Brazil

Brazil's dividend taxation regime changes substantially as of January 1, 2026, ending nearly three decades during which dividends paid to Brazilian individuals were exempt from both withholding tax on income and individual income tax. The changes were introduced by Law No. 15,270/2025, which also established a new minimum tax regime for high-income individuals.

Under the new rules, a Brazilian company must withhold 10% income tax at source when it distributes more than BRL 50,000 in dividends in the same month to the same individual residing in Brazil. The law provides that the rate applies to the total amount distributed in the month, not merely the portion above BRL 50,000.

Law No. 15,270/2025 also created a Minimum Individual Tax Income (IRPFM) aimed at high-income taxpayers, with dividends being one of the income sources considered to determine whether the minimum tax applies. Under this provision, IRPFM will be applied at a 10% rate for income higher than BRL 1.2 million. For income between BRL 600,000 to BRL 1.2 million, rates will range from 0% to 10%.

Additionally, effective January 1, 2026, Law No. 15,270/2025 introduced a tax relief mechanism for Brazilian Individual Income Tax ("IRPF") through its reduction tables applied to the monthly advance tax calculation and the annual tax return adjustment. Under the monthly regime, a reduction is granted so that individuals with monthly taxable income of up to BRL 5,000 effectively incur no IRPF liability. For monthly taxable income between BRL 5,001 and BRL 7,350, the reduction gradually decreases and is fully phased out once income reaches BRL 7,350.

A comparable mechanism applies to the annual tax adjustment, under which individuals with annual taxable income of up to BRL 60,000 effectively bear no IRPF burden, while the reduction is progressively decreased for annual income between BRL 60,001 and BRL 88,200, becoming unavailable for income at or above BRL 88,200.

In December 2024, the Brazilian Supreme Court held that the Inheritance and Gift Tax ("ITCMD") cannot be levied on amounts and rights transferred to beneficiaries under VGBL and PGBL plans upon the death of the plan holder.

The social security contribution table applicable for 2024 was updated by an Ordinance, dated 11 January 2024, issued by the Brazilian social security authorities (see the Other taxes section for more information). The progressive income tax table applicable from February 2024 was updated by Law 14,848, dated 1 May 2024 (see the Taxes on personal income section for more information).

Brazil is negotiating new social security agreements (see the Foreign tax relief and tax treaties section for more information), including Bulgaria, Switzerland, and the Portuguese speaking countries Multilateral Agreement (Brazil, Angola, Cabo Verde, Guinea Bissau, Mozambique, Portugal, Sao Tome and Principe, and East Timor).

Regarding the report of overseas assets in Brazil (Annual Income Tax Return and Brazilian Central Bank reporting), there is an Agreement between Brazil and the United States (US) whose main objective is the exchange of financial information between the countries. This occurs through the tax authorities, which can exchange information with regards to balances in checking and saving accounts, earnings from financial investments, brokers, and insurance accounts. Further information (e.g. information related to real estate purchased abroad by Brazilians) may also be requested but is not automatically provided.

Law 14,754 was published on 13 December 2023 and provides for the taxation of income earned by individuals resident in Brazil with financial investments, qualified controlled entities, and trusts abroad. With regard to income from financial investments and profits earned by qualified controlled entities, such income is generally subject to annual taxation by the personal income tax (PIT) at a flat rate of 15% starting 1 January 2024, separately from other income and capital gains, with no deduction being applied to the tax base.