How to Legally Reduce Taxes with an Offshore Company in 2026

Since Law No. 14,754/2023 (Lei 14.754/2023), an offshore company does not reduce tax just by existing. An investor who holds financial investments through a company abroad usually pays earlier, not less: a passive controlled entity is taxed at 15% on December 31, whether or not it distributes.

The legitimate reduction that still exists comes down to four points provided for in the law itself: deferral for companies with real activity, credit for tax paid abroad, loss offsetting, and succession planning. This guide covers each one, with the article of the law that supports it, and where savings end and evasion begins.

Quick answer: does an offshore company still reduce tax?

It depends on what is inside it.

An individual who invests directly abroad pays the same 15%, but only when the gain is realized: on redemption, on sale, or on receipt of interest and dividends (art. 2, §§ 1 and 2). For an investment portfolio, a company in the middle brings no tax advantage in Brazil.

Tax avoidance and evasion: where the line is

Tax avoidance (elisão) is choosing, among the paths the law offers, the one that costs less, and declaring everything. Tax evasion (evasão) is paying less by hiding: an undeclared account, omitted income, a shell company simulating an activity that does not exist. The first is planning; the second is a crime against the tax system.

The practical test is simple. If the savings only work as long as Brazil's Federal Revenue Service (Receita Federal) does not know about the structure, it is not savings, it is a liability with a fine. Since the automatic exchange of financial information between countries (CRS and FATCA), Brazilian tax authorities receive data on accounts abroad without depending on your declaration.

The four legal ways that remain

1. Defer tax in a company with real activity

Law 14,754 taxes every year only the controlled entity that is in a tax haven or privileged regime, or that has own active income below 60% of total income (art. 5, § 5). Active income is income from carrying on its own economic activity; interest, dividends, royalties, rents, and capital gains are left out (art. 5, § 6).

A company abroad that really sells products or provides services, with operating revenue above that threshold and outside the tax haven list, has its profit taxed in Brazil only when distributed (art. 6, II). While the profit is reinvested in the operation, the personal tax is deferred. Distributed profit pays 15% on the annual return, in the section for financial investments and for profits and dividends.

This requires substance: operations, clients, management, and decisions outside Brazil. A company that exists only on paper to receive the revenue of an activity carried out here does not pass this test and exposes the partner to an assessment.

2. Offset tax paid abroad

Someone who receives income already taxed in another country can deduct that tax from the individual income tax (IRPF) due on the return, provided there is a treaty to avoid double taxation or reciprocity, and only up to the amount of the Brazilian tax on that income (art. 4). Choosing where the structure and the assets are located with this in mind avoids paying twice on the same money. It does not eliminate the tax: what you pay abroad is deducted from what you would pay here.

3. Offset losses against gains

Realized and documented losses on financial investments abroad offset the investment income of the same year. If any remains, they offset profits of controlled entities declared in the same year, and the balance carries over to following years (art. 9, § 3). Recording losses in the right year reduces tax legitimately; an undeclared loss is a wasted loss.

4. Plan succession

Here the savings are usually larger than in income tax, and they do not depend on the 15% rate.

• •U.S. estate tax : a non-resident foreigner who dies owning assets located in the US above US$ 60 thousand, such as shares of American companies, requires the estate to file the federal return (Form 706-NA) and may owe tax on the excess. How those assets are held changes this exposure, and the answer depends on the type of structure and on the treaty.
• •Probate in Brazil: assets held through a structure with defined succession can pass to heirs without judicial probate of the assets abroad, which reduces cost and time. ITCMD (the state inheritance and gift tax) remains due under state law, and the trust has its own rule in Law 14,754 (arts. 10 to 13).

The detailed paths are in the guide on offshore for succession without probate and in the succession planning service.

Opaque or transparent regime: when each is worth it

For controlled entities, the law offers an alternative: declaring the company's assets as if they were the individual's (art. 8). The option is made per controlled entity and is irrevocable for as long as you hold the company (art. 8, § 1, II).

For an investment holding company that would be taxed every year under art. 5, transparency can align the timing of the tax with that of the individual, who pays only on realization. The choice depends on the portfolio, the turnover, and the exit plan, and therefore needs a simulation with the numbers of the case beforehand, never afterward.

What no longer works (and some promises that never did)

• •"Leave the money in the offshore company and only pay when you bring it in." That is over for the passive company and for the tax haven company: the profit is taxed on December 31, brought in or not (art. 5).
• •"A US LLC pays no tax anywhere." Brazil's Federal Revenue Service treats the transparent LLC of members not resident in the US as a privileged tax regime (RFB Normative Instruction 1,037/2010 and Cosit Consultation Ruling No. 56/2026), with annual taxation in Brazil. See the guide to Delaware LLCs for Brazilians.
• •An exemption for selling only a little each month. Gains on financial investments abroad pay 15% on the annual return, with no deduction from the tax base (art. 2, § 1).
• •"Nobody will find out." The Central Bank receives the declaration of capital abroad above US$ 1 million on December 31 (CBE), and the automatic exchange of data between countries reaches the Federal Revenue Service.

Be wary of any proposal that promises a percentage of savings before knowing your structure, your assets, and your heirs.

Before setting up the structure

1. •Define the main goal. Commercial operations, investment, or succession call for different structures. An offshore company designed for one of them tends to get in the way of the others.
2. •Classify the future controlled entity. Will it have own active income of 60% or more? Is it in a low-tax country? The answer determines whether the profit is taxed every year or only on distribution.
3. •Simulate both regimes before exercising the irrevocable option for transparency.
4. •Calculate the maintenance cost. Annual fees, registered agent, accounting, and filings in Brazil and abroad all count, and can cancel out the advantage for smaller estates.
5. •Declare from the first year. The step-by-step is in how to declare an offshore company on your income tax return.

To put the numbers of your case side by side, the international tax planning service runs the simulation before any incorporation, and the compliance service handles the obligations afterward.

Conclusion

Reducing tax with an offshore company in 2026 is possible, but not the way it was sold before 2024. For those who only invest, Law 14,754 removed the deferral and equalized the rate. What remains is deferring tax in a company with real activity, offsetting tax paid abroad, offsetting losses, and planning succession, all declared. Before setting up any structure, book a consultation to simulate the numbers of your case.