ECF and Foreign Affiliates: 2026 Guide (Law 12,973)

A Brazilian company with a controlled or affiliated company abroad reports those holdings in the ECF, filed with Sped by the last business day of July of the following year. Records X340, X350 and X351 identify the investee and calculate the foreign result; Y520 reports foreign payments and receipts. Profits are taxed under Law No. 12,973/2014 (Lei 12.973/2014).

Who must file the ECF, and what is the deadline?

All private-law legal entities domiciled in Brazil file the Escrituração Contábil Fiscal (ECF, the Brazilian Tax Accounting Bookkeeping), including entities treated as such, whether or not they are subject to income tax. The ECF is filed centrally by the head office, with an ICP-Brasil digital certificate, by the last business day of July of the year following the calendar year.

Companies in the Simples Nacional regime (which file the DASN), public bodies, public agencies, public foundations and inactive companies are exempt. The basis is IN RFB No. 2,004 of January 18, 2021, as described in the 2026 Legal Entity Questions and Answers (Perguntas e Respostas da Pessoa Jurídica 2026) from Brazil's Federal Revenue Service (Receita Federal).

When there is a dissolution, split, merger or absorption, the deadline changes:

• •event between January and April: last business day of July of the same year;
• •event between May and December: last business day of the 3rd month following the event.

For companies that calculate corporate income tax (IRPJ) under the actual profit method, the ECF is itself the Actual Profit Calculation Book (Lalur), provided for in art. 8, item I, of Decree-Law 1,598/1977 (Decreto-Lei 1.598/1977). In addition, a legal entity that receives profits, income or capital gains from abroad must use the actual profit method from the quarter in which this occurs (Law 9,718/1998, art. 14, III, according to the same Questions and Answers).

Which ECF records cover affiliates and controlled companies abroad?

Four records concentrate the topic: X340 (identification of the foreign holding), X350 (result for the calculation period of the holdings), X351 (statement of results and tax paid abroad) and Y520 (payments and receipts from abroad or from non-residents). The names and fields come from the ECF Manual, Layout 12.

The Layout 12 Guidance Manual is an annex to Cofis ADE No. 2/2026 and applies to calendar year 2025 and special situations in 2026. It is on the ECF page at Sped, which also publishes new versions.

In X340, the control indicator classifies the investee into one of these categories: direct controlled company, indirect controlled company, company treated as controlled (equiparada), affiliate on an accrual basis, branch or agency, affiliate on a cash basis, joint venture, partnership, trust, affiliate on an accrual basis by election (art. 19-A of IN RFB 1,520/2014) and affiliate on a mixed basis. Controlled companies, affiliates and companies treated as controlled have different rules under Law 12,973, so define the classification before filling in the form.

How does Law 12,973/2014 tax the profits of controlled companies and affiliates abroad?

For a controlled company, the portion of the investment adjustment equivalent to profits earned before income tax goes into the actual profit and the CSLL (social contribution on net profit) base of the Brazilian parent (art. 77). The profit is added to the December 31 balance sheet of the year in which it was earned abroad, whether or not it was distributed (art. 79, I).

For an affiliate, profits go into the December 31 balance sheet of the year in which they were made available to the Brazilian company, provided the conditions of art. 81 are met. Paragraphs 1 and 2 of art. 81 detail when profit counts as made available: payment or credit to a liability account of the affiliate, a loan made by an affiliate that has profits or reserves, and an advance for a future sale with settlement beyond the production cycle.

Three rules of Law 12,973 weigh most in day-to-day practice:

1. •Individualized sub-accounts. The parent records, in sub-accounts of the investment in a direct controlled company, the result of each direct and indirect controlled company, in proportion to its ownership interest (art. 76).
2. •Affiliate treated as controlled. A Brazilian company that, together with related persons, holds more than 50% of the voting capital of an affiliate abroad is treated as its parent (art. 83).
3. •Loss abroad. Without consolidation, a negative result can only offset future profits of the same company that generated it, and loss balances must be reported to the Receita Federal within the deadline and in the form it defines (art. 79, II).

