Doing Business in Venezuela
I. Property Rights
Venezuela’s Constitution provides for a wide degree of protection to private property rights.
Article 115 of the Constitution recognizes the rights of private parties to own, use, enjoy, and dispose of their own assets. These are constitutional rights which may only be limited by restrictions, obligations and contributions determined by the law based on the general interest and social needs. According to article 115, the expropriation of private property can only be declared if decided by a final judicial decision and provided that fair compensation is paid to the owner of the expropriated asset.
Article 116 of the Constitution grants an additional protection by providing that the confiscation of private property can neither be declared nor performed, except when expressly authorized under the Constitution (i.e., the assets of persons that are declared guilty of crimes against the public patrimony or crimes related to drug trafficking).
Additionally, article 112 of the Constitution recognizes the right to enter into the business activity of choice, subject to certain limitations (i.e., sectors of the economy reserved for the State) and determines that the role of the State shall be to promote and support the private initiative and the participation of the private sector in the economy.
Finally, article 55 of the Constitution recognizes the right of every individual to receive the protection of the State and its security forces when facing threats or menaces to its own safety, private property or the exercise of their constitutional rights and duties.
II. The Expropriation Act
In order to undertake the nationalization of private property, the expropriation of the corresponding assets must be performed pursuant to a procedure determined by the law (Article 115 of the Constitution).
Such procedures can be specific to certain industries or activities, especially when the performance of public services is involved, in which case the particular expropriation procedures are set forth in chapters contained in the law that regulates the corresponding public services (e.g., Railways Act, Telecommunications Act, Electricity Act, Hydrocarbons Act, Gas Act, etc.).
On the other hand, the general expropriation procedure applicable to all sorts of assets not specifically regulated under a particular law is set forth by the Expropriation Act (Ley de Expropiación por Causa de Utilidad Pública o Social), which was amended and enacted by the National Assembly on July 1, 2002.
The main steps of the expropriation procedures, either specific or general, are similar, considering that they are all subject to compliance with the general constitutional principle established under Article 115 of the Constitution whereby, to be effective, any expropriation must be declared by a final judicial decision and payment of a fair indemnification must be made to the owner of the expropriated asset.
The main steps of the expropriation procedure under the Expropriation Act, are as follows:
i. The public utility of the asset to be expropriated must be declared by law.
ii. A Decree whereby the expropriation is decided has to be published by the Executive Power (either at the national, state or municipal level) (Article 5 of the Expropriation Act).
In the event that no amicable resolution is reached, then the expropriation must be conducted by a Civil Court, which decisions can be appealed before the Supreme Court.
iii. A final judicial decision (not subject to appeal) must declare the expropriation and determine the amount of the indemnification to be paid to the owner, based on the calculations performed by the experts. The owner is granted due process rights and the possibility to appeal any initial decision before the Supreme Court.
iv. The amount of the indemnification must have been paid to the owner for the transfer of title and ownership on the expropriated assets to occur. Until all the above steps are duly complied with, the owner retains full title and ownership on the assets and cannot usually be deprived of its rights to use and enjoy its property.
III. Foreign Investment Protection
Under the Foreign Productive Investment Act of 2017, all foreign investments must be registered (Article 37) and generally require a mandatory Investment Contract if it meets the minimum threshold (Article 38). The principle of equal treatment ensures that foreign investment is subject to the same conditions as national investment (Article 33).
To obtain the necessary registration, a foreign investment must typically meet a minimum threshold of €800,000, 6,500,000 Renminbi or the equivalent in another foreign currency, although the governing body may reduce this amount to a minimum of 10% of this threshold for strategic sectors or small and medium-sized industries (Article 19). The constitutive value of the investment must be represented by assets located entirely within the national territory, such as equipment and supplies required for the productive process (Article 17), and internal domestic financing is strictly limited to no more than 15% of the total investment amount (Article 18). Foreign capital is required to remain within the national territory for a minimum period of two years from the date the registry is granted before the original capital can be remitted abroad (Articles 19, 26).
