BRAZIL Law and Practice Contributed by: Daniel Zugman and Frederico Bastos, BVZ Advogados | Bastos, Bari, Vilela e Zugman
following the Brazilian Supreme Court’s deci - sion in Theme 825 and Complementary Law No. 227/2026, as well as valuation disputes involving family holding companies and closely held busi - nesses. • Income Tax (IRPF) – disputes concerning the appli - cation of Law No. 14,754/2023 to foreign trusts, offshore entities and other international wealth structures, as well as the income tax treatment of lifetime gifts, wealth reorganisations and the legal characterisation of succession planning transac - tions. • Real estate transfer tax (ITBI) – litigation concern - ing the constitutional exemption for contributions of real estate to family holding companies and real estate entities. • Succession planning – challenges to lifetime gifts, alleged infringements of forced heirship rules, the validity of wills and disputes concerning the governance and management of family holding companies. In practice, these disputes commonly arise in probate proceedings, tax assessments, declaratory actions, writs of mandamus and other judicial proceedings involving asset valuation, the legal characterisation of transactions and the application of constitutional tax rules. 5.2 Mechanism for Compensation Brazilian remedies in wealth disputes are primarily compensatory and restorative rather than punitive. Courts may annul gifts, wills, corporate acts or trans - fers that violate forced heirship rules, creditor rights, capacity requirements or formalities. They may also order collation of lifetime gifts, reduction of exces - sive donations, rendering of accounts, restitution of assets, restoration of the estate and damages where mismanagement or bad faith caused measurable loss. In corporate succession disputes, remedies may include enforcement or annulment of shareholders’ agreements, exclusion of a shareholder, buyout of quotas, appointment of an administrator, or judicial dissolution in extreme cases. Fiduciaries, execu - tors, administrators and company managers may be required to account for their conduct and compensate
the estate or beneficiaries for losses attributable to negligence, conflict of interest or breach of duty.
6. Roles and Responsibilities of Fiduciaries 6.1 Prevalence of Corporate Fiduciaries Brazil does not have a domestic trust industry or professional trustees comparable to those found in common law jurisdictions. Nevertheless, fiduciary functions are common in other contexts, particularly in relation to investment fund administrators, fiduci - ary agents in debt issuances, estate administrators, executors and company directors and managers. These professionals are subject to statutory fiduci - ary duties that go beyond those of ordinary service providers. Their obligations generally include duties of care, loyalty, transparency, conflict management and acting in the best interests of the investors, creditors, heirs or other beneficiaries they represent. In the financial and capital markets, many of these functions are regulated and supervised by the Bra - zilian Securities Commission (CVM) and the Cen - tral Bank through licensing, disclosure and conduct requirements. Breaches may result in civil liability, administrative sanctions, fines and, where applicable, the loss of regulatory authorisation 6.2 Fiduciary Liabilities As Brazil has no domestic trust regime, fiduciary liability primarily arises in regulated structures such as investment funds, securities offerings and other financial market transactions. In these contexts, fidu - ciary administrators, investment managers and fidu - ciary agents are subject to statutory and regulatory duties and may incur civil and administrative liability for breaches of duties of care, loyalty, good faith and conflict-of-interest management. In relation to private foundations and companies, Arti - cle 50 of the Brazilian Civil Code may apply. Courts may pierce the corporate veil where there is abuse of the legal entity through misuse of purpose or com - mingling of assets. In such circumstances, the entity’s liabilities may be extended to the directors, sharehold -
126 CHAMBERS.COM
Powered by FlippingBook