OECD BEPS: What Changes for Brazilians With a Company Abroad

BEPS is the OECD and G20 plan against tax base erosion and profit shifting. It has no force on its own: it reaches Brazilians with a company abroad through domestic rules, such as transfer pricing (Law No. 14,596/2023), controlled companies (Law No. 14,754/2023), the CRS and, for large groups only, country-by-country reporting and the minimum tax.

What is BEPS and what are the OECD's 15 actions?

BEPS stands for Base Erosion and Profit Shifting. It is an OECD project, backed by the G20, to stop profits from being shifted to jurisdictions with little or no economic activity. The Action Plan dates from 2013 and is organized into 15 actions. The explanatory memorandum of Provisional Measure 685/2015 already cited the BEPS Action Plan and Brazil's participation in the work.

The table shows where each topic appears in the Brazilian rules discussed here. "Not covered here" does not mean there is no equivalent rule.

Is Brazil required to follow BEPS?

The OECD recommendation reaches the taxpayer only when it becomes Brazilian law or regulation. Brazil takes part in the Inclusive Framework on BEPS, and Law 15,079/2024 itself refers to it when dealing with the minimum tax. An article published by Ipea records that, by joining the Inclusive Framework, the country committed to adopting the recommendations of actions 5, 6, 13 and 14.

Does Law 14,596/2023 affect anyone with a company abroad?

It affects a legal entity domiciled in Brazil that carries out transactions with related parties abroad. It does not reach individuals directly. The sole paragraph of art. 1 limits the law to the corporate income tax (IRPJ) and CSLL tax base of legal entities in Brazil. The rule has applied since January 1, 2024 (art. 47).

The central principle is in art. 2: the terms and conditions of a controlled transaction must be those that would be established between unrelated parties in comparable transactions. This is the arm's length principle, from Actions 8 to 10.

The point that tends to catch business owners is in art. 4, § 1. Two entities are related parties, among other cases, when:

• •they are under common control;
• •the same partner holds 20% or more of the share capital of each (item VI);
• •the same partners, or their spouses and relatives up to the third degree, hold at least 20% of the capital of each (item VII).

So if you are a partner in a Brazilian company and in an LLC or holding company abroad, the two may be related parties. Any charge between them, such as a service, royalty, loan or purchase and sale, enters the analysis. An example without amounts: the Brazilian company pays a monthly "management" fee to the partner's LLC. The price must be what independent parties would charge, and you must be able to demonstrate it.

What documentation does the law require and what is the risk of not having it?

Art. 34 requires the taxpayer to submit documentation and information showing compliance with the arm's length principle. If information is missing to delineate the transaction or compare prices, § 1 allows the tax authorities to allocate to the Brazilian entity functions, assets and risks for which there is no reliable evidence that the other party carried them out. In plain English: if the offshore cannot prove it does the work, the Receita can treat the work as Brazilian.

Art. 35, II, provides for a penalty of 5% of the transaction value when the information or documentation requested during an audit is not delivered on time. See also our guide on transfer pricing and international compliance.

How does automatic account exchange (CRS) affect Brazilians?

The CRS is the OECD standard for automatic exchange of financial account information between countries. Brazil signed the Multilateral Competent Authority Agreement on October 6, 2016, and the OECD list shows September 2018 as the expected date of the first exchange. Domestically, IN RFB 1,680/2016 requires financial institutions to identify accounts under the CRS.

The agreement itself provides for automatic exchange of financial account information between the authorities of the signatory countries. For that reason, a foreign account not declared in Brazil tends to become visible to the Receita. Details are in the article on CRS and automatic exchange of tax information.

What does Law 14,754/2023 do to controlled companies and trusts abroad?

It applies to individuals the logic of substance and passive income that the OECD advocates. Art. 5 treats as controlled an entity in which the individual has a preponderant say in decisions or more than 50% of the capital or profits. That controlled company enters the annual taxation regime only when it:

1. •is in a favored-taxation country or has a privileged tax regime (arts. 24 and 24-A of Law 9,430/1996); or
2. •earns own active income below 60% of total income.

When it enters, the profit is taxed on December 31 of each year, in the annual adjustment, at a 15% rate (art. 2, § 1). Art. 8 allows an election to declare the controlled company's assets and rights as if they belonged to the individual, irrevocably for as long as the individual holds it.

For trusts, art. 10 establishes that the assets remain under the settlor's ownership until distribution to the beneficiary or until the settlor's death, whichever comes first. If the trust has a controlled company, it is treated as held directly by the owner.

The result is a change of question. Before: "in which country do I open the company?" Now: "what does this company actually do, and how are its profits treated in my annual adjustment?" See how to report an offshore on your income tax return.

Who must file the Country-by-Country Report?

Only large groups. IN RFB 1,681/2016, which establishes the Country-by-Country Report (Action 13), exempts entities resident in Brazil when the group's consolidated revenue in the prior year is below:

• •BRL 2,260,000,000.00, if the ultimate parent is resident in Brazil; or
• •EUR 750,000,000.00 (or the equivalent converted at the January 31, 2015 rate), in other cases.

If you have one or two companies and family assets, this obligation is not your concern. It starts to matter if your Brazilian company is part of a large multinational group.

Does the global minimum tax already exist in Brazil?

Yes, for large multinational groups. Law 15,079/2024 establishes the CSLL Surtax to set an effective minimum tax of 15%, as part of adapting to the GloBE rules of the OECD/G20 Inclusive Framework (art. 2). The law applies to groups with annual revenue of EUR 750 million or more in at least 2 of the 4 fiscal years immediately preceding (art. 4). For business owners and investors who do not meet that threshold, the rule does not apply directly. More in Pillar Two and the global minimum tax.

What changes with the Multilateral Instrument (MLI)?

The MLI updates double taxation treaties without renegotiating them one by one. It came out of Action 15 and covers topics such as the treaty abuse of Action 6. The Brazilian government announced, in a joint note from the Ministries of Foreign Affairs and Finance, Brazil's accession to the MLI in 2025. Application to Brazilian treaties depends on ratification by the National Congress. Check the current status before deciding based on a specific treaty.

What practical steps should a Brazilian with a company abroad follow?

1. •Map the relationships. List the Brazilian company, the offshore, the partners and all charges between them.
2. •Test for related parties. Check art. 4 of Law 14,596 to see whether there is a controlled transaction.
3. •Document the substance. Gather contracts, who performs the work, where decisions are made and which assets the entity uses.
4. •Classify the controlled company. Check whether it is in a favored-taxation country or whether its own active income is below 60%.
5. •Declare on time. Assets and rights abroad go on the Annual Adjustment Return. The Central Bank requires the Brazilian Capital Abroad (CBE) declaration when the total reaches US$ 1,000,000.00 on December 31 (BCB Resolution 279, arts. 10 and 12).
6. •Review the structure with specialized support. See our compliance, tax planning and corporate structures services. For inheritance and gifts, see the article on international gifts.