Investors are granted the right to remit up to 100% of proven annual profits or dividends abroad following the close of the first fiscal year (Article 28). The National Executive reserves the authority to limit these remittances to between 60% and 80% during extraordinary economic situations, force majeure, or circumstances that affect the security of the Nation (Articles 28, 36). Jurisdiction over all foreign investment matters is strictly assigned to Venezuelan courts, and access to international or regional dispute resolution mechanisms is only permitted after all internal judicial remedies have been exhausted and provided such mechanisms were previously agreed upon (Article 6).
Additionally, foreign legal entities must adhere to responsible business conduct, which prohibits behaviors that hinder the productive process for political reasons or participation in strikes and boycotts aimed at destabilizing the democracy and its institutions (Article 32). A strict political prohibition prevents foreign investors and their representatives from participating directly or indirectly in national political debates or contributing to opinion formation on public matters through the media (Article 35). Failure to comply with these duties or the contravention of established obligations can result in in base fines of up to 2% of the total investment amount, which can increase for concurrent or repeated violations (Article 43).
When investing in Venezuela, one should consider making the investment through a legal entity protected under one of the investment promotion and protection treaties (hereinafter collectively referred to as the "Treaties" and individually as the "Treaty") signed by Venezuela. The Treaties could reduce the political and exchange risks of the foreign investment. The political risk may be diminished thanks to the Treaty conditions regarding equal treatment, expropriation, compensation and dispute settlement procedures. Although, as mentioned above, Venezuelan law includes principles of equal treatment (non-discrimination) and expropriation protection procedures, the Treaty ranking and the dispute settlement procedures thereunder offer an additional safeguard.
The Treaties cannot be amended or left without effect without complying with certain procedures and after a certain period of time has elapsed. This feature represents one of the most significant advantages of the protection granted thereunder, as opposed to the protection available under domestic law, as, for example, under the Foreign Productive Investment Act.
Venezuela has signed and ratified Treaties with Argentina, Switzerland, Ecuador, Chile, Barbados, Portugal, the United Kingdom, Lithuania, the Czech Republic, Denmark, Peru, Spain, Paraguay, Uruguay, Sweden, Canada, Costa Rica, Germany, Philippines, France, Belgium-Luxembourg, Cuba, Belarus, China, Vietnam, Russia, and Iran.
IV. Recent Regulatory Changes
On January 29, 2026, the National Assembly approved an amendment to the Hydrocarbons law. This was followed by the approval of the first draft of the Mining Law (Ley de Minas) on March 9, 2026. In addition, on January 22, 2026, the Assembly approved the first draft of the Law on Economic Rights (Ley de Protección de los Derechos Socioeconómicos).
In general, these new law and drafts show an intent by the National Government to open certain sectors to private investments by introducing new structures for investments (i.e., service agreements) and by granting rights to private parties that were not recently allowed. The new legislation appears to show a renewed openness to private investments and an abandonment of the strict state-led model. Public declarations by Government officials appear to indicate such intent, at least in the specific sectors. We expect further changes in regulations (i.e., the Electricity Law) in order to facilitate investments in sectors considered essential to allow for further economic dynamism.
We are constantly monitoring said changes and providing advise on business opportunities in the country.
V. US Sanctions
Venezuela remains subject to U.S. sanctions. The sanctions regime includes visa and immigration restrictions to individuals, export controls and restrictions, prohibitions on entering into certain transactions and blocking of property, among others.
However, recently the Office of Foreign Assets Control (OFAC) of the U.S. Department of the Treasury has issued a series of significant General Licenses that mark the most substantial easing of Venezuela-related sanctions in years. These licenses appear to reflect a deliberate U.S. policy shift: using sanctions relief as a lever to encourage political reform while simultaneously incentivizing investment.
These licenses together with local regulatory changes create a framework that allows for the recovery of certain sectors of the Venezuelan economy with the participation of private investment.
