Domestic

A legal entity incorporated under Brazilian legislation will be treated as a domestic legal entity.

A Brazilian national is automatically a resident while legally domiciled in Brazil or, if not domiciled in Brazil, upon his or her election to be treated as a resident for tax purposes.

Foreign

As a rule, foreign legal entities are not subject to Brazilian taxes except when carrying out activities in Brazil through a permanent establishment.

Foreign individuals are considered residents for tax purposes from the moment they enter the country to work under an employment contract. Foreign individuals appointed to management positions in Brazilian companies (officers) are required to obtain a permanent work permit and a visa. Foreign individuals may be considered Brazilian tax residents in other scenarios, depending on how long they stay in Brazil.

Non-tax residents are subject to taxation in Brazil over income received by Brazilian sources only.  In this regard, nonresident individuals and legal entities who render services to a Brazilian party are subject to Brazilian withholding income tax received from Brazilian sources. Other taxes may apply depending on the transaction at hand.

Future Impacts of the Brazilian Tax Reform 

It is worth mentioning that a new tax reform focused on consumption (indirect taxes) was approved at the end of 2023 by means of Constitutional Amendment No. 132/2023, and subsequently regulated by Supplementary Laws No. 214/2025 and No. 227/2026.  

With the Tax Reform the following taxes were created:

• Excise Tax (“IS”) will apply over the production, commercialization, and importation of goods and services harmful to human health and the environment as follows: automotive vehicles; vessels and aircrafts;  tobacco products; alcoholic beverages; sugary beverages; minerals; prediction contests (fixed-odd bets and lotteries), and fantasy sport.
• Contribution on goods and services (“CBS”) will replace the current social contributions on gross revenues (“PIS and COFINS”).
• Tax on goods and services (“IBS”), which will replace the Municipal Service Tax (“ISS”) and the State Value Added Tax (“ICMS”).

It is important to note that IPI will not be extinguished, but rates will be reduced to zero in 2027, except for goods manufactured in Manaus Free Trade Zone.

Both IBS and CBS will apply over transactions with physical or intangible goods, including rights and services, and will have the same triggering events, calculation basis and taxpayers. The new taxes will be implemented gradually during a transition period: in 2026, CBS and IBS will be subject to a “trial implementation”, with reduced rates for compliance/testing purposes (eg, reporting in electronic invoices and related filings), without replacing the current taxes yet; CBS will be fully effective as of 2027 (replacing PIS/COFINS); and IBS will start being phased in as from 2029 (as ICMS/ISS are phased out), becoming fully effective as of 2033. The final IBS and CBS rates will be set by the Federal Senate, and current official estimates indicate a combined IBS/CBS rate in the high 20 percent range (often cited around 27.97 percent), subject to confirmation upon the issuance of pending regulations.

Finally, under the new taxation model, no tax incentives can be granted by States and Municipalities, except those allowed by the Constitution. In addition, the Supplementary Law presents the possibility of applying reduced rates to several industries such as education services, health services, medical devices, artistic productions, and agricultural inputs.

Please note that this Guide is based on the current rules and does not reflect the changes which will be implemented due to the Tax Reform.

Domestic

Corporate income tax (IRPJ)

As a general rule, Brazilian legal entities are required to pay corporate income tax (IRPJ) in Brazil. The IRPJ may be calculated under 2 different methods, the actual profits method or under the deemed profits method.

Brazilian legal entities are taxed by the IRPJ on their worldwide income and capital gains, regardless of their origin.

Under the actual profits method, the IRPJ may be accrued and paid on a quarterly or annual basis. If quarterly, a 15 percent rate will levy over the net income of the period, plus a 10 percent surtax over the net income exceeding BRL60,000 per quarter.

On the other hand, if the IRPJ is calculated annually, taxpayers are required to anticipate monthly installments, which are calculated on an estimated income basis. The estimated income shall correspond to 8 percent up to 32 percent of the total monthly gross revenue, depending on the taxpayer's activity, in addition to any capital gains perceived in the period, as well as other revenues and positive results incurred by the company. Alternatively, taxpayers may calculate these anticipated monthly installments over the net balance accounted. Over the calculated basis, the IRPJ shall levy at a 15 percent rate, plus an additional 10 percent surtax over the estimated income that exceeds BRL20,000 per month.

