Children's Education Abroad: Remittance, IRPF and Tax Residency

Yes, a family can send money from Brazil for children to study abroad. Foreign exchange is free, with no limit on the amount, but it must go through an institution authorized by the Central Bank of Brazil (BCB) (Law No. 14,286 (Lei 14.286), arts. 2 and 3).

The bigger concern is tax: only education expenses count for individual income tax (IRPF), and a change in the child's residence requires notifying Brazil's Federal Revenue Service (Receita Federal).

How do you send money abroad to pay for your children's studies?

Use the foreign exchange market: a bank, a brokerage or another institution authorized by the Central Bank to operate in foreign exchange. Law No. 14,286/2021 (Lei 14.286/2021) says that foreign exchange transactions may be carried out freely, with no limit on amount (art. 2), and only by authorized institutions (art. 3). Money entering and leaving the country also goes through these institutions, which identify who sends and who receives (art. 14).

In practice:

1. •Make the transfer through an authorized institution and keep the exchange contract.
2. •Keep the school's or university's proof with it (invoice, receipt, enrollment letter).
3. •To support a child abroad, the Receita describes transfers made in the dependent's name, through an authorized entity and through the Central Bank's regular mechanisms.
4. •Avoid carrying cash. Art. 14, § 1, waives the authorized institution only for carrying up to USD 10,000, or an amount whose departure is proven as set out in the regulation.
5. •Ask the institution what the IOF and the fees are on the date of the transaction. This page does not estimate cost, because the rate depends on the rule in force that day.

Is there an amount limit or income tax on the transfer?

The law sets no amount limit for foreign exchange (art. 2). On income tax, the Federal Revenue Service answers, in question 303 of the IRPF 2024 Questions and Answers manual, that transfers to support dependents abroad, in their name, are not subject to withholding at source, regardless of the amount. The conditions are that the transfer goes through an authorized entity, follows the Central Bank's mechanisms and does not involve the beneficiary's own income. Read the whole question before sending.

If tax is withheld on a transfer for study or an internship, it does not count as an education expense and cannot be offset in the return of the person who bears the cost (question 408).

How much of my children's school fees can I deduct from IRPF?

You can deduct payments to educational institutions, for the taxpayer and dependents, up to the individual annual limit in art. 8, II, "b", of Law No. 9,250/1995 (Lei 9.250/1995). The text of the law gives BRL 3,561.50 from 2015, and the Receita manual repeats that amount for calendar year 2023. Confirm the amount for the year of your return in the Receita's table.

If the dependent has their own income, it is added to that of the person responsible in the annual return (question 396). The Receita also states that, as a rule, tax law does not distinguish the dependent's residence. A non-resident dependent can be declared if the conditions for it are proven (question 339).

Does a child who studies abroad stop being a Brazilian tax resident?

It depends on whether the departure is permanent or temporary. A person who leaves permanently becomes a non-resident on the date of departure. A person who leaves temporarily becomes a non-resident from the day after completing 12 consecutive months of absence. That is what the Receita describes in the Permanent Departure Notice service (Comunicação de Saída Definitiva do País).

Note one detail: Law 14,286 has its own definition of resident, used for foreign exchange and for capital abroad (art. 1, sole paragraph). Residence for income tax purposes follows the Receita's rules. The two concepts are not the same.

When the child becomes a non-resident, the family must:

1. •File the Permanent Departure Notice (CSDP) by the last day of February of the following year. Dependents registered in the CPF who leave on the same date as the account holder must be listed in the notice (question 117).
2. •Submit the Permanent Departure Tax Return (Declaração de Saída Definitiva do País, DSDP) by the deadline for the annual adjustment return of the following year. The CSDP does not replace the DSDP.
3. •Pay the assessed tax in a single installment and notify the paying sources.

If the dependent leaves on a different date from the account holder, check the Receita's service before filling out the notice. The step-by-step of the tax exit is in the guide on permanent departure from Brazil, exit tax and DSDP, and the overview of changing tax domicile is in how to change international tax residence.

Do I need to declare the money that stays abroad?

Yes, where applicable, on two fronts: the Census of Brazilian Capital Abroad (CBE), run by the Central Bank, and the annual adjustment return.

CBE. Law 14,286 defines Brazilian capital abroad as funds, assets and rights held outside the country by residents (art. 8, I) and gives the Central Bank the power to regulate and request information about them (art. 10). According to the federal government's service, the annual declaration is mandatory when the declarant's total assets and funds abroad are equal to or above USD 1 million on December 31. The obligation belongs to the resident declarant, and an account in the name of the resident child counts toward that child.

IRPF. Income from financial investments abroad, such as interest-bearing bank deposits and current accounts with income, is declared separately in the annual return and pays 15% on the annual portion, with no deductions from the tax base (Law No. 14,754/2023 (Lei 14.754/2023), arts. 2 and 3). If the child's account earns interest and the child is still your dependent, add that income to yours, as question 396 instructs.

What if the family uses an offshore company or a trust to fund the studies?

In that case, Law 14,754/2023 weighs more than foreign exchange. Two points change the analysis.

Controlled company abroad. The profits of foreign controlled companies of a resident individual are taxed on December 31 of each year, but only when the controlled company is in a country with favored taxation or a privileged tax regime, or when its own active income is below 60% of total income (art. 5, § 5). To measure control, the law adds the person's holding to that of related persons, including spouse, partner and relatives up to the third degree (art. 5, § 1, II, and § 3, I). The children's holdings enter this count.

Trust. The trust's assets remain under the settlor's ownership until distribution to the beneficiary or the settlor's death, whichever comes first (art. 10). The change of ownership is treated as a transfer for no consideration: a gift if the settlor is alive, or a transfer causa mortis if the settlor has died (art. 10, § 2). Income and capital gains of the trust are taxed to the owner of the assets (art. 10, § 3).

Before using the structure's funds to pay for school, ask for an analysis of the specific case, with the trust deed and the company's bylaws on the table. The text of the law does not replace an opinion on your structure. To understand the instrument, see offshore trusts for Brazilians and offshore succession and probate. For the family's tax framework, consult the tax planning and compliance services.

How do you organize the paperwork before the child leaves?

Build a file per child and per year. It serves the IRPF, the Central Bank and, if needed, an audit.

1. •Exchange contracts for each transfer, with date and amount.
2. •Receipts and invoices from the school or university, in the name of the student or the person responsible.
3. •Conversion to reais of payments in foreign currency, using the criterion in question 407.
4. •Date of departure from Brazil, and when the child completes 12 consecutive months of absence.
5. •Statements of the accounts abroad on December 31, for the CBE and for the annual return.
6. •If there is an offshore company or trust, the deed, bylaws and distribution records.