Capital gains tax in Brazil – what foreign companies should know

See also:

Business Basics in Brazil

Time frame to incorporate in Brazil and Royalties

I recently received a question from one of my blog readers in the UK, concerning capital gains tax in Brazil. His question was as follows:

Dear Adler, I’m looking to setup a company here to buy assets with funds from UK investors. I assume the Brazilian company would be subject to Brazilian capital gains tax. Would UK investors be subject to UK capital gains tax also?

Amazo

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Dear Mr. Amazo,

Thanks for the message. 

I have recently been working with quite a few investors from UK and The Netherlands with similar business strategies. 

There are two sets of tax structures that may apply to your case:

(1) If you set up a Brazilian Company and invest through it, you will pay taxes as a Brazilian company. But, after taxation, the gains can be sent back to the UK without profits remittance tax. When the original capital is to be sent back, you may have to pay taxes on the currency appreciation.

(2) If you invest as a foreign company, directly in the stock market, the taxation may vary from 0% (in case of federal bonds) to 25% (day trade and some investment funds). In this case you do not have to set up a company in Brazil, but will have to hire a bank or broker here, who will represent you. 

In both cases, the taxation in the UK is independent from the taxation in Brazil, and may apply.

The Brazilian Central Bank does not charge anything for the registration. The registration before it is only for regulatory purposes. All transferences and business are managed by private banks. 

I hope to hear more from you. 

Regards, 

Adler 

See also:

Business Basics in Brazil

Time frame to incorporate in Brazil and Royalties