At the end of the year, the taxpayer may request the reimbursement of overpaid amounts, or be required to pay the difference between the amount paid monthly and the one calculated based on the annual income.

Note that certain taxpayers are allowed to calculate the IRPJ under the deemed profits method, as long as certain thresholds set in the legislation are met (ie, maximum gross revenues in the prior calendar year not exceeding BRL78 million per year or fraction).

Under this method, the IRPJ is calculated on a quarterly basis. Similar to the monthly anticipations made under the actual profits method, the taxable basis of the IRPJ will vary from 8 percent up to 32 percent of the legal entity's revenues, depending on the taxpayer activity. Over such a basis, the IRPJ shall levy at a 15 percent rate, in addition to a 10 percent surtax on the excess of deemed profits of BRL60,000 per quarter.

As of 2026, the presumption percentages for companies operating under the deemed profits method will be increased by 10 percent over the portion of their annual gross revenue that exceeds BRL5 million, pursuant to Supplementary Law no. 224/2025 and Normative Instruction 2,306/2026.

Please note that if the deemed profits method of taxation is adopted, the taxpayer will not be able to make any adjustments to the IRPJ's taxable basis.

Social contribution on net income (CSLL)

The CSLL is a social contribution that funds the social security system. The CSLL is assessed on net profits before income tax (ie, IRPJ) and after the adjustments for non-deductible items and deemed profits.

The rules for calculating the CSLL are substantially the same as those for IRPJ. In effect, CSLL is a true corporate income tax surcharge, that levies at a 9 percent rate over taxpayer's net income specifically adjusted for CSLL purposes. It is important to notice that some financial institutions are subject to a 20 percent CSLL rate.

Together with the IRPJ, the combined corporate income taxes rate (ie, IRPJ and CSLL) for most companies is currently 34 percent.

Interest on net equity (INE)

INE is a hybrid instrument used by companies to pay its shareholders and, simultaneously, generate a deductible expense at the company level.  Accordingly, INE may be paid or credited to the relevant shareholder, provided that the company:

• Duly deliberates the INE's payment or credit
• Has retained or current year earnings 
• Follows specific thresholds limits set in the legislation

The amount of INE to be paid or credited to the shareholder shall be calculated by applying the government long- term interest rate (Taxa de Juros de Longo Prazo- TJLP), calculated on a pro rata die basis, over the following net equity accounts:

• Paid-in Capital;
• Capital reserve, arising from the issuance of shares (with or without nominal value);
• Profit reserve, excluding tax incentive reserves;
• Treasury shares; and
• Accumulated profits or losses accounts.

As of January 2026, the rate of the withholding income tax (WHT) levied on INE amounts paid or credited increases from 15 percent to 17.5 percent, . A 25 percent rate applies if the beneficiary is located in a tax haven.

For purposes of corporate income tax (IRPJ and CSLL) deduction, the following limits must be adopted, whichever is higher:

• 50 percent of the taxpayer's net profit accrued at the end of the year before the INE deduction, or
• 50 percent of the sum of the accumulated and reserve profits

The following must be observed to arrive at the INE computation:

• The net positive variation of the net equity arising from transactions involving parties which do not represent an effective cash inflow should be excluded.
• Negative accounting adjustments or accounting reductions to the net equity arising from related parties must be added back.

See Taxable income.

Legal entities must file tax returns at federal, state and local levels depending on their activities. Some of these returns are monthly obligations. 

The Brazilian Government has introduced Pillar 2 rules from OECD, ensuring that entities belonging to multinational groups with annual revenues of at least EUR750 million in 2 of the last 4 fiscal years are subject to a minimum effective tax of 15 percent tax rate – the so-called CSLL Surcharge.

The CSLL Surcharge follows the reference documents approved by the OECD Inclusive Framework, thereby qualifying as a Qualified Domestic Minimum Top-up Tax (QDMTT). So far, Brazil has not introduced the other GlobBE rules, such as Income Inclusion Rule (IIR) and Undertaxed Profits Rules (UTPR).

