Impacts of the new coronavirus (“COVID-19”) in Brazil

2 . April . 2020 |

Please find below our general considerations regarding the recent measures and new regulations due to the COVID-19 pandemic. Note that Lobo de Rizzo continues to monitor the impacts and will send updates regarding each area as needed.


Important tax measures were taken regarding the worldwide COVID-19 pandemic and new regulations are being issued daily.

For instance, the Ministry of Economy extended in 90 (ninety) days the term of the Clearance Certificates of Non-Indebtedness with regard to Overdue Tax Liabilities of the Federal Government (Ordinance No. 555, of 03.23.2020).
Concerning specifically tax incentives, the President of Brazil also edited the Provisional Measure No. 927, of 03.22.2020, which enables the deferral of the payments to the Unemployment Compensation Fund (“FGTS”), regarding the reference dates of March, April and May, which can be now paid as from July, 2020. This regulation also extended the terms of the Clearance of Non-Indebtedness regarding the mentioned fund for an additional 90-day period.

In addition, the Government, by means of the Office of Attorney-General of the National Treasury (“PGFN”), enacted the Ordinance No. 7.820, of 03.18.2020, granting an extraordinary settlement by enabling the payment of Federal Overdue Tax Liabilities in installments. The terms involve an advance payment of 1% of the debts, which can be paid in 3 equal and successive installments, having the last business day of June, 2020 as the first overdue date. The remaining amount of the Federal debts can be paid in 81 installments, unless the debts concern specifically Social Contributions, in which case the remaining number of installments will be reduced to 57.

In order to help the spread control of the COVID-19, the Federal Government also enacted several regulations reducing to zero the Customs Duty and the Excise Tax upon selected products used for the disease’s control, already in effect.

Finally, the National Council of Justice released the Resolution No. 313, of 03.19.2020, in which it standardized the judicial time limits for appeals and all other judicial acts of the majority of the Brazilian Courts, to be suspended until 04.30.2020.

For further information, contact:   

Maria Carolina Bachur 

Mariana Miranda Lima


The Brazilian Federal Government released on March 22, 2020, Provisional Measure (MP) 927 to govern labor and employment actions during this period, which may be adopted by companies to safeguard job positions and income as well as to handle the public calamity state acknowledged by Legislative Decree 6/2020 arising from the international public health emergency brought by COVID-19 pandemic, certified by the Ministry of Health in accordance to Law 13,979/2020.

MP 927 holds alternatives to temporarily smooth several aspects of labor collective and individual contractual relations as holidays and telecommuting services aside from bringing up a new temporary layoff procedure.

In view of the mass impact triggered by such legal provision, the federal government, after teasing audience by social media platforms, edited MP 928 on March 23 to revoke the new temporary layoff procedure aforementioned, which enabled employers to unilaterally keep employees at home without regular payments.

Furthermore, in accordance with art. 503 of the Brazilian Consolidated Labor Laws, it is lawful, in case of force majeure or duly proven losses, for the company to reduce the wages of its employees, proportionally to each employees’ wage and up to 25%, limited to the regions’ minimum wage.

Some collective bargaining agreements (which are negotiated between the employees’ union and the companies’ union, without the company’s direct participation in the negotiation) are already foreseeing ways to reduce wages.

All remaining topics embedded by MP927 were sustained with no amendments, such as: softening of telecommuting, grant individual and collective holidays, postponement of vacation bonus payments and the unemployment severance fund deposits (FGTS) in addition to other measures in force as long as the public calamity state is in course.

For further information, contact:   

Fabio Medeiros


There is still no medical treatment for COVID-19, but companies are already questioning the legal remedies available to address the impacts of the pandemic and its global impact on business contracts.

First, any analysis of force majeure, act of God or excessive burden (as well as its common law cognates: force majeure, act of God, excessive hardship and others) should always be done according to what determines the material law that governs the contractual relationship.

In relation to any of these institutes, under the Brazilian law, the analysis must be essentially case by case.

