Licenses and Permits: How Government Authorization Works for Opening and Running a Business

This page is a translation of the original Portuguese text, provided for convenience. It deals with Brazilian law. If there is any discrepancy, the Portuguese version prevails. Read the original in Portuguese

Business owners who need government approval before they can open their doors often treat a license and an authorization as the same thing, but administrative law keeps the two strictly apart. The distinction determines whether a private party holds a right that must be recognized or merely a permission that the government may withdraw at any time, with direct consequences for the security of the business.

License and authorization: two acts with opposite natures

A license (licença) is a binding and definitive administrative act. When a private party meets every requirement set by law, the government has no room to choose: it must grant the license. Meeting the legal requirements gives rise to a vested individual right, and an improper refusal can be challenged in court. Classic examples are a building permit and an operating license for a commercial establishment that complies with zoning, safety, and health regulations.

An authorization (autorização), by contrast, is a discretionary and revocable act. Even if the applicant meets the technical conditions, the government weighs convenience and timing before approving the request, and it may deny it on public-interest grounds. Because the act is revocable, it can be withdrawn at any moment, as a rule without any duty to pay compensation. The private party knew from the start that it was receiving a revocable privilege, not an established right.

This difference in nature has far-reaching practical consequences. The holder of a license acts under the protection of a recognized right. Someone operating under an authorization lives with the legitimate possibility that the act will be withdrawn whenever the collective interest so recommends. Confusing the two leads business owners to overestimate the stability of a situation that is, legally, fragile.

Requirements for obtaining approval and the duty to state reasons

Both licenses and authorizations presuppose compliance with requirements set by statute, regulation, or technical standard. The difference lies in what follows once those requirements are met. With a license, approval is mandatory once the requirements are satisfied. With an authorization, meeting the requirements is necessary but not sufficient, because the government still weighs the public interest before deciding.

Business owners should document every step of the application. Filing receipts, proof of fee payments, approved plans, and technical reports are the evidence that the requirements were met. That paperwork is decisive when a denial has no connection to the legal requirements, since it lets the applicant show that the conditions were satisfied and that the refusal lacks a valid basis.

A central point is the duty to state reasons. The government must set out the factual and legal grounds for its decision, especially when it denies a request or imposes restrictive conditions. A denial without clear reasons, or one based on a requirement with no legal foundation, opens the door to a challenge. A reasoned decision lets the applicant understand what is missing, fix whatever can be fixed, and, if necessary, contest the act before the agency itself or in court.

Additional demands deserve extra attention. It is common for applicants to face requests for documents or changes that go beyond what the law provides. When that happens, refusing to meet the unlawful demand cannot, by itself, justify a denial, because the government is bound by the principle of legality and cannot create obstacles that the rules do not authorize.

There is also administrative silence, meaning an unjustified delay in responding to the request. Prolonged inaction does not automatically amount to approval, but neither can it condemn the business owner to an indefinite standstill. When the government fails to act, the applicant can demand an answer, including through the courts, to compel the government to respond within a reasonable time and give reasons for its decision.

When a private party meets every requirement set by law, the government has no room to choose: it must grant the license.

Consequences of cassation and loss of the permit

Cassation (cassação), the withdrawal of a license or authorization as a penalty, occurs when the holder stops meeting the conditions that supported the act. It differs from revocation, which rests on convenience and timing, and from annulment, which results from a defect of illegality at the outset. Cassation punishes the private party’s own later failure to comply with its obligations. An establishment that obtained a license and later began operating in violation of health regulations, for example, is subject to cassation of the act.

The effects are severe. Once a license or authorization is cassated, the business owner loses the legal basis to continue operating, is exposed to closure orders, fines, and other administrative sanctions, and may see the business shut down. For that reason, cassation usually requires a prior administrative proceeding with adversarial process and full defense rights, except where imminent risk justifies an immediate precautionary measure by the government.

Respect for due process is the private party’s main safeguard. Before withdrawing the permit, the government must notify the interested party, identify the violation objectively, and give an opportunity to present a defense or correct the irregularity. A cassation imposed without following this procedure, or based on unproven facts, is vulnerable to annulment, and the business owner may ask to keep operating while the merits are being decided.

Options when facing abusive demands and denials

The first path is administrative. When a request is denied or the government makes a demand with no legal basis, you can appeal within the agency itself, first by asking for reconsideration and then for review by a higher authority. This route tends to be faster and less costly, and it can resolve the impasse without litigation, especially when the problem stems from an error in the review or from a demand that has no support in the applicable rules.

When the administrative route is exhausted or proves ineffective, the judicial route opens. A writ of mandamus (mandado de segurança) is the appropriate tool to protect a clear and indisputable right (direito líquido e certo) against an unlawful or abusive act by a public authority, such as the denial of a license to someone who meets every requirement. Documentary proof that the legal requirements were met is what gives the claimed right its clarity and certainty.

In any scenario, a preventive approach protects the business. Gathering all documentation from the start, tracking the deadlines in the proceeding, insisting on reasons for decisions, and clearly distinguishing whether the case involves a license or an authorization allow the business owner to assess risks accurately. Knowing whether you hold a right that must be recognized or a revocable permission changes your strategy in response to every demand and every denial.

Frequently Asked Questions

Can the government revoke a license that has already been granted?

Because a license is a binding and definitive act, it cannot be freely revoked on grounds of convenience. As long as the holder meets the legal conditions, the right remains protected. The permit is lost through cassation, when the holder later fails to meet its obligations, or through annulment, when a defect of illegality is found at the outset, always with due process and adequate reasoning.

Does the denial of a request have to be justified?

Yes. The government is required to set out the factual and legal grounds for the refusal, indicating which requirement was not met. A decision without clear reasons, or one based on a requirement that the law does not provide for, is vulnerable to challenge both administratively and in court. A reasoned decision allows the applicant to fix whatever can be fixed or to contest the act with confidence.

What should you do when the agency takes too long to respond to a request?

An unjustified delay amounts to administrative silence, which does not equal automatic approval but also cannot paralyze the business indefinitely. The applicant can demand a response within a reasonable time and, if the inaction continues, turn to the courts to compel the government to issue a reasoned decision, preserving the right to carry out the intended activity.

As informações deste artigo são de caráter informativo e não substituem consulta jurídica individualizada. Cada caso possui particularidades que exigem análise específica.