Art. 78 allows the results of the investees to be consolidated, with exceptions (for example, a country without tax information exchange, a favored or privileged regime, or low own active income). The current wording, given by Law 15,079/2024, provides for consolidation through calendar year 2029, and the election is irrevocable for each calendar year. Art. 87 covers the deduction of tax paid abroad by the controlled company, in proportion to the ownership interest. Check the conditions in the text of the law before applying.

For the context of CFC rules in other countries, see the comparison CFC Rules Worldwide: Brazil, USA, UK and Germany.

How do I convert profits earned abroad into reais?

The conversion uses the exchange rate of the currency of the country of origin, set at the Central Bank's selling rate, on the balance sheet date of the direct or indirect controlled company (art. 76, § 2). If the currency has no quotation in Brazil, it is converted first to US dollars and then to reais (art. 76, § 3).

The Receita Federal maintains its own page of exchange rates for tax purposes, linked from the ECF page. Keep the investee's balance sheet and the rate used, because these two documents support the amount entered.

What is the difference between the legal entity rule (Law 12,973) and the individual rule (Law 14,754)?

A Brazilian legal entity follows Law 12,973/2014 and reports everything in the ECF. A resident individual follows Law No. 14,754/2023 (Lei 14.754/2023) and reports in the Annual Adjustment Return (DAA). Both laws use December 31 as the cutoff date, but they differ in what they reach and in the tax.

Mixing the two rules is a common mistake. An individual partner with an LLC abroad does not file the ECF for it, but his or her Brazilian holding company does. For the individual's case, see how to declare an offshore company on your income tax return.

Does the ECF replace the declaration of capital abroad to the Central Bank?

No. The Declaration of Brazilian Capital Abroad (CBE) is a separate obligation, filed with the Central Bank. The annual declaration is required when capital abroad totals US$ 1,000,000.00 or more on the December 31 base date, and the filing period runs from February 15 to April 5 of the following year (BCB Resolution No. 279/2022, arts. 10 and 13).

The ECF reports the tax result to the Receita Federal. The CBE reports the assets held outside the country to the Central Bank. Check that the data in the two declarations are consistent. The official BCB page on the CBE lists the current amounts and rules.

What is the penalty for filing the ECF late or with errors?

Art. 8-A of Decree-Law 1,598/1977, added by art. 2 of Law 12,973/2014, provides for two penalties. The first is 0.25% per calendar month or fraction, on the net profit before IRPJ and CSLL for the period, capped at 10%. The second is 3% of the amount omitted, inaccurate or incorrect, with a floor of BRL 100.00.

The Receita Federal's 2026 Questions and Answers add details on this penalty:

• •caps of BRL 100,000.00 (gross revenue of up to BRL 3,600,000.00 in the prior year) and BRL 5,000,000.00 (other cases);
• •a 90% reduction if the filing occurs within 30 days after the deadline, and 75% within 60 days;
• •the penalty on the incorrect amount is not due if the correction comes before any ex officio procedure.

A correction before any ex officio procedure removes the penalty on the incorrect amount. On how the Receita Federal cross-checks this data, read Receita Federal and offshore oversight.

What should I check before filing the ECF with holdings abroad?

Gather these items before generating the file in the current layout:

1. •List of investees with company name, country, NIF and ownership percentage.
2. •Classification of each: direct controlled company, indirect controlled company, company treated as controlled, affiliate, branch, joint venture, partnership or trust.
3. •Investees' balance sheets as of December 31, with the BCB selling exchange rate on the balance sheet date.
4. •Loss balances abroad, when there is future offsetting.
5. •Proof of tax paid abroad, if a deduction is requested.
6. •List of the year's foreign payments and receipts, for record Y520.
7. •Reconciliation with the CBE and with the group's other declarations.

If the structure involves a holding company, LLC or company in another jurisdiction, the legal design defines which rule applies. See how to structure investments abroad and OffshoreProz's tax planning service.