We will point out in the following week some key aspects related to taxation on foreign investments in Brazil.
1. Tax on Dividends. One common question from foreigners is whether Brazilian tax authorities tax dividend or profit distribution paid out to shareholders. Generally speaking, dividends or profit distributed by Brazilian companies to resident or non-resident beneficiaries (individuals or corporations) are exempt from taxes.
2. Tax on Interest on Net Equity. Another regular question refers to interest on net equity (juros sobre capital próprio – JCP). Middle and large size companies pay interest on net equity to their shareholders subject to a 15% flat tax rate, or 25% if they are located in tax haven jurisdiction listed by Brazilian tax authorities.
3. Tax on Capital Gain. Regarding capital gains on investments in Brazil, foreign taxpayers are subject to withholding income taxes on capital gains at rates ranging from 22.5% to 15%, depending on the size of the investment (15% up to BRL 5 million: 17,5% between BRL 5 and 10 million; 20% between BRL 10 and 30 million; 22,5% over BRL 30 million), except for gains generated out of investments in certain securities holding tax exemptions from time time such as Agribusiness Receivables Certificates (CRAs).