BRAZIL Law and Practice Contributed by: Paulo Honório de Castro Júnior and Bruno Marques Feitosa, William Freire - Advogados Associados
3.2 Business Profits Business profits earned in Brazil are subject to IRPJ and CSLL. The standard combined rate is 34% (25% IRPJ, including a surtax, and 9% CSLL). Higher rates apply to certain financial institutions. Brazilian resident companies are taxed on their world - wide income. Non-resident entities are taxed only on profits attributable to activities carried out in Brazil, whether through a locally incorporated entity or a PE. Tax Base and Regimes Under the actual profit method ( lucro real ), taxable income is based on accounting profit adjusted by statutory additions and exclusions. Tax losses may be carried forward indefinitely, but may offset only up to 30% of taxable income per year. Smaller companies may opt for the presumed prof - it method ( lucro presumido ), under which taxable income is calculated by applying fixed statutory mar - gins to gross revenues. In this regime, actual expenses are generally not relevant for determining the income tax base. Cross-Border Aspects In treaty situations, business profits of a foreign enter - prise are generally taxable in Brazil only if attributable to a PE located in the country. In the absence of a PE, Brazil typically relies on withholding taxation on spe - cific categories of payments, such as services or roy - alties, subject to domestic law and treaty provisions. 3.3 Passive Income Passive Income Brazil taxes passive income under a combination of withholding rules and corporate income taxation, with treaty relief available in many cases. Dividends As from 1 January 2026, dividends paid by Brazil - ian companies are subject to withholding income tax at 10%, including when paid to resident individuals and non-residents. Tax treaties may reduce the rate applicable to non-residents where a lower ceiling is provided.
Interest Interest paid to non-residents is generally subject to 15% withholding tax, increased to 25% if the recipi - ent is resident in a low-tax jurisdiction or subject to a privileged regime. Certain exemptions apply (eg, spe - cific foreign bond issuances and infrastructure bonds). Treaty reductions may apply. Interest on Net Equity (Juros sobre Capital Próprio – JCP) JCP remains deductible for the paying company within statutory limits. The withholding tax rate was increased to 17.5% from 2026 onwards (previously 15%), or 25% for low-tax jurisdictions. Treaty relief may apply where compatible with the treaty wording. Royalties Royalties paid abroad are generally subject to 15% withholding tax, or 25% for low-tax jurisdictions. Most Brazilian treaties allow source taxation and may reduce the rate (often to 10–15%). In addition to income tax, cross-border payments for royalties and certain services may trigger the Con - tribution for Intervention in the Economic Domain ( Contribuição de Intervenção no Domínio Econômi- co – CIDE) (10%), Social Integration Programme Contribution ( Programa de Integração Social – PIS)/ Contribution for the Financing of Social Security ( Contribuição para o Financiamento da Seguridade Social – Cofins-Import) and tax on financial opera - tions ( imposto sobre operações financeiras – IOF-FX) at the level of the Brazilian payer. 3.4 Capital Gains Capital Gains Brazil does not apply a separate capital gains tax for corporations. The taxation depends on whether the seller is resident or non-resident and on the applicable Capital gains realised by resident individuals are sub - ject to progressive rates ranging from 15% to 22.5%, depending on the amount of the gain. The gain cor - responds to the positive difference between the sale price and the acquisition cost. Limited exemptions apply, such as small-value transactions and the sale income tax regime. Resident Individuals
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