Brazil Taxes Your Foreign Company Every Dec 31
Even if not a single dollar reaches you
Por Lucas Ribeiro Cavalcante — OAB/CE 44.673
Brazil Taxes Your Foreign Company Every Dec 31
Even if not a single dollar reaches you
Por Lucas Ribeiro Cavalcante — OAB/CE 44.673
You moved to Brazil. Your company stayed in Portugal, Delaware or the BVI. You never send money home, so nothing is taxable. Right? That assumption is about to cost you.
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The costliest mistake with Brazil's CFC rules is silence.
Under the CFC regime, a Brazilian tax resident must declare the profits of a controlled foreign company yearly, on accrual basis, regardless of repatriation. But the trigger surprises everyone.
✘ Mito
Myth: I only pay tax when I take a dividend
✓ Verdade
Truth: Brazil taxes retained profits on Dec 31 automatically
150%
Fines can reach 150% of the unpaid amount, plus a possible criminal complaint
15%
Flat rate on foreign company profits for individuals under Lei 14.754/2023
Dica
Control means holding more than 50% of votes or capital, or preponderant influence. Tax residency is the first trigger, and it catches people who never realized they had become residents.
Confirm your tax residency date
Map your foreign holdings
Declare profits before Dec 31
Never receive that letter from the Receita Federal. Get compliant before December 31.