Seemingly, there will be a great debate about the possibility of framing the pandemic as an event of force majeure or unforeseeable circumstances (capable, therefore, of resulting in the extinction of certain obligations).

ike the impossibility hypothesis, it fits the case of difficulty of compliance with the obligations – which would make it possible to resort to the theory of excessive burden and consequently plead for the resolution of the contractual relationship.

Although in this case the analysis should also be case-by-case, with the injured party being responsible for demonstrating the effective imbalance between the benefits provided by the party and the actual result of losses, it seems clear that the pandemic has an extraordinary character and, depending on when the contract was executed, it may be considered unpredictable.

Relations governed by the rules of the Consumer Protection Code and Contracts with the Public Administration, by their nature, deserve specific performance; and

Brazilian case law still does not have uniform treatment regarding the cases involving contractual non-compliance arising from pandemic events. In view of this and the need for further analysis of each case to be carried out individually, it is unlikely that precedents offer a safe parameter for the solution of new cases.

For further information, contact:   

Luis Fernando Guerrero

Gabriel José de Orleans e Bragança

Corporate and M&A

M&A deals can suffer the effects of the new pandemic and both purchasers and sellers should pay extra attention to certain contractual provisions that might affect the certainty of closing of the transactions.

Considering that the ordinary operations and expected results of the targets can be disturbed due to containment measures and deterioration of general market conditions, it is relevant for future contracts to draft and negotiate them anticipating such effects and, thus, ensuring greater transparency to both parties. For agreements which were already executed, it is worth analyzing the expected impacts of the pandemic on the business of the targets and on the covenants assumed by the parties in order to verify if they will trigger termination rights, indemnification or adjustment of the purchase price and or earn-out payments.

The most relevant provisions in this scenario are Material Adverse Change (MAC)/Material Adverse Effect (MAE) clauses, representations and warranties concerning the ordinary course of business, covenants of conductions of business between signing and closing and drop-dead/longstop date (considering that the fulfillment of certain covenants can be delayed due to the pandemic).

The pandemic of COVID-19 and the experts’ advice to avoid social gatherings is a challenge to certain corporate mandatory routines, such as the implementation of mandatory annual shareholders’ meetings to deliberate on the financial statements and results of the 2019 fiscal year. Such meetings, according to the applicable legislation, must occur within 120 days of the end of the fiscal year – end of April to most companies.

In order to comply with their corporate obligations, companies should analyze the possibility of having such meeting by means of videoconference or conference calls.

Another difficulty in daily corporate routines is associated with the interruption of services of the most relevant Trade Boards.

The São Paulo Trade Board, observing a State Decree, has suspended most of its services until April 30, 2020 – except for the registration of incorporation acts of limited lability companies (limitadas) and individual limited liability entities (EIRELIs) which can be signed electronically by means of signature tokens (certificados digitais), all other services, including registration of minutes of board ad shareholder’s meetings and amendments to the Articles of Association of limtiadas and EIRELIs are on hold.

The Rio de Janeiro Trade has also closed its premises to the public and only documents executed electronically can be presented for registration. On March 30, the State of Rio de Janeiro should reassess if the non-essential services to the public will remain closed and for how long.

Up to this date there is no legislation regulating the effects of said suspension of Trade Board services to the public.

For further information, contact:   

Daniella Tavares

Hugo Johan Silverio Wery

Paula Costa e Silva

Intellectual Property

In view of the difficulties imposed by the new coronavirus epidemic that arrived in Brazil, the Brazilian PTO (INPI) suspends all deadlines from March 16th to April 14th, normally returning on April 15th.
Lobo de Rizzo will continue with its normal activities, having taken appropriate measures as recommended by the competent authorities to ensure the safety of its employees, clients and family members and, as a whole, to help preventing the risk of contamination in the population. In particular, with a few exceptions, the employees will work on a home office basis to keep meeting the demands, being fully available by way of remote manners.

For further information, contact:   

Ana Paula Celidonio



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