Tax | Tax Planning by Foreigners in Brazil and The Worldwide Income Taxation Principle

As a general rule, a person has tax obligations in his or her current country of residence, although it is possible and even common that he/she becomes a taxpayer in another country.

It all depends on the country’s residence rule. In this scenario, tax on income is a very critical aspect because of the worldwide income taxation principle adopted in many countries, including Brazil. 

People who live abroad, even for a set period of time, or who travel frequently or who have headquarters in one country but go often to another should seriously consider tax planning. 

In Brazil, there is the 183-day rule for a person to become a tax resident and, consequently, a taxpayer. From that day on, regardless of one’s residence abroad, the Brazilian IRS will have jurisdiction and will (also) be entitled to tax the worldwide income. Nevertheless, many countries have international agreements to avoid double taxation, case in which they will determine how to proceed. 

Tax planning is crucial in cases like these. One of the worst consequences of being considered tax resident in two countries is double taxation on income. As pointed, there are international agreements to avoid it, but not all countries have it and every case must be closely analyzed.


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