ARTICLE · 29 NOVEMBER 2013

CFC Rules For Brazilian Resident Individuals

TozziniFreire Advogados

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On November 12, 2013, Provisional Measure n. 627 ("MP 627/2013") was published, which, among other relevant changes in Brazilian Income Tax Legislation, changed the way investments abroad are taxed when held by Brazilian-resident individuals.

BrazilTax

Ana Cláudia Utumi

Gustavo Nygaard

Rafael Mallmann

Leonardo Azevedo Ventura

Jerry Levers De Abreu

Marco AntôNio Ruzene

Maurício Braga Chapinoti

Vinicius Jucá Alves

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On November 12, 2013, Provisional Measure n. 627 ("MP 627/2013") was published, which, among other relevant changes in Brazilian Income Tax Legislation, changed the way investments abroad are taxed when held by Brazilian-resident individuals.

In accordance with such new rules, individuals shall recognize and anticipate the payment of income tax over the profits obtained abroad through controlled foreign corporations ("CFC").

Starting on January 1st, 2015, the profits deriving from a CFC will be considered as made available to Brazilian resident individuals at the closing of the CFC's taxable year and will be subject to Income Tax in Brazil if:

I – the CFC is located in a tax haven or subject to a beneficial tax regime; or

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