Tax rulings

On certain issues, taxpayers can request a private letter ruling that applies only to the specific issue. However, tax rulings cannot grant holidays or incentives without a law which sets up the conditions and benefits.

Tax incentives

Brazil provides for different types of tax incentives at the federal, state and local levels, which target the development of specific regions of the country or specific activities.

Under the Tax Reform no new tax incentives can be granted, with a few exceptions. The existing ICMS and ISS benefits will be maintained until 2029 and will be gradually reduced until 2032.

In addition, under Supplementary Law No. 224/2025, as of 2026, the federal government introduced a 10 percent linear reduction (haircut) to certain federal tax incentives related to: (i) PIS/COFINS on gross revenue and imports; (ii) IRPJ and CSLL; (iii) Import Duty; (iv) IPI; and (v) Employer Social Security Contributions (INSS).

The haircut applies to federal incentives (i) listed in the 2026 Federal Tax Expenditures Statement attached to the 2026 Annual Budget Law (with few exceptions) and (ii) certain specified regimes, including the Deemed Profit Regime (lucro Presumido), the Special Regime for the Chemical Industry (REIQ), specific presumed credits of the IPI, and certain presumed credits and reduced-rate regimes for the PIS/COFINS and PIS/COFINS-Import.

Brazilian tax legislation does not provide for consolidation.

Brazilian legislation does not provide for participation exemption.  While dividends paid by Brazilian legal entities were generally tax-free until the end of 2025, this framework changed as of 2026, as further explained in the “Distributions” section below.

Capital gain recognized by a legal entity is taxed at the same rate as ordinary income for IRPJ and CSLL purposes. Non-operating losses are deductible. However, non-operating losses accrued in previous years can only be offset in future years with gains of the same nature and subject to a 30 percent limitation rule.

For individuals and nonresidents, as from January 1, 2017 capital gains earned as a result of the disposal of assets and rights of any nature are taxed at progressive rates varying from 15 percent up to 22.5 percent.

As of 2024, gains from the disposal of financial assets (including shares issued by foreign companies) held abroad by Brazilian resident individuals are subject to a flat 15 percent rate.

Until 2026, distributions paid by a Brazilian legal entity to shareholders were treated as tax-free dividends, regardless of where the shareholder is domiciled.  However, under Law No. 15,270/2025, as of January 1, 2026 dividends paid, credited, delivered, or remitted to foreign investors are subject to a 10 percent WHT.  The new law does not establish a higher WHT rate or specific restrictions for residents of jurisdictions with favorable tax regimes (ie, tax havens). For Brazilian-resident beneficiaries, the WHT applies only to individual shareholders and only when monthly dividend income exceeds BRL50,000.

Grandfathering rule: Dividends related to profits accrued until calendar year 2025 and approved for distribution by December 31, 2025 are exempt from WHT, provided payment follows the original approval terms. The application of this rule has generated significant interpretive debate and should be carefully assessed to ensure that pre‑2026 profits paid in subsequent years remain non‑taxable.

Credit mechanism: If the sum of the effective tax rate of the distributing Brazilian entity and the 10 percent WHT exceeds Brazil’s nominal corporate tax rate (typically 34 percent, or up to 45 percent for certain financial institutions), the foreign investor may opt to claim a tax credit. This credit is subject to conditions and procedures to be defined by regulation and must be requested within 360 days following the relevant fiscal year.

WHT exemption maintained for: (i) foreign governments with reciprocity, (ii) sovereign wealth funds, and (iii) foreign pension entities.

Under the actual profits method, net operating losses generated in a given period/year can be used to offset up to 30 percent of the taxable income the accrued on the subsequent periods/years.

The recognition of gains or losses in reorganizations can be structured at cost and deferred. However, new Transfer Pricing rules require arm’s length consideration for related party transactions, including intragroup reorganizations.

As a general rule, profits of controlled foreign companies are taxable in Brazil every December 31, regardless of when profits are made available. Optional specific consolidation rules for direct and indirect controlled foreign companies may apply, including relief for foreign losses subject to certain conditions and limitations.

Subject to conditions and limitations, foreign tax credits are available for foreign income taxes paid.

Brazil provides for a special and optional tax regime for real estate developments.

