Leasing an Office in Brazil: The Commercial Lease Rules for Foreign-Owned Companies

Most foreign-owned subsidiaries rent their office, warehouse or plant rather than buy it. In Brazil, commercial leases are governed by the Tenancy Law (Law 8,245/1991), which gives tenants some protections that surprise foreign lessees and lessors alike: rent cannot be set in foreign currency, the tenant can ask a court to renew a long lease, and the landlord cannot take the property back during the fixed term. Other terms, including who pays property tax and condominium fees, are mostly a matter of contract. This guide explains what a foreign group should check before signing.

Which law applies

The Tenancy Law covers leases of urban property, including offices, shops, warehouses and industrial buildings. A lease is treated as non-residential when the tenant is a company, even if the property is used by its partners, directors or employees. Two special regimes exist within the law:

• Shopping centers: the parties’ agreed conditions prevail, but the landlord cannot charge the tenant for structural works, façade works or other items listed in the law, and expenses must be budgeted and can be audited by the tenant.
• Built-to-suit leases: where the landlord builds or substantially renovates a property for a specific tenant, the agreed conditions prevail, the parties may waive rent review, and the penalty for early exit cannot exceed the rent remaining until the end of the term.

Leases of parking spaces, advertising space, apart-hotels and leasing operations follow the Civil Code instead.

Rent: in reais, adjusted once a year

The parties can agree the rent freely, but it cannot be set in foreign currency or linked to the exchange rate or to the minimum wage. For a group that budgets in dollars or euros, this means the currency risk on rent stays with the subsidiary. Rent is usually adjusted annually by an inflation index agreed in the contract, and the parties can change the value or the adjustment clause by agreement at any time.

If they do not agree, either party can ask a court to review the rent to market value after three years from the start of the lease or from the last agreement. If the contract does not specify an index for late payments, the Civil Code now applies IPCA inflation and interest at the Selic rate minus IPCA (Law 14,905/2024).

Term, early exit and renewal

The landlord cannot end the lease early

During the fixed term, the landlord cannot take the property back. The tenant can leave early by paying the agreed penalty, reduced in proportion to the time already served, or the penalty set by a court. Negotiating the penalty and an early termination window is important for subsidiaries whose space needs may change.

The right to renew

Commercial tenants have a right to renewal, enforced through a renewal action (ação renovatória), if all of the following apply:

• the lease is written and has a fixed term;
• the term, or the sum of uninterrupted written leases, is at least five years;
• the tenant has carried on the same business for at least three uninterrupted years.

The action must be filed between one year and six months before the lease expires; outside this window, the right is lost. The landlord can refuse renewal in specific cases, such as works required by the authorities or own use. For a subsidiary that invests in fitting out its premises, a five-year lease that qualifies for renewal is valuable protection.

Guarantees: only one

The landlord may require one, and only one, of the following guarantees:

Requiring more than one guarantee in the same lease is void and is an offense under the law. Unless the contract says otherwise, the guarantee lasts until the property is actually returned.

Who pays what

• Property tax (IPTU) and building insurance: the landlord’s by law, unless the contract expressly transfers them to the tenant, which is usual in commercial leases.
• Ordinary condominium expenses (cleaning, security, maintenance, common utilities): the tenant’s by law, with the right to see the budget and the allocation.
• Extraordinary condominium expenses (structural works, façades, reserve funds): the landlord’s.
• Improvements: unless the contract says otherwise, necessary improvements and authorized useful improvements are reimbursable and give a right of retention; purely decorative ones are not. Commercial leases usually include a waiver, so fit-out costs should be negotiated up front.
• Subleasing or assignment: requires the landlord’s prior written consent, which is important for groups that reorganize entities.

If the landlord sells the property

The tenant has a right of first refusal on a sale, on equal terms, with 30 days to accept after being notified of all the conditions. A buyer can terminate the lease with 90 days’ notice unless the lease has a fixed term, includes a clause that it continues in case of sale and is registered on the property’s record at the real estate registry. Registering the lease is a simple step that protects the subsidiary’s occupancy.

Taxes on rent

• Individual landlords: a company paying rent to an individual resident landlord must withhold income tax under the progressive table. Rent paid to a landlord resident abroad is subject to withholding tax, generally at 15%.
• Rent as a cost: rent is a deductible expense for the subsidiary under the usual rules (see Lucro Real or Lucro Presumido).
• Tax reform: from 2027, leases enter the scope of the new CBS and IBS taxes with a 70% reduction in the rates. Individual landlords become taxpayers only above certain thresholds (annual rent above R$240,000 and more than three properties). A transition regime is available for non-residential fixed-term leases signed and registered before the reform’s deadlines. Under the general credit rules of the new taxes, tenants in the regular regime should be able to credit the CBS and IBS charged on rent; the details are worth checking for each lease.

A checklist before signing

1. Agree the term with the renewal right in mind (five years) and an early exit penalty you can live with.
2. Choose the guarantee that limits the parent’s exposure.
3. Define the adjustment index and the date of the annual adjustment.
4. Allocate IPTU, condominium fees and fit-out costs in writing.
5. Include a continuation clause in case of sale and register the lease.
6. Check the zoning and the municipal operating license for your activity before committing.

How Solidy can help

Solidy already serves subsidiaries of multinational companies in Brazil. We help assess the financial terms of a lease, set up the accounting for rent and right-of-use assets under IFRS 16 (CPC 06), apply the correct withholding on payments to landlords and include the lease in the monthly close and tax calendar (see monthly tax compliance in Brazil). Talk to our market entry team.