Last night, the Brazilian Federal Revenue Service (Receita Federal do Brasil – “RFB”) published on its website the document Perguntas e Respostas – Tributação de Altas Rendas: Considerações sobre Lucros e Dividendos, providing important clarifications regarding some of the aspects that have been generating uncertainty about the application of Law No. 15,270/2025, which reinstates the taxation of profits and dividends in Brazil.
We highlight below the main matters addressed by RFB:
RFB confirmed that the conditions for maintaining the exemption applicable to individual resident quotaholders/shareholders also apply to non-residents, namely:
I. Profits and dividends accrued up to the 2025 calendar year;
II. Distribution approved by December 31, 2025;
III. Profits/dividends must be enforceable, pursuant to applicable civil or corporate law;
IV. Payment, credit, employment, or delivery must occur by 2028.
To comply with the temporal criteria established by Law No. 15,270/2025, RFB clarified that taxpayers may approve the distribution of profits relating to the 2025 calendar year based on interim financial statements or trial balances covering the period from January to November 2025. If the final result of the balance sheet as of December 31, 2025, is lower than the amount previously approved, the exemption will be limited to the amount actually accrued. In all cases, approval of the distribution must occur by December 31, 2025.
RFB confirmed that the capitalization of profits constitutes “employment,” which is one of the scenarios subject to withholding income tax (“WHT”). However, the tax authorities recognized that, with respect to profits accrued up to December 31, 2025, no WHT will be levied on such amounts, “provided that the resolution and approval of the respective corporate event occur by that same date.”
The return of share capital will be subject to capital gains tax if the amount received exceeds the acquisition cost of the equity interest. According to RFB, there is no minimum period for maintaining amounts in share capital, but simultaneous capital reductions upon incorporation of profits, and in violation of private law regulations, may result in the charge of income tax on profits previously capitalized with tax exemption.
RFB confirmed that the WHT rate on profits and dividends paid, credited, delivered, employed, or remitted to quotaholders/shareholders resident or domiciled in countries that do not tax income or that tax it at a maximum rate below 17% (“tax havens”) will be 10%, i.e., the same rate applied to other non-residents.
To ensure proper classification and benefit from exemption scenarios, it is essential to conduct a detailed analysis of the requirements imposed by Law No. 15,270/2025, including the verification of the temporal criteria for profit distribution and the adequacy of corporate and tax procedures.
Other relevant developments on this topic have been recently reported, such as legal actions filed against various provisions of Law No. 15,270/2025, in some cases already resulting in favorable decisions for taxpayers.
