintains broad authority to request data from authorized institutions and residents regarding FX operations, capital flows, and private credit compensation.
  • FX Operations Reporting: Authorized institutions must report detailed FX operation data to BACEN’s Sistema Câmbio, with daily cut-off times, though operations up to US$50,000 have extended monthly reporting deadlines.
  • Non-Resident Account Reporting: Institutions maintaining BRL accounts for non-residents must report movements by the fifth day of the subsequent month, with stricter requirements for high-value transactions.
  • Non-Resident Investment Reporting: Representatives and institutions handling non-resident investments are required to maintain updated records, provide information to BACEN and CVM upon request, and retain documentation for at least ten years. The client’s role in classifying transactions remains essential.

The new foreign exchange framework in Brazil marks a significant transition towards a more open, modern, and internationally aligned financial system.

9.5. Bibliographical References:

Banco Central do Brasil. (2020, January 23). Circular nº 3.978: Provides for the policy, procedures and internal controls to be adopted by institutions authorized to operate by the Central Bank of Brazil in order to prevent the use of the financial system for money laundering and terrorism financing crimes. Diário Oficial da União, seção 1. Brasília, DF.

Banco Central do Brasil. (2022, December 31). Resolução BCB nº 277: Provides for the provision of foreign exchange services by institutions authorized to operate by the Central Bank of Brazil. Diário Oficial da União, seção 1. Brasília, DF.

Banco Central do Brasil. (2023, August 4). Resolução BCB nº 337: Amends Resolution BCB nº 277, of December 31, 2022, which provides for the provision of foreign exchange services by institutions authorized to operate by the Central Bank of Brazil. Diário Oficial da União, seção 1. Brasília, DF.

Banco Central do Brasil & Comissão de Valores Mobiliários. (2024, March 11). Resolução Conjunta nº 13: Provides for investments in the country by non-resident investors. Diário Oficial da União, seção 1. Brasília, DF.

Brazil. (1962, September 3). Law nº 4.131: Provides for foreign capital and remittances abroad and other provisions. Diário Oficial da União, seção 1. Brasília, DF.

Brazil. (2021, December 29). Law nº 14.286: Provides for the foreign exchange market, Brazilian capital abroad, foreign capital in the country and the provision of information to the Central Bank of Brazil. Diário Oficial da União, seção 1. Brasília, DF.

Carrete, L. S. (2019). Brazilian financial market (p. iv) [E-book]. Atlas. https://app.minhabiblioteca.com.br/reader/books/9788597021394/

Reis, F. J. G. dos, Silveira, A. O. da, Campos, E. do N. O., & et al. (2023). International finance and exchange (p. 76) [E-book]. SAGAH. https://app.minhabiblioteca.com.br/reader/books/9786556903705/


Authors: Analice Hegg Amaral Lima e Ellen Porto Gomes

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