Foreign Holding for E-commerce: Taxation and Rules in Brazil

A foreign holding company for e-commerce concentrates the brand and the stakes in operating stores abroad, but the resident owner is still taxed in Brazil. Under Law No. 14,754/2023 (Lei 14.754/2023), controlled entities' profits go on the return on December 31 with a privileged tax regime or own active income below 60%. Dealings with a Brazilian company require transfer pricing.

When does a foreign holding company make sense for an e-commerce business?

It makes sense when the business has more than one piece to organize: the brand, one or more operating stores and, sometimes, a company that provides services to the group. The holding sits at the top, holds the stakes and, if applicable, the intellectual property. Each store takes on the risk of its own operation.

What it does not do is take the owner out of Brazilian tax. The Brazil-resident holder declares the controlled entities under Law 14,754/2023, and each layer of the structure has a different point of attention.

Two related questions have their own articles. For the store's LLC, see US LLC for e-commerce. For a holding that only invests, see offshore holding for international investments.

How does Law 14,754 tax the holding and the controlled stores?

Law 14,754/2023 taxes, on December 31 of each year, the profits of controlled entities abroad of resident individuals, when they fall under the cases in art. 5. Individual income tax (IRPF) is 15% on the annual amount, with no deduction from the tax base (art. 2, § 1).

The points of the law that matter for a holding:

• •Controlled entity. An entity in which the individual has preponderance in decisions or more than 50% of the capital or profits, directly or indirectly (art. 5, § 1). This reaches the holding and the stores below it.
• •When art. 5 applies. If the controlled entity, direct or indirect, is in a favored-taxation country, benefits from a privileged tax regime, or earns own active income below 60% of total income (§ 5).
• •Profit calculated per entity. Each controlled entity has its profit calculated individually, in an annual balance sheet, without counting twice the result of stakes in other controlled entities (§ 10, I). The balance sheet follows IFRS or Brazilian accounting standards, at the taxpayer's choice, and mandatorily the Brazilian ones if the controlled entity is in a favored-taxation country or under a privileged tax regime.
• •Outside § 5. The profit of controlled entities that do not fit is taxed when it is made available to the holder (art. 6, II).
• •Distribution. Profit already taxed on December 31 is not taxed again when distributed (§ 11).
• •Tax paid abroad. It can be deducted, in proportion to the stake, under the conditions of § 15.

Do royalties and dividends count as the holding's own active income?

Royalties do not. Dividends, sometimes. This is the test that weighs most on an e-commerce holding.

Art. 5, § 6, I, defines own active income as revenue from the entity's own economic activity, excluding revenue arising exclusively from royalties, interest, dividends, equity interests, rents, financial investments, financial intermediation and certain capital gains.

In an e-commerce business, this produces three situations:

1. •Holding that licenses the brand to the store. Royalty revenue stays outside the holding's own active income.
2. •Holding that only receives dividends from the stores. § 8 lifts the exclusion of dividends and equity interests when the investee, controlled or affiliated, earns own active income above 60% of total income. In that case, the dividend received does not fall under the exclusion.
3. •Holding that also sells. The holding's own sales revenue counts as own active income, but the calculation must be made on total income, including non-operating income (§ 6, II).

Build the calculation with the balance sheet numbers of each entity and settle the classification with your accountant before deciding who licenses the brand and who sells.

Does the US LLC in the structure change the calculation?

It does, because of RFB Normative Instruction 1,037/2010 (IN RFB 1.037/2010). Art. 2, VII, lists as a privileged tax regime the US state LLC "whose participation is made up of nonresidents, not subject to federal income tax." Cosit Consultation Ruling 218/2018 (Solução de Consulta Cosit 218/2018) clarified that "nonresidents" means persons not resident in the US. Cosit Consultation Ruling 56/2026 (Solução de Consulta Cosit 56/2026), of April 9, 2026, concluded that an LLC with participation of a person not resident in the US and treated as transparent under US law is a privileged tax regime, and that the classification comes from the structure, not from the tax actually paid.

Under Law 14,754, art. 5, § 5, I, a controlled entity under a privileged tax regime comes under the December 31 taxation regime even if its own active income is high. A consultation ruling answers an individual case; it expresses the Federal Revenue Service's understanding and does not replace the law.

Is it worth opting for the transparency of art. 8?

Art. 8 allows the assets, rights and obligations of the controlled entity to be declared as if they were the individual's. The option applies per entity, is irrevocable as long as the individual keeps the controlled entity and, where there is more than one partner, must be exercised by all individual partners resident in Brazil. For stakes acquired from January 1, 2024, the option is exercised in the first annual return after the acquisition (§ 3).

There is an effect for a holding: assets and rights transferred to another controlled entity under § 5 for which the option was not exercised are valued at market value, and the difference from cost becomes the individual's taxable income (§ 4). Before moving the brand from one entity to another, check which regime each one is under.

When does transfer pricing come into the calculation?

Law 14,596/2023 only comes in when there is a legal entity domiciled in Brazil. The sole paragraph of art. 1 applies the law to the IRPJ and CSLL tax base of legal entities domiciled in Brazil that carry out controlled transactions with related parties abroad.

In an e-commerce group, this appears when a Brazilian company buys from, sells to or provides services to the holding or the store abroad, or pays for the use of the brand. The law requires that the terms of the transaction be those that would be set between unrelated parties in comparable transactions (art. 2).

• •Related parties. They include the controlling shareholder and its controlled entities, and entities under common control (art. 4, § 1, I and VI).
• •Brand and intellectual property. Art. 20 requires considering the ownership of the intangible and who performs the functions, uses the assets and assumes the relevant risks tied to it.
• •Method. The law provides for the most appropriate method among those in art. 11, such as the Comparable Independent Price (PIC), Resale Price minus Profit (PRL) and Cost plus Profit (MCL).

If the group has no Brazilian legal entity, the sole paragraph of art. 1 is not the starting point; even so, document the contract between the entities, because it supports the classification of revenue under Law 14,754.

Does the foreign holding company have to be reported to the Central Bank?

It depends on total assets abroad. Law No. 14,286/2021 (Lei 14.286/2021) defines Brazilian capital abroad as the amounts, goods, rights and assets of any nature held outside the national territory by residents (art. 8, I) and authorizes the Central Bank of Brazil (BCB) to request information about them (art. 10, III).

Under BCB Resolution 279/2022, as regulated in the Declarant's Manual (Manual do Declarante), the annual CBE declaration is mandatory for anyone who, on December 31, has assets, goods and rights abroad totaling US$ 1,000,000.00 or more. The deadline runs from February 15 to April 5 of the following year. The quarterly declaration is only required from US$ 100,000,000.00. The manual provides for reporting stakes in companies abroad.

Track that total throughout the year and confirm in the manual how each asset in the structure is valued and reported.

What steps should you take before opening the holding?

1. •Design the revenue flow. Who sells to the consumer, who holds the brand, who provides services to the group, and whether there is a Brazilian company at any end.
2. •Run the 60% test per entity, with royalties and dividends separated from sales revenue.
3. •Classify each entity. A Brazilian's transparent LLC is a privileged tax regime, according to the Federal Revenue Service; check each entity's country against the list in art. 1 of IN RFB 1.037/2010.
4. •Decide on art. 8 before the first return after the acquisition.
5. •If there is a Brazilian company, document the controlled transactions and the transfer pricing method.
6. •Build the calendar: annual income tax return, each controlled entity's balance sheet and the CBE, if applicable.

Company models are in corporate structures and the tax design in tax planning. For the entities' accounts, see offshore banking, and for the obligations calendar, compliance. The Delaware and Wyoming pages give the details of each state.