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Find out everything about the new income tax declaration requirements for investors with offshore companies!
The deadline for delivery of the Income Tax Declaration (IR) of 2024 is already in force, starting on March 17 and continuing until May 30. For investors who own offshore companies, especially those located in countries with favorable taxation, the changes implemented by Law 14.754/2023 require extra attention.
This new legislation, which came into force at the end of 2023, brings important updates on the taxation of income from abroad, especially for those who invest through offshore companies in tax havens.
Changes in tax rate and mandatory balance sheet
Before the new law was passed, income obtained through offshore companies were only taxed if there was distribution of profits or personal use of the company's resources.
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In this context, income tax was levied at rates of 7,5% to 27,5%, or, in the case of capital gains, 15% to 22,5%.
As of this year, taxation has become stricter, with a fixed rate of 15% on the financial income of offshore companies.
Furthermore, the investor now has the right to offset losses against capital gains, which represents an attempt to balance the tax burden more fairly.
For offshore companies, the big news is the mandatory accounting balance sheet, which must be signed by a Brazilian accountant, registered with the Federal Accounting Council (CFC), and prepared in accordance with the standards of the BR GAAP.
This requirement seeks to ensure greater transparency and control over the operations of these companies, something that was not previously strictly monitored.
Experts warn that caution should be exercised with international service providers, who often do not meet these requirements, which can result in fines and tax complications for investors.
Choosing the tax regime and income tax
Another crucial point brought up by Law 14.754 / 2023 is the possibility of choosing between two tax regimes: “transparent” and “opaque”.
No transparent regime, the income and assets of the offshore company are declared directly by the investor, as if they belonged to the individual, which can increase the complexity of the declaration.
Taxation only occurs on realized gains, which means that tax is charged according to exchange rate variations and positive results obtained during the fiscal year.
This model of fiscal transparency was inspired by the United States system and aims to increase tax compliance, in addition to attracting more investors to Brazil, given its alignment with international practices.
In the opaque regime, the offshore company is treated separately, and profits are not taxed until these earnings are distributed to the investor.
For companies created up to 2023, the choice of regime must have been made in the 2023/2024 IR declaration. If the investor has not opted for transparency, taxation will follow the traditional and opaque model.
For new companies, the choice of regime will occur in the 2024/2025 Income Tax declaration.
Impacts and recommendations for Offshore investors
The complexity of the new rules may raise doubts among investors, but the main recommendation from experts is to seek support from specialized accountants and to correctly analyze the offshore company's tax balance sheet.
According to Vagner Quito, partner at 4Tax Group, an error in filling out or choosing the regime can result in problems with the Federal Revenue Service and even in additional tax costs.
It is also essential that investors with assets exceeding US$ 1 million outside Brazil comply with the mandatory Declaration of Brazilian Capital Abroad (DCBE), which must be submitted by April 7.
Despite the challenges, experts agree that the changes brought about by Law 14.754/2023 are positive for the Brazilian tax system.
They aim to increase government revenue and align Brazil with international taxation standards, which could be an important step for the country to achieve a prominent position in the Organization for Economic Cooperation and Development (OECD).
