This strong economic interconnection - combined with Luxembourg’s mature regulatory, legal, and capital markets infrastructure - positions the country as a strategic hub for Brazilian corporate groups seeking access to EU and global investors. As a result, Luxembourg has become the preferred jurisdiction for Brazilian groups to raise funds on international capital markets.

Typically, a Luxembourg special purpose vehicle (SPV) is established by the group to issue notes, which are supported by credit enhancements - most commonly a guarantee from the Brazilian parent company. The SPV then on-lends the proceeds of the issued notes to its parent and/or other group entities.

Between 2022 and 2025, Brazilian groups significantly increased their participation in cross-border bond markets. By early 2024, Brazilian groups had already raised more than USD 16.4 billion in foreign bonds, surpassing the full-year total for 2023. Groups like Cosan and Rede D’Or structured multi-hundred-million-dollar offerings through Luxembourg issuers, with listings on the LuxSE. Likewise, Ambipar issued USD 750 million of green bonds through Luxembourg. BTG Pactual have also established Luxembourg-based issuing entities for their Rule 144A/Reg S offerings.

A. Key advantages of Luxembourg

i) Tax Framework

The combined corporate income tax rate (2025) in Luxembourg City is approximately 23.86%. Net Wealth Tax rate is levied at a headline rate of 0.5%  of the SPV taxable net wealth (broadly the fair market value of all its assets minus liabilities). Subject to conditions, the NWT is creditable against corporate income tax in respect of the preceding year. Granting interest bearing loans might lead the SPVs to fall within the scope of the Luxembourg VAT. An exemption will likely apply, as well as the entitlement to recover the input VAT (if lending to non-EU borrowers).

Moreover, Luxembourg generally imposes no withholding tax on arm’s length interest payments. Luxembourg’s network of 94 double-tax treaties further enhances its attractiveness. Under the Luxembourg-Brazil tax treaty, a tax sparing clause is also available under circumstances.

The key tax aspect of a Luxembourg issuer is transfer pricing. As Brazil has recently adopted the OECD transfer pricing guidelines, both systems are aligned. The issuer must operate at arm’s length when dealing with group companies. As almost all of its revenue will originate from related parties (group companies in Brazil), identifying the proper arm´s length remuneration of the SPV will thus determine to a large extent the Luxembourg tax burden (which can be relatively light, subject to conditions). When setting up the SPV, it is important to design its role and how the arm´s length principle applies to its particular circumstances.

ii) Regulatory and legal framework 

Luxembourg’s legal system provides exceptional flexibility for structuring international capital market transactions. Issuers can form SPVs using common corporate forms such as the SA, SARL, or SCA, which are quick to incorporate and cost-efficient to operate. Bond listings on the Luxembourg Stock Exchange (LuxSE) are typically approved within 1–2 business days, enhancing execution speed for time-sensitive offerings.

Issuers may choose between the fully regulated market (Bourse de Luxembourg) and the Euro MTF platform, which is subject to lighter listing requirements. For professional investors, no EU or Luxembourg prospectus is required, and post-listing obligations are reduced. Luxembourg also permits listing on the non-trading Official List (SOL), a tool often used for visibility without triggering disclosure rules under the Market Abuse Regulation.

Offerings through Luxembourg SPVs are frequently governed by New York law to take advantage of Rule 144A/Reg S exemptions, enabling access to global capital markets. Issuers benefit from flexibility in financial reporting (IFRS or other major GAAPs) and can issue in any currency. This comprehensive legal and regulatory framework allows Brazilian companies to implement efficient and scalable bond issuance platforms in Luxembourg.

iii) Financial market infrastructure 

Luxembourg plays a pivotal role in international bond listings. The Luxembourg Stock Exchange (LuxSE) is widely regarded as the world’s leading venue for listing international debt securities, hosting over 38,000 debt instruments from approximately 1,700 issuers in more than 100 countries. In 2023, the LuxSE recorded a milestone with 13,900 new listings, representing over €1.2 trillion in capital raised.

Nearly 99% of listings are approved within two business days, making Luxembourg a preferred jurisdiction for fast-track execution. The exchange’s listing fees are considered transparent and competitive, while bonds listed on the LuxSE are generally eligible as collateral with the European Central Bank. Some jurisdictions may also extend fiscal advantages to LuxSE-listed instruments.

One of the most innovative features of the LuxSE is the Luxembourg Green Exchange (LGX) - the first dedicated platform for green, social, and sustainability-linked securities. By the end of 2023, the LGX had admitted more than 3,600 instruments from 300 issuers across 60 countries, aggregating nearly €1 trillion. Brazilian issuers such as Ambipar have utilized LGX to showcase ESG-focused debt offerings, such as its $750 million green bond issued in 2024.

LuxSE’s emphasis on transparency and environmental standards helps mitigate concerns around greenwashing and enhances investor confidence. Altogether, Luxembourg’s market infrastructure offers global reach, deep liquidity, and efficient processes, making it particularly well-suited for Eurobond and sustainability-linked issuances.

iv) Political-Economic stability and reputation 

Luxembourg’s macroeconomic and political environment ranks among the most stable globally. As a founding member of the European Union with one of the highest GDPs per capita worldwide, Luxembourg enjoys top-tier sovereign credit ratings - AAA from S&P, Fitch, and DBRS, and Aaa from Moody’s - all with a stable outlook.

The Luxembourg government promotes the country’s stability and predictability as a core strength, and this is echoed in its performance in foreign direct investment metrics. Luxembourg has consistently been ranked first in Europe for FDI projects per capita. These factors make it a trusted jurisdiction for international issuers.

Regulators and courts in Luxembourg are perceived as professional and business-friendly. The jurisdiction enjoys a strong reputation with institutional investors, including global banks and asset managers. Multilingual advisory support - including Portuguese-speaking teams experienced in Brazilian structures - is readily available, enhancing Luxembourg’s appeal for Brazil-based issuers.

While incorporating in Luxembourg involves certain procedural steps, the resulting legal certainty and reputational benefits are often considered well worth the effort by Brazilian groups.

B. Emerging trends and outlook 

Ongoing trends in sustainable finance and global tax harmonization reinforce Luxembourg’s importance as a cross-border issuance hub. The growing prominence of ESG financing suggests that the Luxembourg Green Exchange will remain central to green bond activity by Brazilian issuers. Meanwhile, EU and OECD initiatives such as ATAD and Pillar Two have been implemented into Luxembourg law without eroding key structuring advantages.

Luxembourg’s OECD-compliant transfer pricing framework enables the creation of efficient and robust structures for Brazilian groups seeking to access the international capital markets. Euro MTF and SOL markets allow professional issuers to avoid the burdens of the EU Prospectus Regulation - accommodation likely to persist under current European legislation.

In summary, Luxembourg provides a compelling value proposition for Brazilian groups. Its advantages include an AAA-rated jurisdiction, an efficient and predictable tax regime, a flexible legal framework, and a globally respected listing venue. The jurisdiction is expected to maintain its status as a preferred platform for Eurobond and ESG bond issuance in the years ahead.

 

This article was written in collaboration with Arthur Grossmann.