Data center boom? Lawyer explains the rules of the Redata law approved in the Senate. 

With the collaboration of Ericka Araújo

Approved by the Federal Senate, the draft law establishing Redata (Special Tax Regime for Data Center Services) promises to unlock billions of reais in investments and consolidate Brazil as the main digital infrastructure hub in Latin America.

However, the tax benefit is not unconditional: it creates a kind of "market reserve" and requires companies to meet 100% of their energy demand with renewable or low-emission sources. More than a simple commercial supply decision, energy contracting becomes the heart of tax compliance for these ventures.

To understand the profound regulatory impacts, the risks of retroactive tax collection, and how the electricity sector should structure itself in light of the new rules, the Canal Solar interviewed Raphael Gomes, partner in the Energy area of ​​the Lefosse law firm.

Follow the full conversation below:

According to Lefosse's assessment, what are the main legal and regulatory effects of Redata's approval for companies interested in installing or expanding data centers in Brazil?

The main effect is the creation of a specific legal framework to incentivize the installation, expansion, and modernization of data centers in Brazil, with a significant reduction in the cost of acquiring and importing information and communication technology equipment. 

In return, the beneficiary companies assume obligations related to sustainability, water efficiency, research and development, serving the national market, and the origin of the energy used. The tax benefit, therefore, is not unconditional: its maintenance will depend on compliance with these obligations throughout the project.

From the perspective of the electricity sector, REDATA reinforces the importance of an energy contracting strategy right from the investment structuring phase. The text requires that the entirety of electricity demand be met by supply contracts or self-generation from renewable or low-emission sources.

This tends to bring data center projects even closer to the free market and self-production structures, especially because we are talking about consumers with very high loads and long-term contracts.

Furthermore, I understand that REDATA sends an important signal to investors in Data Centers, as there was a great deal of frustration with the expiration of Provisional Measure 1.318/2025.

We still have major challenges, such as the issue of connecting large loads to the transmission system and the issue of state taxes, but the enactment of the law will certainly bring a positive perception to the country.

How should the obligation to meet 100% of contracted energy demand with renewable or low-emission sources be interpreted? What mechanisms could be accepted to prove that this is met?

The provision refers the matter to regulation, which should come through a decree from the Executive Branch. The approved bill does not provide guidelines regarding the method of measurement and parameters to be met by the regulation, limiting itself to specifying that the sources must be "low emission".

The regulation may already include sources that possess such attributes or establish assessment criteria to be measured/verified on a case-by-case basis. That said, it is possible to say, with a certain degree of certainty, that sources such as hydroelectric, gas-fired thermal power plants, and biomethane have a high probability of being covered by the regulation of the legal instrument.

Which aspects of the project are still subject to regulation and, at this time, represent the greatest legal uncertainty for investors and data center operators?

There are several points related to regulation. In the energy sector, I would highlight primarily the definition of what will be considered a low-emission source and the methodology for proving that 100% of the demand is met. These are relevant issues because compliance with this obligation is directly associated with maintaining the tax benefit.

Furthermore, the regulation should detail the sustainability criteria and indicators, the conditions and procedures for qualification and co-qualification for REDATA, the deadlines and methods for proving the counterpart contributions, and the procedures applicable in case of non-compliance.

I wouldn't say, however, that this necessarily represents a deficiency in the law. In a system of this nature, it's natural that operational issues will be regulated later. The fundamental point for legal certainty will be that the regulation establishes objective, verifiable criteria that are compatible with the operational reality of the electricity sector.

How should companies structure their energy contracts and governance mechanisms to reduce the risk of losing incentives and retroactive collection of suspended taxes?

Energy procurement should be treated as a central element of REDATA's compliance structure itself, and not merely as a commercial supply decision. This is because meeting the energy requirement is one of the conditions for converting the tax suspension to a zero rate, and in case of non-compliance, the company may have to pay the suspended taxes, with interest and penalties.

Until regulations are in place, it would be premature to recommend a single contractual structure. However, it is advisable that supply contracts and self-generation structures include mechanisms that allow for the identification and verification of the energy source, continuous monitoring of demand fulfillment, and management of any deficits or exposures.

From a governance perspective, companies will also need to maintain documentation and controls capable of demonstrating compliance with REDATA obligations throughout the relevant period. Regulation will be crucial in defining exactly what evidence will be required, but it is likely that regulatory energy management will become directly integrated into the tax governance of these projects.

I also have no doubt that the regulation, by the Executive Branch, delegates some regulatory powers to the ANEEL, such as the duty to regulate certain aspects of how to oversee the supply of 100% of the data center's load demands.

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