Brazil Tax Reform Extends IBS/CBS to Leases, Commercial Contracts Under Review

Brazil's consumption tax reform, via Complementary Law 214/2025 as amended by 227/2025, explicitly includes leasing and onerous assignment of properties under IBS and CBS, prompting companies to reassess commercial lease agreements. The change introduces new tax incidence on real estate contracts, creating uncertainty over how costs will be allocated between landlords and tenants. This could alter lease economics and contract terms across commercial real estate sectors.