BrasiliaRiyadh

23/03/2016

Wednesday

Agriculture Investment:FAQs

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Investment in Brazilian Agriculture sector

Questions and Answers

(7/2/2013)

(International Agribusiness Promotion Department, Ministry of Agriculture, Livestock and Food Supply, Brazil)

"1 - Can foreigners acquire or lease land in Brazil?

Yes. Both individuals and corporations can do it, legal provisions complied.

2 - Who is considered a foreigner in Brazil for matters concerning land acquisition/leasing?

Foreign individuals

- not naturalized even if married to a Brazilian citizen under communion of property and with a Brazilian children;

P.S: The Portuguese Reciprocity Certificate holder is not a foreigner for the purpose of acquisition and leasing of land in Brazil.

Foreign Corporations

- Foreign corporations, that is, one whose capital is totally from foreign origin, headquartered abroad and authorized to operate in Brazil;

- Brazilian corporations whose majority of capital is controlled by foreigners, whether they are individuals or corporations, residing or headquartered in Brazil or abroad.

3 - Are there any restrictions on the amount of land to be acquired by foreigners in Brazil?

Yes. Constraints are of two orders:

Regarding the nature of foreign person:

- Individuals can acquire up to 50 MEI (Indefinite Exploitation Module), which is equivalent to areas ranging from 250 to 5,000 hectares, according to the MEI`s value in each municipality. (See the meaning of MEI on question 6).

- Corporations can acquire up to 100 MEI, which is equivalent to areas ranging from 500 to 10,000 hectares, according to the MEI`s value in each municipality.

Regarding municipality and nationality:

- According to Federal Law 5709/1971, the total sum of land areas acquired by foreigners in a municipality may not exceed 25% of its territory;

- Foreigners of the same nationality cannot own more than 10% of the total area of a municipality.

P.S: Foreigners married with Brazilian citizens under communion of property or with a Brazilian son/daughter are not subject to these limits, being however subject to other legal constraints.

P.S: the amount in hectares of each MEI can be found on

www.incra.gov.br/index.php/estrutura-fundiaria/regularizacao-fundiaria/aquisicaode-terras-por-estrangeiros/file/1114-modulo-de-exploracao-indefinida-mei

See question 6 for what MEI mean.

4 - Is it possible to acquire land in Brazil beyond those limits?

Yes. But only upon approval by the Brazilian National Congress.

5 - Can foreigners lease land in Brazil?

Yes. The leasing, according to Article 23, Paragraph 1 of Law 8629 of 25/02/1993, is subject to the same conditions applicable to the acquisition of rural land by foreigners.

6 - What does MEI mean?

The Indefinite Exploitation Module (MEI) is a unit of measure, expressed in hectares, used to establish the limit of acquisition and leasing of land by foreigners in the Brazilian municipalities. The size of each MEI ranges from 5 to 100 hectares depending on the municipality. It is defined by INCRA (National Institute of Colonization and Agrarian Reform) considering the territorial dimension, geographical location and economic exploitation of each municipality.

7 - What are the main requirements for the acquisition and leasing of land by foreigners in Brazil?

For individuals

a) Being a permanent resident in Brazil and enrolled in the National Registry of Foreigners - RNE under permanent status;

b) Providing an exploitation project (only for areas above 20 MEI). See question 9 for exploitation project.

For corporations

c) Registration at the Board of Trade in the Brazilian State where it is headquartered - in the case of a Brazilian corporation controlled by foreigners, whether they are natural or legal persons, residing or headquartered abroad;

d) Official authorization to operate in Brazil, in the case of a foreign legal entity, that is, one which its capital is fully controlled by foreigners;

e) Clear provision in its bylaws regarding activities on agriculture, livestock, forestry, tourism, industry or colonization;

f) Providing an exploitation project whatever the size of the area to be acquired or leased.

8 - How to start your application for authorization to purchase or lease land in Brazil.

The foreigner, whether an individual or a corporation, must file an authorization application for acquiring or leasing at the INCRA`s Superintendence in the state where the rural estate is located.

The application form can be found on:

For individuals

http://www.incra.gov.br/index.php/estrutura-fundiaria/regularizacao-fundiaria/aquisicaode-terras-por-estrangeiros/file/1106-requerimento-pessoa-natural-estrangeira

For corporations

http://www.incra.gov.br/index.php/estrutura-fundiaria/regularizacao-fundiaria/aquisicaode-terras-por-estrangeiros/file/1107-requerimento-pessoa-juridica-estrangeira

9 - What is an exploitation project?

The exploitation project is a requirement for the approval of land acquisition by foreigners in Brazil (see question 10 as the case may be). In that document the applicant for acquiring or leasing must specify the following information:

- Justification of proportionality between the amount of land to be acquired and size of the project;

- Physical and financial schedule of investment and implementation;

- Possible use of official credit to finance all or part of the venture;

- Logistical feasibility of its implementation and, in the case of an industrial project, demonstration of the compatibility between the land location and the type of industry to be installed;

- Demonstration of compliance with the criteria for Ecological and Economic Zoning of Brazil (ZEE). The ZEE establishes which crops are best suited economically to each area of the country, considering measures and standards of environmental protection and biodiversity.

Find further information about ZEE on:

http://www.planalto.gov.br/ccivil_03/leis/L6938.htm

http://www.planalto.gov.br/ccivil_03/DNN/2001/Dnn9465.htm#art11

http://www.planalto.gov.br/ccivil_03/decreto/2002/d4297.htm

One must apply the exploitation project to INCRA that later on sends it other departments to assess, depending on the nature of the project (Ministry of Development, Industry and Foreign Trade - MDIC; Ministry of Tourism - MTur; Ministry of Agrarian Development - MDA). All projects also must be assessed by the Ministry of Agriculture, Livestock and Food Supply - MAPA. The final authorization depends on INCRA`s decision.

10 - In which cases authorization request and presentation of an exploitation project for acquisition and leasing of land by foreigners in Brazil is required?

Authorization request and presentation of an exploitation project are subject to the nature of the foreign person and the size of the area of property:

For individuals

Land with an area equivalent of up to 3 MEI: the applicant must only declare not to own another rural estate in Brazil. Therefore, foreigners cannot acquire several estates with areas below 3 MEI each in order to be exempted from INCRA`s authorization; Land measuring between 3 and 20 MEI: INCRA`s authorization is required, but applicants are exempted from applying an exploitation project.

Land measuring more than 20 MEI: INCRA`s authorization and exploitation project are required; Land measuring more than 50 MEI: besides INCRA`s authorization and an exploitation project, an authorization by the Brazilian National Congress is also required.

For corporations

INCRA`s authorization and an exploitation project are required regardless of the estate`s size; For land measuring more than 100 MEI: besides INCRA`s authorization and an exploitation project, an authorization by the Brazilian National Congress is also required

P.S: When it comes to an estate located in a border territory or area deemed essential to national security, it is mandatory a prior consent by the Executive Secretariat of the National Defense Council.

11 - Do legal restrictions apply to the case of lawful succession?

All prerogatives are guaranteed to the Brazilian legitimate successors as long as they reside in Brazil".

 

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