FX Legal Landmark

To understand the current functioning of the foreign exchange market in Brazil, it is necessary to analyze the transition from the previous regulatory structure to the new legal framework (Law No. 14,286/2021). This section details the characteristics of the previous system and the principles underlying the current legislation.

Regulatory Structure Prior to Law 14,286/2021

The previous regulatory environment was characterized by a set of complex and restrictive rules, reflecting a past economic context of greater control over capital flows.

Fragmented and Bureaucratic Legislation: Foreign exchange regulation was not consolidated, consisting of more than 40 laws and a large volume of infra-legal regulations. This fragmentation resulted in high complexity, legal uncertainty, and high operational costs for companies and financial institutions.
Centrality and Rigidity of the Exchange Contract: The system was centered on the "exchange contract". Every purchase or sale of foreign currency required the execution of this standardized document, which served as a supervisory instrument for the Central Bank and contained more than 150 classification codes, representing the main point of bureaucracy in the system.
Operational Restrictions and Inefficiencies: The control structure imposed practical barriers—companies with international operations, for example, were often forced to carry out inefficient financial movements, such as "round-trip exchange" (internalizing revenues to then externalize them), which generated additional costs with spreads and taxes.

Principles and Guidelines of the New Foreign Exchange Framework

Law No. 14,286/2021 instituted a change in regulatory philosophy, focusing on efficiency, simplification, and international integration. Its pillars are:

Legal Consolidation and Simplification: The New Framework consolidated legislation into a single text, providing greater clarity and legal certainty.
Debureaucratization and Cost Reduction: The law aimed to eliminate unnecessary procedures. The main advance was the flexibility of the requirement for the rigid exchange contract, allowing the formalization of operations to be simpler.
Operational Freedom and Responsibility of Agents: The regulatory model shifted from a prescriptive system to one based on principles, giving more freedom to agents and increasing the demands on their compliance programs.
Alignment with International Standards: The law was designed to align Brazil with OECD practices (Organization for Economic Cooperation and Development), with the aim of reducing friction for foreign investors and facilitating the country's insertion into global value chains.
Promotion of Innovation and Competition: The more flexible regulatory environment was structured to lower entry barriers for new business models, especially in the fintech sector.

Comparative Table

The table below summarizes some of the most relevant changes for the daily lives of companies and individuals.

Operation Aspect	Before the New Framework (Until 2022)	After the New Framework (From 2023)
Operation Formalization	Mandatory execution of a "Rigid Exchange Contract" for almost all operations.	Freedom of formalization between parties (email, invoice, simple contract). Registration with the Central Bank is done in a simplified manner by the institution.
Use of Export Revenues	General rule required internalization of funds (closing the exchange). Compensation of credits abroad was restricted and complex.	Explicit permission for private compensation: exporters can use their revenues abroad to pay their (or group) obligations abroad.
Cash Limit for Travel	Allowed to carry the equivalent of R$ 10,000.00 in foreign currency, in cash, when entering or leaving Brazil.	Limit increased and dollarized to the equivalent of US$ 10,000.00 (US dollars), offering more predictability.
FX between Individuals	Prohibited. Buying and selling foreign currency was restricted to authorized financial institutions.	Allowed for occasional and non-professional operations, with a limit of up to US$ 500.00 (or equivalent) per transaction.
Non-Resident Accounts in Reais	Restricted use, with complex rules for movement.	Rules equated to those of resident accounts, allowing use for payments of any nature and facilitating the operation of payment fintechs.
Advance Payment for Imports	Restricted time limits (e.g., up to 180 days before shipment).	Greater flexibility. Deadlines are freely defined as negotiated between importer and exporter.
Foreign Direct Investment	Distinct and more bureaucratic rules for registering foreign investment and external credit.	Unified treatment as "foreign capital", simplifying the registration and movement of resources for investment purposes in the country.