New Offshore Asset Taxation Rules

Provisional Measure No. 1,171/2023, issued on April 30 this year, proposed substantial changes in the asset tax regime abroad. Changes mainly reach residents in the country that maintain investments abroad, either directly, as through financial investments; Be indirectly, through controlled entities (offshore companies or trusts), obtaining income from such assets.

Until then, taxation treated the income of financial investments abroad as capital gain, observing a rate of 15% (fifteen percent) for taxation when not exceeded R $ 5,000,000.00 (five million reais); 17.5% (seventeen comma five percent) in capital gains between R $ 5,000,000.00 (five million reais) and R $ 10,000,000.00 (ten million reais); 20% (twenty percent) on capital gain exceeding R $ 10,000,000.00 (ten million reais) and was less than R $ 30,000,000.00 (thirty million reais); and 22.5% (twenty two percent) in relation to the gain that exceeded R $ 30,000,000.00 (thirty million reais).

with the changes promoted by MP, on the income earned by the individuals specified above will be entitled to tax in two collection ranges: one 15% (fifteen percent), to be applied on the installment annual income exceeding R $ 6,000.00 (six thousand reais) and does not exceed R $ 50,000.00 (fifty thousand reais); and another 22.5% (twenty -two comma five percent) on the annual installment of income exceeding R $ 50,000.00 (fifty thousand reais). Like or less than R $ 6,000.00 (six thousand reais) will be exempt.

In addition, another relevant change to stand out in MP 1,171/2023 refers to the form of taxation of offshore companies or trusts, controlled by individuals residing in Brazil, and with passive income above 20% (twenty percent), in locations with privileged tax regime or in tax havens. In this case, the MP provides that such entities will observe the rates indicated above, applicable to individuals.

as provided for in MP, for the purpose of incidence of the above form, the societies and other entities, personified or not, are considered as controlled, including investment funds and foundations, in which the person Physics, directly or indirectly, in isolation, in isolation or in conjunction with other parties, rights that ensure preponderance in social deliberations or power to elect or dismiss the majority of administrators; or, those in which the individual holds more than 50% (fifty percent) of share in the capital of corporate, or the rights to receive profits or assets found in settlement.

Finally, it is also important to highlight that the MP revokes old relevant rules applicable to individuals, such as income tax exemption on capital gain earned in the sale, settlement or rescue of goods located in outdoor.

MP came into force on May 1 this year. The new rules and tax rates applicable, however, will be valid and produced from January 1, 2024, if the measure is converted into law within its regimental period.