Doing Business in Brazil: key legal risks foreign companies often overlook

Brazil is one of the largest and most dynamic markets in Latin America, attracting foreign companies from sectors such as technology, manufacturing, healthcare and services.
Despite its potential, many international businesses enter Brazil without fully understanding the local legal framework, which frequently leads to unexpected costs, disputes and operational disruptions.

Legal risks in Brazil are rarely obvious at the beginning but they tend to emerge once operations are already underway.

1. Contractual risks under Brazilian law

Brazilian contracts are governed by civil law principles that differ significantly from common law systems.

Foreign companies often encounter issues such as:

• Contracts drafted abroad without proper adaptation to Brazilian law

• Clauses that are unenforceable or interpreted differently by local courts

• Disputes involving jurisdiction, governing law and liability

• Legal exposure in distributor, reseller or joint venture agreements

Without local legal review, contracts may fail to provide effective protection.

2. Data protection and regulatory exposure

Brazil’s General Data Protection Law (LGPD) applies to foreign companies that process personal data related to individuals located in Brazil.

Common compliance gaps include:

• Underestimating the extraterritorial reach of the LGPD

• Lack of internal data governance policies

• Regulatory exposure in marketing, HR and customer data processing

Non-compliance may result in administrative sanctions, fines and reputational damage.

3. Intellectual property risks that impact market entry

Brazil follows a first-to-file system for trademarks, which often surprises foreign companies.

Typical risks include:

• Trademarks registered by third parties before market entry

• Delays in filing IP applications

• Loss of exclusivity or forced rebranding

Without a proactive intellectual property strategy, companies may face disputes that directly affect their brand and market position.

4. Employment and labor law challenges

Brazilian labor law is highly protective of employees and imposes strict obligations on employers.

Foreign companies frequently overlook:

• Mandatory benefits and payroll costs

• Risks related to independent contractor classification

• High exposure to labor litigation

Labor disputes are among the most common and costly legal issues for companies operating in Brazil.

5. Regulatory and tax complexity

Brazil’s regulatory and tax systems are complex and vary by industry and region.

Operating without local legal guidance may lead to:

• Unexpected tax liabilities

• Compliance failures

• Delays in licenses and authorizations

Early legal planning is essential to avoid operational setbacks.

Reducing legal risk when doing business in Brazil

Foreign companies that succeed in Brazil typically adopt a preventive legal approach, which includes:

• Legal due diligence before market entry

• Localized contracts and compliance frameworks

• Intellectual property protection strategies aligned with Brazilian law

• Ongoing legal support from local counsel

This approach reduces risk and supports sustainable, long-term operations.

Entering the Brazilian market requires more than opportunity, it requires legal certainty.

We advise foreign companies on legal structuring, intellectual property protection and risk management in Brazil, helping them operate with confidence in a complex regulatory environment.