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Acquiring a Brazilian company: CADE merger control, tag along, successor liability, goodwill and the seller's capital gains tax

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Last verified: 2026-10-27 · Status: Stable

Buying a Brazilian business is open to foreign buyers, but deals above two revenue thresholds (R$750 million for one group and R$75 million for another, in Brazil) must be cleared by CADE before closing, with a R$85,000 fee and fines up to R$60 million for jumping the gun. A share deal carries the target's tax and labor history with it, and even an asset deal of a going business can transfer tax and labor liabilities to the buyer. Goodwill paid to an unrelated seller can be deducted over at least five years after a merger, and a non resident seller's capital gain is taxed at 15 to 22.5 percent, withheld by the buyer or its attorney in Brazil.

USD figures use the Banco Central do Brasil PTAX selling rate of R$5.3346 per US dollar for 27 October 2026 (the rate was R$5.5007 on 26 October and R$5.0377 on 23 October, so conversions move with the market). Conversions are for orientation only; the rate on the day of each FX contract will differ.

Key facts

Merger filing threshold: Brazilian revenue of one group	750000000 BRLLei nº 12.529 art. 88 I; Portaria Interministerial nº 994/2012 art. 1, as of 2026-10-27 · in force
Merger filing threshold: Brazilian revenue of another group	75000000 BRLLei nº 12.529 art. 88 II; Portaria Interministerial nº 994/2012 art. 1, as of 2026-10-27 · in force
CADE merger filing fee	85000 BRLLei nº 12.529 art. 23, as of 2026-10-27 · in force
Maximum CADE review period before extensions	240 daysLei nº 12.529 art. 88 § 2, as of 2026-10-27 · in force
Maximum fine for closing before CADE clearance	60000000 BRLLei nº 12.529 art. 88 § 3, as of 2026-10-27 · in force
Minimum tender offer price for minority voting shares on sale of control of a listed company	80 % of control priceLei nº 6.404 art. 254-A, as of 2026-10-27 · in force
Maximum monthly tax amortization of goodwill after merger (unrelated parties)	1/60 fraction per monthLei nº 12.973 art. 22, as of 2026-10-27 · in force
Top capital gains rate for non residents (gain above R$30,000,000)	22.5 %Lei nº 8.981 art. 21 IV, as of 2026-10-27 · in force

The rule

1. Merger control is mandatory and suspensory. Mergers, acquisitions of control or of parts of companies and similar concentrations must be filed with CADE before closing when, cumulatively, one group involved had gross revenue or business volume in Brazil in the prior year of at least R$750,000,000 and another group had at least R$75,000,000. The statute sets R$400,000,000 and R$30,000,000; Portaria Interministerial MJ/MF nº 994 of 2012 raised them under the power in art. 88 § 1, and the figures are measured for the whole economic group.
Cost to do it: CADE filing fee (taxa processual) of R$85,000 per filing, about US$15,934 (art. 23, wording of Lei nº 13.196 of 2015), plus legal and economic advisers.
Example: Buyer group with R$2,000,000,000 of Brazilian revenue buys a target with R$100,000,000: both thresholds met, file and pay R$85,000 before closing. Target at R$60,000,000 with a seller group without other Brazilian revenue: no mandatory filing. / Thresholds are about US$140.6 million and US$14.06 million; the fee is about US$15,934.Lei nº 12.529 (Competition Law); Portaria Interministerial MJ/MF nº 994 of 2012, Lei nº 12.529 art. 88 caput, items I and II, and § 1; Portaria nº 994 art. 1, 2011-11-30 official text · verified 2026-10-27

2. Review deadline and gun jumping. CADE must decide within 240 days of the filing or its amendment, extendable by up to 60 days at the parties' request or up to 90 days by reasoned decision of the Tribunal. A notifiable deal may not be consummated before clearance: closing early makes the act void and triggers a fine of R$60,000 to R$60,000,000, and competitive conditions between the parties must be preserved until the final decision. CADE may also call in, within one year of closing, deals below the thresholds.
Cost to do it: Fine for closing before clearance from R$60,000 to R$60,000,000 (about US$11,247 to US$11.25 million), plus nullity of the act.
Example: Signing on 1 March with a filing on 15 March: the outside date under the statute is 240 days from 15 March, 330 days if both extensions are used. Long stop dates in the SPA should cover that window. / Fine range about US$11,247 to US$11.25 million.Lei nº 12.529 (Competition Law), Art. 88 §§ 2, 3, 4, 7 and 9, 2011-11-30 official text · verified 2026-10-27