Brazilian transfer pricing rules apply to transactions between a Brazilian party and a foreign related entity or any entity domiciled in a tax haven jurisdiction or subject to privileged tax regime.  As of 2024, new transfer pricing rules were passed by Congress which follow the OECD arm's-length principle.

The new Transfer Pricing rules under Law No. 14.596/2023 are effective as of January 1, 2024 to all taxpayers, unless an early adoption election was made for 2023. The rules follow the OECD arm's-length principle and are applicable for transactions involving goods, commodities, intangibles, cost sharing, services, internal organizations, guarantees, and financial transactions between related parties.

The prior rules provided for methods inspired by the OECD’s traditional methods (CUP, RPM, and Cost Plus), but are mostly based on fixed gross margins, better suited for tangible goods, resulting in burdensome analysis and tax adjustments. The new rules have introduced the possibility of using the TNMM and Profit Split methods.

In general, payments made to non-residents are subject to WHT in Brazil.  As a general rule, payments to non­residents for services rendered to Brazilian residents (except for technical and similar services, as outlined below) and payments to nonresident individuals as work compensation are subject to the general WHT at a 25 percent rate. However, interest, royalties and other fees that are not paid in connection to the provision of services are taxed at a 15 percent rate.

The WHT shall also be levied at a 15 percent rate over the provision of technical services, administrative assistance and other similar services, which do not involve transfer of technology.

Note that payments made to entities located at low tax jurisdictions are subject to the WHT at a 25 percent rate. Tax treaties may reduce or eliminate WHT.

Other taxes may be imposed on the local source of payment depending on the nature of the transaction.

Brazil does not impose capital duty or stamp duty. Transfer taxes may be imposed at the state (ITCMD) or local level (ITBI) as discussed below.

Employers must withhold income tax and social security tax. Employers also must pay their share of social security tax, unemployment tax, and other payroll charges in respect of compensation paid to employees. These social and payroll taxes are deductible by an employer for Brazilian corporate income tax purposes.

Contribution for intervention in the economic domain (CIDE)

The contribution is due for payments made in connection with:

• License agreements
• Acquisition of technological know-how or
• Agreements involving cross-border transfer of technology

CIDE also applies to the cross-border provision of technical services, administrative assistance, and other similar services that do not involve the transfer of technology.

CIDE is generally imposed at a 10 percent rate over the total amount paid, credited, delivered, or remitted abroad to nonresident beneficiaries.

Welfare contributions on gross revenues (PIS/COFINS)

The Contribution to the Social Integration Program (PIS) and the Contribution to Finance Social Security (COFINS) are welfare contributions that are levied over a taxpayer's gross revenue. Currently, there are 2 methods of calculating PIS/COFINS, the cumulative and non-cumulative methods.

The cumulative method is applicable to cooperative organizations, immune or exempt entities companies, financial institutions, insurance companies, and taxpayers that accrue the corporate income tax in accordance with the deemed profits method. Under such method, the PIS shall apply at a 0.65 percent rate, whereas the COFINS will apply at a 3 percent rate.

The non-cumulative method is applicable to most legal entities. The main purpose of this legislation is to avoid the cascading effect of the welfare contributions by granting tax credits that can be offset with PIS/COFINS payable amounts. Currently, PIS and COFINS apply at a combined rate of 9.25 percent, with PIS at 1.65 percent and COFINS at 7.6 percent.

The taxpayer is entitled to calculate tax credits over the following expenses:

• Acquisition of goods for resale
• Inputs (ie, goods and/or services) that are deemed as necessary and essential for the maintenance of the taxpayer's activities
• Acquisition of electric energy
• Payment of leases related to buildings, machinery and equipment
• Lease expenses derived from leasing transactions (arrendamento mercantil)
• Acquisition or manufacture of machinery and equipment to be leased to 3^rd parties, or used in the manufacture of products intended for sale, and/or for incorporation as a fixed asset
• Buildings and betterments in 3^rd-party real estate property to be used in the company's operations Storage and freight costs, incurred in sale transactions, supported by the seller
• Meal coupons, transportation and uniforms provided to employees by a company that engages in cleaning, conservation and maintenance services and
• Intangible assets, acquired for the utilization in the manufacture of goods destined for sale or in the rendering of service

Furthermore, PIS and COFINS shall not apply to:

• Revenues resulting from export transactions of goods and services, whose payment represents an inflow of foreign capital into Brazil.
• Revenues derived from domestic sales by trading companies (empresas comerciais exportadoras) with specific export purposes.

