BRAZIL Law and Practice Contributed by: Paulo Honório de Castro Júnior and Bruno Marques Feitosa, William Freire - Advogados Associados
of a primary residence under specific reinvestment conditions. Resident Companies For companies under the actual profit regime, capital gains are included in the ordinary corporate income tax base and taxed at the combined 34% rate (IRPJ and CSLL). Losses are generally classified as non- operational and may offset non-operational gains, subject to the 30% limitation on tax loss utilisation per period. Under the presumed profit regime, capital gains are added to the taxable base and effectively taxed at ordinary rates, while capital losses are not deductible. Non-Residents Capital gains realised by non-residents on Brazilian assets are subject to withholding tax at progressive rates from 15% to 22.5%, or 25% if the seller is resi - dent in a low-tax jurisdiction. The Brazilian purchaser or legal representative is responsible for withholding and remitting the tax. Tax treaties may limit or eliminate Brazilian taxation in specific situations, particularly where exclusive taxing rights are allocated to the seller’s country of residence. 3.5 Employment Income Employment Income Employment income earned by individuals resident in Brazil is subject to progressive personal income tax at rates ranging from 0% to 27.5%. Employers are required to withhold tax at source on a monthly basis under the payroll withholding system. Residents are taxed on their worldwide employment income, includ - ing remuneration paid abroad. Non-Residents and Short-Term Assignments Non-resident individuals are taxed only on Brazilian- source employment income, generally at a flat rate of 25%, withheld at source. Brazilian domestic law does not provide a specific short-term presence exemption. However, under applicable tax treaties, employment income may be exempt in Brazil where:
• the individual remains in Brazil for no more than 183 days within the relevant period; • remuneration is paid by a foreign employer; and • the cost is not borne by a Brazilian PE. In practice, treaty protection is essential for short-term assignments. Cross-Border and Remote Working Brazil has not enacted specific tax rules addressing remote working. For individuals, tax residence remains the decisive factor. A foreign employee physically working in Brazil may trigger Brazilian-source taxation regardless of where the employer is located. For corporations, remote working may create risks of a PE if activities in Brazil are conducted on a fixed or habitual basis and go beyond preparatory or auxil - iary functions. The analysis remains fact-specific and grounded in traditional PE principles rather than in specific digital or remote work legislation. 3.6 Other Income There are no additional types of income not listed previously that are subject to special taxation rules in Brazil. 4. OECD/G20 Global Tax Reform 4.1 Pillar One – Amount B Brazil has not implemented Amount B in its domestic transfer pricing legislation. Although Brazil aligned its transfer pricing system with the OECD arm’s length standard as from 2024, it did not incorporate the sim - plified and streamlined approach for baseline mar - keting and distribution activities (Amount B) into its internal rules. At the international level, Brazil has participated in dis - cussions within the OECD/G20 Inclusive Framework and has expressed political support for the develop - ment of Amount B. However, as of early 2026, there is no specific domestic legislation, regulation or admin - istrative guidance providing for its application.
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