Brazil election 2026: what the result means for foreign companies

The votes in Brazil’s 2026 election have been counted. On October 25, 2026, President Luiz Inácio Lula da Silva (PT) won the presidential runoff with 64,256,232 votes, or 51.79% of valid votes, against 59,826,041 votes (48.21%) for Senator Flávio Bolsonaro (PL), according to the Superior Electoral Court (TSE). The first trading day after the vote was one of the roughest in years: on October 26 the Ibovespa closed 13.88% lower and the Central Bank’s PTAX reference rate for the US dollar rose 9.19%. For a foreign group with a Brazilian subsidiary, the political result is not the planning question. The questions are what that market move does to this year’s numbers, which rules stay in place whoever governs, and which decisions are still open before the new term starts on January 5, 2027.

Brazil election 2026: the official result

The TSE announced the result on the night of October 25. More than 158 million voters were eligible for the runoff and 128.2 million turned out, with abstention around 19.2%, below the 21.08% of the first round. On the same night, six governors were elected in state runoffs.

The day was not free of controversy. An injunction from the Supreme Federal Court (STF) extended voting from 5 p.m. to 7 p.m. (Brasília time) in certain polling stations that were still open, and the TSE president said the late order forced adjustments to the counting routine. Any legal challenge to the outcome would be decided by the electoral courts. For business planning, the working assumption is the result the TSE has announced, with any challenge as a point to monitor rather than a scenario to budget for.

How did markets react to the election result?

Sharply, and in one direction. The table compares the last trading day before the runoff with the first one after it, using official data from B3 (the São Paulo exchange) and the Central Bank of Brazil (BCB).

Two caveats matter before anyone rebuilds a forecast. First, the PTAX is the Central Bank’s reference rate, calculated from four dealer consultation windows between 10 a.m. and 1 p.m. (Brasília time). It captured the opening shock, and the spot rate traded later in the day can differ from it. Second, one session is not a trend. What will shape the next months are the 2027 budget, the Central Bank’s next decisions and the new government’s first economic announcements, all covered below.

What the move means for a subsidiary’s numbers

The effect on a foreign parent is mostly arithmetic, but it reaches the P&L, the balance sheet and cash at the same time. Take a hypothetical subsidiary with BRL 10 million of monthly revenue and a USD 1 million payable to its parent:

• Translation: at the October 23 PTAX, BRL 10 million is about USD 1,985,000; at the October 26 PTAX, about USD 1,818,000. Revenue in reais has not changed, yet the parent’s reported revenue from Brazil falls by about 8.4%. Most groups translate income at an average rate for the period, so the reported effect builds up over the months the rate stays at this level.
• Intercompany balance: settling the USD 1 million payable would have cost BRL 5,037,700 on October 23 and BRL 5,500,700 on October 26. The BRL 463,000 difference is an exchange loss in the subsidiary’s local books if the rate holds at the reporting date.
• Imported inputs: goods and services priced in dollars cost more in reais, which pressures local margins unless contracts allow price adjustments.

The same move works the other way for a subsidiary that exports from Brazil or bills its parent in dollars, such as a software development or shared services center. The point is to know which side of the trade each entity is on before the next monthly close, not after it.

What doesn’t change after the election

A large part of the rulebook that foreign-owned companies deal with is already written into law or the Constitution. Changing it would take new legislation passed by Congress, and in some cases a constitutional amendment.

• Consumption tax reform. Under article 126 of the Constitution’s transitional provisions (ADCT), added by Constitutional Amendment 132/2023, the federal CBS is charged from 2027 and the PIS and Cofins contributions are abolished. The operating rules are in Complementary Law 214/2025. The calendar for Brazil’s CBS and IBS tax reform does not depend on who holds office, so January 2027 system readiness stays on the critical path.
• Tax on dividends paid abroad. Since January 1, 2026, Law 15,270/2025 has applied a 10% withholding tax to profits and dividends paid, credited or remitted abroad. There are exceptions, including a transition rule for profits for 2025 and earlier whose distribution was approved by December 31, 2025. The details are in our guide to Brazil’s 10% tax on dividends paid abroad.
• Fiscal rules. Complementary Law 200/2023 (the fiscal framework) remains the law that sets how primary-balance targets and federal spending growth are managed. Any change to the targets goes through Congress.
• Trade measures. The US Section 301 tariffs on Brazilian goods, in force since July 22, 2026, are a US decision and did not change with the vote. Our analysis of the Section 301 tariffs three months in covers what exporters can do while they last.

What is still open between now and 2027

The decisions with the most weight for business are still ahead, and most have fixed dates.

The 2027 budget

Brazil heads into year-end without a 2027 budget. The budget guidelines bill (PLDO 2027, PLN 2/2026) was sent in April 2026 and the annual budget bill (PLOA 2027, PLN 24/2026) on August 31, 2026. According to Congress’s own tracking pages, as of October 27, 2026, both were still awaiting dispatch to the joint budget committee, with no amendment or vote stage started. Article 57 of the Constitution says the legislative session shall not be interrupted until the budget guidelines bill is approved, a rule usually applied to the July recess. The constitutional deadline for that bill has already passed, and the session is scheduled to run until December 22. How the final texts handle the primary-balance target will be the clearest early signal of fiscal direction for the new term.

Interest rates

The Monetary Policy Committee (Copom) meets on November 3–4 and December 8–9, 2026. The Selic target was 13.75% on October 27. Each decision affects the cost of local debt, the carry on intercompany loans and the economics of hedging.

The new term and the new Congress

Under Constitutional Amendment 111/2021, the presidential term now begins on January 5 instead of January 1, and the 2027 inauguration is the first under that rule. Governors take office on January 6. The deputies and senators elected in October take their seats from February 1, 2027, when each house holds its preparatory sessions. Appointments to the economic team and the first legislative priorities of the new term are the announcements to watch in that window.

What should foreign companies do now?

Very little of this calls for dramatic action. Most of it calls for discipline in the next two closing cycles.

1. Re-run the 2027 budget at more than one exchange rate. A plan built on a single rate set in August or September is now out of date. Use at least a base case and a stress case, and show headquarters the effect on revenue, margin and cash separately, so that translation is not mistaken for operating performance.
2. Map FX exposure entity by entity. List intercompany balances, dollar-denominated suppliers, foreign loans and dollar receivables, with maturities. Then decide, with the group treasury, what to hedge and what to accept. Hedging policy is a group decision; the subsidiary’s job is to give treasury accurate numbers and dates.
3. Review the timing of cash going abroad. If the subsidiary plans dividends, service fees or loan repayments before year end, check the cost at the current rate against the group’s view of the currency, and make sure the tax treatment of each route is right. Our guide to getting cash out of Brazil compares the options.
4. Protect local liquidity. Higher import costs and possible delays in customer payments can squeeze working capital quickly. A rolling 13-week view, as described in our guide to cash flow management for Brazilian subsidiaries, gives early warning.
5. Keep compliance projects on schedule. The CBS starts in January 2027 regardless of politics. Delaying ERP and invoicing work while waiting for clarity on the fiscal outlook would be a costly mistake.
6. Explain the numbers to headquarters early. A short note for the parent’s finance team on what moved, why, and what it means for the forecast avoids surprises in the October and November reports.

How Solidy can help

Solidy already serves subsidiaries of multinational companies in Brazil. Through our CFO as a Service team, we can help rebuild a subsidiary’s 2027 budget under different exchange rate scenarios, organize the cash forecast and prepare clear reporting for headquarters on the effects of the market move.

Explore Our CFO as a Service Solutions