Put: Vitor Antony Ferrari and Ivan Kubala

Currently, Bill No. 2963/2019 is being processed in the National Congress, which provides for the regulation of the acquisition, possession and registration of rural property by foreign individuals or legal entities.

The proposal, if approved, would eliminate the need for authorization or license for the acquisition of rural properties by foreigners, in the case of properties with areas not exceeding 15 tax modules — the value of the tax module is dictated by Incra and varies between 5 and 110 hectares, depending on the municipality in which the rural property is located.

According to the PL, the sum of rural areas belonging to and leased to individuals from other countries may not exceed 25% of the surface area of the municipalities where they are located.

Furthermore, in the case of companies formed by citizens and companies of the same nationality, this percentage will be reduced, not exceeding 10% of the surface area of the municipalities.

This change has been motivated by the estimate that in the last decade Brazil has lost at least R$550 billion in investments in the agricultural sector due to “legal controversies” over opening up to foreign capital.

The text, which has already been approved by the Senate, in accordance with the provisions of Article 190 of the Federal Constitution, grants the National Congress the authority to authorize the acquisition of rural properties by foreigners, beyond the limits set by law, when it involves the implementation of projects deemed to be priorities, in view of the country's development plans, upon prior approval by the Executive Branch.

Furthermore, the aforementioned project amends Law 5,868/72, which created the SNCR (National Rural Registration System), establishing that the registrations will be computerized and, except for information protected by tax secrecy, the remaining data will be published on the internet, guaranteeing the free issuance of certificates of their information with digital authentication.

In this way, with the conversion of the project into Leio SNCR, its database would be updated with the information provided by taxpayers in the Cadastral Information and Update Document (DIAC), referred to in Law 9,393/19, which also provides for Rural Territorial Property (ITR) and the payment of the debt represented by agrarian debt bonds.

Thus, the legislation that deals with the mandatory provision of registration information regarding rural properties acquired or used by foreign legal entities would also be reviewed.

Finally, the Bill repeals Law 5,709/71, which regulates the acquisition of rural property by foreigners residing in the country or foreign legal entities authorized to operate in Brazil.

On the other hand, as highlighted by the analysis carried out by the Chamber of Deputies, it would validate the acquisitions and leases of rural properties acquired by Brazilian individuals or legal entities constituted or controlled, directly or indirectly, by foreign private individuals or legal entities, during the validity of this law.

The acquisition of rural properties or any type of possession when the legal entities are non-governmental organizations, sovereign funds, foundations and other legal entities headquartered abroad, will be subject to approval by the National Defense Council (CDN), expressly provided for in art. 8 of the PL that is awaiting consideration in the Chamber.

Likewise, Brazilian legal entities constituted or controlled directly or indirectly by foreign individuals or legal entities will also have to go through the National Defense Council (CDN) when the property is located in the Amazon biome and is subject to a legal reserve equal to 80%.

The acquisition of rural properties, located in areas essential to national security, must also have the prior consent of the CDN.

In any case, foreigners would be prohibited from:

• any form of possession for an indefinite period;
• partial or total lease or sublease for an indefinite period;
• qualification for the concession of public forests intended for sustainable production.

Despite this, when it comes to concession, however, it is permitted for a Brazilian legal entity constituted or controlled directly or indirectly by a foreign individual, and such prohibitions do not apply when the acquisition of rural property is intended for the execution or exploration of a concession, permission or authorization of a public service.

The topic is controversial, and, despite having already been approved in the Senate, it will certainly be treated with caution by the Legislature due to the events and political positions of recent years.

However, from a legal and economic point of view, expanding the possibility of selling rural properties would clearly bring about movement in the real estate market.

Despite the apparent immediate benefit, it is also necessary to pay attention to the fact that the acquisition of rural properties by foreigners should also bring intrinsic benefits to the domestic economy as a whole, with the obligation to develop the local economy, generate jobs and income, wealth and collect specific taxes directed towards the growth and maintenance of financial assets within the national territory.

Our office has closely monitored legislative developments such as those reported here, being attentive to their implications and benefits for our clients, keeping its professionals up to date with the new legislation and the understandings issued by the Judiciary.

Source: https://www.camara.leg.br/noticias/720837-proposta-regulamenta-compra-de-terras-rurais-por-estrangeiros/