Financial revenues are subject to a rate of 4.65 percent, with PIS at 0.65 percent and COFINS at 4 percent.

The concept of "gross revenues" for the calculation of the PIS and COFINS under the cumulative system has been changed under legislation. Accordingly, "gross revenues" for such purposes is defined as:

• The results of the sale of goods and provision of services.
• The result of operations on behalf of 3rd parties.
• Revenues derived from taxpayer's main activity that are not comprised as retail of goods and provision of services.

It is important to note that according to the Brazilian Tax Reform focused on consumption (indirect taxes) PIS and COFINS will be replaced by CBS. CBS will be implemented gradually during a transition period starting in 2026 (initial rollout for compliance and operational testing purposes only), and will fully replace PIS and COFINS as of 2027.  The final CBS rate will be set by the Federal Senate, subject to future regulation.

PIS and COFINS over import transactions (PIS/COFINS-import)

PIS and COFINS are also charged on import transactions of goods and services.  As a general rule, in respect of the importation of goods, PIS shall apply at a 2.1 percent rate and COIFNS at a 9.65 percent rate. Whereas, in respect of the importation of services, PIS shall apply at a 1.65 percent rate, and COFINS at a 7.6 percent rate.

Please note that the importation of certain goods, such as pharmaceuticals, for example, are taxed at specific tax rates. In addition, certain import transactions are subject to a 1 percent COFINS surcharge, which has been progressively reduced as from 2025.

The tax basis shall be the customs value of the imported goods or the amount charged for the service by the foreign contractor.

Taxpayers that are subject to the PIS/COFINS under the non-cumulative system are allowed to accrue tax credits from the PIS and COFINS paid on their imports and offset them against the PIS and COFINS accrued over their respective gross revenue.

Finally, in line with the Brazilian Tax Reform focused on consumption (indirect taxes), PIS/COFINS-import will be replaced by CBS, following the same transition timeline applicable to domestic CBS, with full replacement as of 2027.

Federal excise tax (IPI)

IPI is a Federal value-added tax, which applies to manufactured products, either to their importation or manufacture in Brazil. IPI rates may vary depending on the type of product and whether it is regarded as essential.

According to the Brazilian Tax Reform focused on Consumption (Indirect Taxes), IPI will not be extinguished, but rates will be reduced to zero in 2027, except for goods manufactured in Manaus Free Trade Zone maintained to promote the Manaus Free Trade Zone. However, the Tax Reform created an excise tax (IS) applicable over the production, commercialization and importation of specific goods and services considered harmful to human health and the environment, as defined by Supplementary Law 214/2025.

Import duty (II)

II is due upon customs clearance of imported products on an ad valorem basis. The rate varies, depending on the tariff classification of the product imported.

As mentioned above, import transactions are also subject to the PIS/COFINS-import and to the IPI. Import transactions are also taxed by the State VAT (ICMS). These taxes, along with II, are calculated as follows:

• The II and the PIS/COFINS-import are imposed over the good's customs value (ie, CIF value)

• The IPI is levied on the CIF value plus II.
• The ICMS is levied on the CIF value plus II, IPI and ICMS itself.

It is important to note that II was not amended by Supplementary Law No. 214/2025.

Export duty (IE)

IE applies to the export of certain listed goods and the tax is calculated on an ad valorem basis. The tax rate varies depending on the type of product exported.

In the same sense as II, IE was not amended by Supplementary Law No. 214/2025.

Financial transaction tax (IOF)

The IOF applies to several types of transactions such as credit, exchange, insurance, loans, as well as on transactions involving gold, financial assets or securities. IOF rates and basis vary depending on the nature of the transaction.

In mid 2025, the Government increased to 3.5 percent the IOF rate applicable to foreign exchange operations involving the transfer of funds abroad, such as payments for royalties and services.

IOF over exchange transactions are expected to sunset by 2029.