3. Tag along on listed companies. The direct or indirect sale of control of a publicly held company (companhia aberta) may only be agreed on condition that the buyer makes a public tender offer for the other voting shares at no less than 80 percent of the price per voting share paid for the control block. CVM authorizes the sale after checking the offer, and the buyer may instead offer minorities a premium to stay in the company.
Cost to do it: The tender offer itself: at least 80 percent of the control price for every outstanding voting share, plus CVM offer costs.
Example: Control block bought at R$50 per voting share: minority voting shareholders must be offered at least R$40 per share. / About US$9.37 per control share and at least US$7.50 per minority voting share.Lei nº 6.404 (Corporations Law), art. 254-A included by Lei nº 10.303 of 2001, Art. 254-A caput and §§ 1, 2 and 4, 1976-12-15 official text · verified 2026-10-27

4. Tax successor liability. A company resulting from a merger (fusão), transformation or incorporation (incorporação) is liable for the taxes owed by the merged entities up to the date of the act. A buyer of a business establishment (fundo de comércio or estabelecimento) that continues the activity is liable for the taxes of that establishment up to the purchase: in full if the seller stops the activity, or secondarily if the seller continues or starts a new activity within six months. The rule does not apply to judicial sales in bankruptcy or of isolated units in judicial reorganization, except to insiders.
Cost to do it: No fee; the cost is the inherited tax exposure, which drives escrow, holdback and indemnity sizing.Código Tributário Nacional (Lei nº 5.172), Arts. 132 and 133, with § 1 to § 3 included by Lei Complementar nº 118 of 2005, 1966-10-25 official text · verified 2026-10-27

5. Labor successor liability. A change in ownership or legal structure of the business does not affect employees' acquired rights or employment contracts. Once succession is established, the successor is liable for all labor obligations, including those incurred while employees worked for the predecessor; the predecessor is jointly liable only if fraud in the transfer is proven.
Cost to do it: No fee; labor claims of the target's workforce follow the business, so diligence of labor suits and FGTS deposits is priced into the deal.Consolidação das Leis do Trabalho (Decreto-Lei nº 5.452), art. 448-A included by Lei nº 13.467 of 13 July 2017, Arts. 10, 448 and 448-A, 2017-07-13 official text · verified 2026-10-27

6. Asset deals of a going business. A buyer of a business establishment is liable for the seller's prior debts relating to it that are properly recorded in the books; the seller remains jointly liable for one year (from publication for debts already due, from maturity for the others). The transfer is effective against third parties only after it is recorded with the Commercial Registry (Junta Comercial) and published in the official gazette.
Cost to do it: Registry and official gazette publication costs at the state Junta Comercial.Código Civil (Lei nº 10.406), Arts. 1.144 and 1.146, 2002-01-10 official text · verified 2026-10-27

7. Buying quotas in a Ltda. Unless the articles say otherwise, a partner may assign quotas to another partner freely and to an outsider only if holders of more than one quarter of the capital do not object. The assignment is effective toward the company and third parties from registration of the amendment, and the assignor remains jointly liable with the assignee for its obligations as partner for two years after registration.
Cost to do it: Junta Comercial filing fee for the amendment to the articles (contrato social).Código Civil (Lei nº 10.406), Arts. 1.057 and 1.003 sole paragraph, 2002-01-10 official text · verified 2026-10-27

8. Goodwill deduction. On acquiring an equity stake valued by the equity method, the buyer splits the price into book net assets, fair value surplus (mais valia) backed by an independent appraisal filed with the Federal Revenue or registered in summary at a registry of deeds by the last business day of the 13th month after the acquisition, and goodwill. After the buyer absorbs the target by merger, incorporation or spin off, goodwill from an acquisition between unrelated parties may be excluded from taxable profit at up to 1/60 per month. Goodwill between dependent parties (common control, control relationship, sellers who are partners, directors or close relatives) does not qualify, nor does goodwill without a timely appraisal.
Cost to do it: Independent appraisal report (laudo) within 13 months of the deal; professional fees are negotiated.
Example: Price R$100,000,000 for 100 percent of a target whose net assets at fair value are R$60,000,000: goodwill R$40,000,000. After the merger, up to R$666,667 a month (R$8,000,000 a year) can be excluded from taxable profit; at the 25 percent IRPJ rate (15 percent plus 10 percent additional) that is up to R$2,000,000 of IRPJ a year for five years. / Price about US$18.75 million, goodwill about US$7.50 million, yearly exclusion about US$1.50 million, IRPJ saving up to about US$374,900 a year.Lei nº 12.973; Decreto-Lei nº 1.598 art. 20 as worded by Lei nº 12.973, Lei nº 12.973 arts. 22 and 25; Decreto-Lei nº 1.598 art. 20 § 3, 2014-05-13 official text · verified 2026-10-27

