The mutual recognition of adequacy between Brazil and the European Union marks a watershed moment for Brazilian companies operating in the European market. For the first time, the General Data Protection Act (LGPD) is equated to the strict General Data Protection Regulation (GDPR). This classification places Brazil in the select group of nations considered a “safe harbor” for personal data.

In practice, the agreement allows for direct data transfers between Brazil and the EU, eliminating the need for additional contractual mechanisms that consumed significant time and resources for companies. “The drafting, review, negotiation, and approval of documents such as Standard Contractual Clauses was highly complex and took significant time from privacy teams, which often delayed business operations,” explains Douglas Leite, partner at Licks Attorneys.

Cost and bureaucracy reduction

The most immediate simplification experienced by companies is the exemption from Standard Contractual Clauses (SCCs) for Brazil-EU data flows. Antonielle Freitas, a partner at Viseu Advogados, points out that “there is a trend toward significant cost reductions, especially regarding international legal advice and the drafting of contractual instruments aimed solely at enabling these transfers."

For small and medium-sized enterprises and startups, the impact is even more profound. “This simplification lowers barriers to entry into the European market,” says Freitas. Douglas Leite adds:

"This is especially important for smaller companies, which typically do not have extensive legal structures or teams dedicated specifically to data protection compliance." Douglas Leite, partner at Licks Attorneys

However, both experts are careful to point out that this simplification does not eliminate the need for compliance investments. “The obligation to maintain compliance with the General Data Protection Act and, where applicable, with the General Data Protection Regulation remains, which requires continuous investment in governance, information security, and data protection,” Freitas points out.

Competitive advantage in the global arena

The “adequate country” status places Brazil at a clear advantage over emerging competitors such as Mexico, India, the Philippines, and Colombia, which lack this recognition. “It is a public confirmation that the Brazilian legal system is adequate and reliable for data processing,” notes Leite.

For European companies, hiring Brazilian service providers becomes legally simpler and less risky. Freitas explains that this “increases regulatory predictability and raises the confidence of European clients in the Brazilian tech ecosystem, including BPO, cloud, software development, and other data-intensive services.”

The legal certainty provided by the agreement may also influence strategic decisions regarding establishing operations in Brazil. “With a more predictable and less bureaucratic regulatory environment regarding data protection, Brazil becomes more attractive to European companies,” assesses Leite, although he emphasizes that other factors such as infrastructure, operational costs, and taxation also weigh on this decision.

When will Standard Contractual Clauses still be needed?

Although Standard Contractual Clauses are no longer mandatory for direct transfers between Brazil and the EU, they have not become completely obsolete. Freitas points out scenarios in which these mechanisms remain relevant: “when there is subprocessing or a transfer of data to other countries that do not have an adequacy decision; in global processing chains where part of the operation involves non-adequate jurisdictions; or in higher-risk situations involving sensitive data.”

Leite agrees: “These clauses remain useful in transfers involving countries outside the European Union that do not have this adequacy status.”

Equivalence does not mean being identical

A crucial point highlighted by both experts is that recognition of adequacy does not mean that the LGPD and the GDPR are identical. “What is recognized is that both legislations offer an equivalent level of protection and security,” clarifies Douglas Leite.

In practice, companies already compliant with the LGPD need to make fine-tuning adjustments to ensure full compliance with the GDPR when dealing with European data subjects. Antonielle Freitas recommends paying special attention to four areas:

• Retention and disposal policies: The GDPR tends to require shorter timeframes and stricter justifications for data storage.

• Rights of data subjects: Data portability, for example, may have a broader scope in the European Union.

• Data processing of minors: While the LGPD requires specific consent for children under 12 years of age, the GDPR establishes a minimum age of 16 for consent to digital services, allowing member countries to lower this limit to between 13 and 16 years.

• Legal basis and impact assessments: In high-risk sectors, European authorities may require more detailed documentation than the LGPD dictates.

“It is not necessary to redo the entire compliance program, but rather to calibrate processes and policies to cover the nuances of the General Data Protection Regulation whenever the company operates in the European market.” Antonielle Freitas, partner at Viseu Advogados  

Sectors beyond technology

Although the technology sector is the natural focus of discussions about data circulation, other sectors are also expected to experience significant impacts from the agreement.

In the health and biotechnology sector, Leite points out that the industry “can benefit from regulatory simplification for data sharing in research, international collaboration, and drug development, which often involves partnerships with European institutions.” Freitas specifically mentions clinical research, telemedicine, pharmaceuticals, and medical devices.

According to both experts, the financial sector benefits from greater legal certainty in digital banking services, fraud prevention systems, risk analysis, and cross-border payment systems.

Freitas highlights agribusiness as a major beneficiary, especially regarding “traceability, certification, international logistics, and compliance with the environmental and social requirements of European importers.”

*Translation by Licks Attorneys. This content is available on the Análise Editorial.

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