State VAT on sales and services (ICMS)

Similar to the IPI, the ICMS is another value-added tax on sales, communication, and transportation services, payable upon the importation of a product into Brazil, the sale of a good in the Brazilian market, or upon the provision of certain communication and intrastate and interstate transportation services.

ICMS rates and tax benefits vary from State to State and depend on the type of transaction (eg, import, intrastate, or interstate sale of goods, communication or transportation services, etc.).

The ICMS non-cumulative system permits a taxpayer to offset the ICMS paid in acquired goods and services against the ICMS due on subsequent taxable transactions (eg, sale of goods and services subject to ICMS tax). The difference is the amount due to the state government.

Note that State ICMS legislation may attribute the responsibility to pay the ICMS to a legal entity that, although it did not perform the relevant taxable transaction per se, had an indirect relation to it.  An example is the responsibility for paying the ICMS attributed to electricity generator or distributors on 1 or more operations, from production or importation until the end consumer.

Specific rules apply to operations with hydrocarbons, such as oil, lubricants, and natural gas.

The Brazilian Tax Reform focused on Consumption (Indirect Taxes) replaced ICMS by IBS. The new tax will apply over transactions with physical or intangible goods, including rights, and services and will be due to the destined State and Municipality (interstate tax rates will no longer apply). In addition, IBS will go through a period of transition, which will start in 2029. Finally, upon the Tax Reform, no incentives can be granted, except those allowed by Constitution. The Supplementary Law 214/2025 presents reduced rates to several industries such as education services, health services, medical devices, artistic productions and agricultural inputs.

Estate and gift tax (ITCMD)

ITCMD is a state tax that is levied on the transmission of movable or immovable assets as a result of donation or in the event of the death of the owner.  As a general rule, ITCMD is subject to rates varying from 4 percent to 8 percent, depending on the state, over the fair value of the movable asset, real estate or transmitted rights.

Constitutional Amendment No. 132/2023 determined that the ITCMD rates shall be progressive, according to the value of the assets involved. Supplementary Law No. 214/2025 established that the levy of the IBS and CBS shall not affect the ITCMD calculation basis. More recently, Supplementary Law No. 227/2026 introduced national general rules for the ITCMD, including competence, taxable events, and the calculation basis, covering situations involving assets, donors or heirs located abroad, and adopting market value as a required valuation standard.

Tax on services (ISS)

ISS is a municipal tax that applies to the price charged for the provision of certain listed services. Rates vary from 2 percent to 5 percent, depending on the type of service and the particular municipality in which the party rendering the services is located.

The ISS shall also apply to the importation of services. In such circumstances, each municipality may set forth in the relevant municipal legislation that the contracting parties located in Brazil are liable for collecting the relevant tax.

The ISS shall not apply to the exportation of services, except over those developed in Brazil and whose results also occur in Brazil, even if the contracting party is a foreign resident.

The Brazilian Tax Reform focused on consumption (indirect taxes) will replace ISS (as well as ICMS) with IBS. The new tax will apply over transactions with physical or intangible goods, including rights, and services and will be due to the destined State and Municipality (interstate tax rates will no longer apply). In addition, IBS will go through a period of transition, which will start in 2029. Finally, upon the Tax Reform, no incentives can be granted, except those allowed by Constitution. The Supplementary Law presents reduced rates to several industries such as education services, health services, medical devices, artistic productions, and agricultural inputs.

Real estate property tax (IPTU)

IPTU is a municipal tax levied annually, at progressive rates according to the appraised value and use of the real estate, and over the ownership, possession, and use of urban realty.

IPTU was not amended by Supplementary Law No. 214/2025.

Real estate transfer tax (ITBI)

ITBI is a municipal tax on the transfer of real estate. The rates may vary according to the actual value of the transaction or the appraised value of the property, whichever is higher.

For now, according to Supplementary Law No. 214/2025, the levy of the IBS and CBS shall not affect the ITBI calculation basis. Additionally, Supplementary Law No. 227/2026 amended the ITBI rules in the National Tax Code (CTN), including provisions allowing municipalities to rely on pre‑established reference values for determining the taxable base, a change that may conflict with prior case law from the Superior Court of Justice (STJ). 