9. The seller's capital gain. A non resident seller of assets located in Brazil, including quotas and shares of a Brazilian company, is taxed on the gain at progressive rates: 15 percent up to R$5,000,000 of gain, 17.5 percent from R$5,000,000 to R$10,000,000, 20 percent from R$10,000,000 to R$30,000,000 and 22.5 percent above. Shares or quotas of the same company count as one asset for the brackets. The buyer resident in Brazil, or the buyer's attorney in Brazil when the buyer is abroad, must withhold and pay the tax.
Cost to do it: Tax on the gain at 15 to 22.5 percent, withheld at closing; buyers usually gross down the price paid abroad.
Example: Gain of R$30,000,000: 15 percent on R$5,000,000 (R$750,000) plus 17.5 percent on R$5,000,000 (R$875,000) plus 20 percent on R$20,000,000 (R$4,000,000) = R$5,625,000. A gain of R$40,000,000 adds 22.5 percent on R$10,000,000 (R$2,250,000): R$7,875,000, an effective 19.7 percent. / Gain of about US$7.50 million (R$40,000,000): tax about US$1.48 million withheld by the buyer side.Lei nº 8.981 art. 21 as worded by Lei nº 13.259 of 2016; Lei nº 10.833, Lei nº 8.981 art. 21 items I to IV and § 4; Lei nº 10.833 art. 26, 1995-01-20 official text · verified 2026-10-27

Issue	Share or quota deal	Purchase of a business establishment
Taxes	All of the target's history stays in the target (and passes to the absorbing company on merger, CTN art. 132)	Buyer liable for the establishment's taxes, in full or secondarily (CTN art. 133)
Labor	Contracts and liabilities stay with the employer company	Succession: buyer liable for prior labor debts (CLT arts. 10, 448, 448-A)
Other recorded debts	Stay in the target	Buyer liable for recorded debts; seller jointly liable for one year (Civil Code art. 1.146)
Registration	Amendment of articles or share register	Recording at the Junta Comercial and publication (Civil Code art. 1.144)
Goodwill tax deduction	After merger with the buyer, up to 1/60 a month (Lei nº 12.973 art. 22)	Purchase price allocated to the acquired assets

Share deal versus asset deal in Brazil: what follows the buyer

Worked example

A US group with R$2,000,000,000 of Brazilian revenue buys 100 percent of a São Paulo Ltda. with R$100,000,000 of revenue from its non resident founder for R$100,000,000 (about US$18.75 million). The founder's quota cost is R$60,000,000, so the gain is R$40,000,000 and the buyer's attorney in Brazil withholds R$7,875,000 (about US$1.48 million) at closing (Lei nº 10.833 art. 26). Both CADE thresholds are met: the parties file, pay R$85,000 (about US$15,934) and wait for clearance before closing (Lei nº 12.529 art. 88). After closing the buyer's Brazilian holding absorbs the target; with a timely appraisal showing R$60,000,000 of net assets at fair value, R$40,000,000 of goodwill can be excluded from taxable profit at up to R$8,000,000 a year (Lei nº 12.973 art. 22).
If the seller were resident in Argentina or another treaty country, the treaty may change who taxes the gain; check it before pricing the gross up (see Tax treaties).

Step by step

1. Run the CADE test on group revenues in Brazil for the prior year (R$750,000,000 and R$75,000,000). If met, build the 240 day review (plus up to 150 days of extensions) into the long stop date and agree conduct of business covenants that do not transfer control early.
2. Diligence: federal, state and municipal tax certificates, labor suits and FGTS, environmental licenses, real estate registry certificates (matrícula) and, for rural land or border zone assets, the foreign ownership rules (see Foreign investment regime).
3. Choose the structure: quota or share purchase, or purchase of the establishment. Price the inherited tax and labor exposure into escrow, holdback or indemnity caps.
4. For a listed target, plan the 80 percent tag along offer with CVM (Lei nº 6.404 art. 254-A).
5. At signing or closing, compute and withhold the seller's capital gains tax if the seller is non resident, and order the goodwill appraisal so it is filed by the last business day of the 13th month after closing.
6. After closing, register the quota transfer or share transfer, update the beneficial ownership data with the Federal Revenue and the foreign direct investment report with the Central Bank (see Foreign direct investment reporting).
7. If goodwill deduction is the goal, merge the acquisition vehicle and the target and start excluding at most 1/60 a month.

Common traps

Closing before CADE clears the deal. The act is void and the fine runs from R$60,000 to R$60,000,000 (Lei nº 12.529 art. 88 § 3); integration steps such as joint pricing or exchanging sensitive data before clearance can count as early consummation.
Testing only the target's revenue. The thresholds are measured for each economic group, so a small target bought by a large group can trigger a filing.
Assuming an asset deal leaves the past behind. Tax liabilities follow the establishment (CTN art. 133) and labor liabilities follow succession (CLT art. 448-A).
Losing the goodwill deduction: no timely independent appraisal, a seller who is a related party or a partner or director of the buyer, or no merger between buyer and target (Lei nº 12.973 arts. 22 and 25).
Forgetting to withhold. The buyer, or its attorney in Brazil when the buyer is abroad, is the party responsible for the non resident seller's capital gains tax (Lei nº 10.833 art. 26).
Treating a Ltda. quota sale as automatic. Absent a clause in the articles, holders of more than one quarter of the capital can block a sale to an outsider (Civil Code art. 1.057).

Sources

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