Brazil implements new taxation rules for dividends and foreign assets

New tax regulations in Brazil have altered the treatment of dividends and the updating of foreign assets. Under Law No. 15.270, effective January 2026, dividends distributed by Brazilian companies to individuals are no longer universally exempt. A 10% income tax is withheld at the source if a single company distributes more than R$ 50,000 in profits or dividends to the same individual within a single month. This tax applies to the total amount distributed, not just the portion exceeding the threshold.

Additionally, taxpayers with annual incomes exceeding R$ 600,000 are subject to a minimum taxation regime for high incomes. These changes will first be reflected in the 2027 tax filings.

Regarding assets held abroad, the Receita Federal issued Consultation Solution Cosit No. 138 to clarify the optional updating of assets to market value. The guidance specifies that dividends and interest on equity (JCP) cannot be excluded from the calculation base when updating assets under Law No. 14.754/2023. While the law allows for an 8% definitive tax rate on the difference between acquisition cost and market value, certain deductions applicable to the annual taxation of controlled entities abroad cannot be used to reduce this specific calculation base.