Individual income taxation (IRPF)

Brazilian tax legislation distinguishes individual residents from nonresidents. As mentioned above, a Brazilian national is automatically a resident while legally domiciled in Brazil or, if not domiciled in Brazil, upon their election to be treated as a resident for tax purposes.

In general, resident individuals are subject to tax on their worldwide income, regardless of nationality (universal taxation), while non-residents are generally subject to tax in Brazil only on Brazilian source income (limited taxation).

According to the tax legislation, foreign individual will be considered to be a tax resident in Brazil when:

• Admitted to the country under a permanent visa or
• Admitted to the country under a temporary visa, and
• Under an employment relationship for purposes of Brazilian law, on the day such relationship is established, or
• Upon completing 184 days, consecutive or not, of physical presence in Brazil within a 12-month period.

The duration of the time period outlined above begins on the day the foreigner enters Brazil, independent of the calendar year. The days counted are only those days spent within the country, interrupted upon the moment they leave Brazil and recommenced if they return.

Tax residents are subject to income tax on worldwide income on a cash basis for each year, even if the income is generated abroad.  Currently, an individual income tax return should be filed by the last business day of May to report income received in the previous year, with no extensions. We recommend such deadline be confirmed every year.

Brazil has a different set of rules for ordinary income, capital gains, income received from abroad and from individuals and income from financial products.

Ordinary income is subject to progressive rates ranging from 7.5 percent up to 27.5 percent. As of 2026, individuals with monthly taxable income up to BRL5,000 are fully exempt, and a reduced effective rate applies to income between BRL5,000 and approximately BRL7,300, resulting in lower taxation for low‑and middle‑income taxpayers.

Compensation received from a Brazilian company for services provided under an employment relationship or as an individual contractor is subject to WHT at monthly progressive rates also ranging from 7.5 percent up to 27.5 percent, depending on the amount of income perceived.

In addition, beginning in 2026, individuals with annual global income exceeding BRL600,000 are subject to a minimum income tax (“high‑income minimum tax”). The minimum tax applies progressively between BRL600,000 and BRL1.2 million of annual income, reaching a minimum rate of 10 percent above this threshold. If the tax calculated under ordinary IRPF rules is lower than the required minimum, the individual must pay a complementary tax.

As mentioned above (in the “Distribution” section of this guide), beginning in 2026 dividends paid to individuals become subject to a 10 percent withholding tax when payments from the same legal entity exceed BRL50,000 in a month.  Accordingly, the high‑income minimum tax is introduced alongside this new dividend taxation, and any WHT withheld on dividend payments is creditable against the annual tax due under the minimum‑tax calculation.

In the annual income tax return, the taxpayer must report all ordinary income received from all Brazilian payment sources on a consolidated basis. Consolidated ordinary income will be subject to income tax at the progressive rates mentioned above. Because each payment source calculates WHT separately, without taking into account the taxpayer's overall income and bracket, the taxpayer might be required to make an additional tax payment upon filing of the annual income tax return.

Capital gains resulting from the disposition of assets and other rights, including investments in the Brazilian capital markets (ie, disposition of stocks, commodities and other rights) are subject to income tax at capital gains, at rates varying from 15 percent up to 22.5 percent.

As a rule, income received from paying sources located abroad (excepted in relation to financial assets) and from individuals in Brazil are subject to a mandatory monthly tax payment (Carnê-leão), which is due at the same progressive tax rates applicable to ordinary income mentioned above. The tax must be collected until the last business day of the following month.

As of 2024, gains from the disposal of financial assets (including shares issued by foreign companies) held abroad by Brazilian resident individuals are subject to a flat 15 percent rate. In this case, the tax will only be payable when filing the annual income tax return (DIRPF), typically due by May 31, but this date must be confirmed annually.

Financial income from Brazilian sources is subject to a final withholding tax system performed by the financial institution. Tax rates shall vary according to the type of investment and also on the term under which it was made.

Brazil provides double taxation relief through a foreign tax credit system applicable to income tax paid to countries with which Brazil has entered into a tax treaty or on a reciprocity basis when the source country also grants a foreign tax credit for taxes paid in Brazil on Brazilian source income. The Brazilian tax authorities have agreed on a reciprocity basis with certain non-treaty countries, such as United States, Germany, and United Kingdom.