Holding Company Abroad for Investments: Brazil's Rules in 2026

A holding company abroad brings brokerage accounts, real estate and equity interests into a single company, but for individuals resident in Brazil, Law No. 14,754/2023 (Lei 14.754/2023) removed its role in deferring tax: the profit of a passive holding is taxed on December 31, even without distribution. Today the decision should rest on organization and governance, not tax.

This guide covers only the Brazilian side for those who invest through the holding. To decide between a holding, an offshore company or a personal account, see the holding vs. offshore comparison.

How Does Law 14,754 Tax a Holding Abroad?

Law 14,754/2023 treats the holding as a "controlled entity abroad". Its profit goes into the individual's Annual Adjustment Return (DAA), separately from other income, and is subject to 15% in the annual adjustment, with no deduction from the tax base (art. 2, caput and § 1).

You control the entity when, directly or indirectly, alone or with other parties, you:

• •hold rights that ensure the upper hand in decisions or the power to elect most of the managers; or
• •own more than 50% of the capital or of the rights to profits, also counting related persons, such as a spouse, partner and relatives up to the third degree (art. 5, §§ 1 and 3).

A holding opened in your name alone is already controlled. Minority partners do not remove the rule if you hold the decision-making power.

When Is the Holding's Profit Taxed on December 31?

The profit is taxed on December 31 of each year when the controlled entity is in a favored-taxation country or has a privileged tax regime, or when it earns active income of its own below 60% of total income (art. 5, § 5). In that case, the tax applies "regardless of any resolution on its distribution" (art. 5, § 10, III).

An investment holding usually receives only dividends, interest, rent and investment returns. Art. 5, § 6, I, excludes this income from the concept of own active income, along with royalties, equity interests and financial intermediation. It also excludes capital gains, except on the sale of equity interests or permanent assets held for more than two years. That is why a passive holding tends to fall under the December 31 rule. Confirm the classification with your accountant before counting on any other case.

When the profit has already been taxed on December 31, the later distribution is not taxed again. You indicate the controlled entity and the year of origin in the DAA, and the amount reduces the cost of the dividend credit receivable (art. 5, § 11). The law also neither taxes nor deducts the exchange-rate variation between the taxed profit and the dividend received (art. 5, § 12).

To calculate the profit, the controlled entity needs an individual annual balance sheet, in IFRS or in Brazilian accounting standards, at your choice. If it is in a favored-taxation jurisdiction or has a privileged regime, the balance sheet follows Brazilian accounting standards (art. 5, § 10, I).

Is It Worth Choosing the Art. 8 Transparency Regime?

Art. 8 lets you report the controlled entity's assets, rights and obligations as if they were yours, instead of following arts. 5, 6 and 7. In practice, Brazil looks at the holding's assets as if they were yours, and the income from each follows its own nature, for example the rules for financial investments abroad.

The conditions, all in art. 8, § 1:

1. •The option applies to each controlled entity, separately.
2. •It is irrevocable and irreversible as long as you hold the entity.
3. •If there is more than one partner, all those who are individuals resident in Brazil must exercise it.

Whoever acquires the interest from 2024 on exercises the option in the first DAA after the purchase (art. 8, § 3). Transferring assets from the transparent entity to another controlled entity classified under art. 5, § 5, without the option, requires valuing everything at market value, and the difference over cost becomes taxable income immediately (art. 8, § 4). Because the choice cannot be undone, run the simulation with your accountant before making it.

Is the Holding's Jurisdiction on the IN RFB 1,037 List?

Two of the jurisdictions most used for investment holdings are on the favored-taxation list of IN RFB 1,037/2010 (Instrução Normativa RFB 1.037/2010): the Cayman Islands and the British Virgin Islands, both in art. 1, according to the current text consulted on October 3, 2026. A controlled entity in those places falls under the December 31 rule for that reason, even if it has active income.

Other points of the current text:

• •Art. 1 lists countries that do not tax income or tax it at less than 17%, or whose legislation does not give access to the corporate composition and the beneficial owner.
• •Singapore was removed from art. 1, but art. 2, XIV, still treats as a privileged regime some Singaporean differentiated-rate regimes, such as the Finance and Treasury Centre one.
• •Art. 2, VII, treats as a privileged regime US state LLCs whose ownership consists of non-residents and that are not subject to federal income tax.

The list changes by normative instruction. Reread the current text on the date you set up or review the structure. Details on each location are on the pages for the Cayman Islands, BVI, Singapore and Delaware.

How Does Tax Paid Abroad Enter the Calculation?

An individual can deduct from personal income tax (IRPF) the tax paid in the country of origin of the income, as long as a double taxation treaty or reciprocity of treatment provides for it (art. 4, I and II). The deduction cannot exceed the difference between the IRPF with and without the income, and does not apply to tax that can be reimbursed or refunded abroad (art. 4, §§ 1 and 3).

For controlled entities, art. 5, § 15, allows deducting, in proportion to your interest, the tax owed abroad by the controlled entity and by non-controlled investees, limited to the tax owed in Brazil on the same profit. Keep the proof of payment abroad. Without it, the deduction cannot be sustained.

When you sell or liquidate the holding, the exchange-rate variation on the invested capital goes into the capital gain, taxed under art. 21 of Law 8,981/1995 (art. 7). The gain is the positive difference between the amount received in reais and the average acquisition cost in reais.

Does the Holding Have to Be Included in the Brazilian Capital Abroad (CBE) Declaration?

Yes, when assets total US$ 1 million or more on December 31. The interest in the capital of a non-resident company is one of the items to report, and the person responsible is the resident who holds it (BCB Resolution 279/2022, arts. 7, I, 8 and 10).

According to the Central Bank of Brazil page consulted on October 3, 2026:

• •the annual CBE covers the December 31 base date and is filed from February 15 to April 5 of the following year;
• •the quarterly CBE applies only to assets of US$ 100 million or more;
• •fines range from BRL 2,500 to BRL 250,000 and can be increased by 50% in some cases.

The deadline is extended to the next business day if it ends on a weekend or holiday. The legal basis is Law 14,286/2021. The CBE is independent of the DAA: complying with one does not exempt you from the other.

How Do You Invest Through the Holding Step by Step?

1. •Define what the holding will hold. Stocks, ETFs, real estate or interests in operating companies are treated differently under Law 14,754. The nature of the income decides whether the holding is passive.
2. •Check the classification before choosing the country. Check the jurisdiction in IN RFB 1,037 and calculate the expected own active income.
3. •Choose between art. 5, art. 6-A and art. 8. Compare the effect of each regime on your DAA before signing anything.
4. •Open the holding's account at a regulated bank. See the requirements in the offshore banking service.
5. •Set up the controlled entity's accounting. Without an annual balance sheet in the required standard, there is no way to calculate the profit under art. 5, § 10.
6. •Schedule the DAA and the CBE. Mark the CBE window and the DAA filing on a calendar every year, and take care of the structure's compliance.

Anyone setting up the holding together with an inheritance plan should also see international succession planning. The tax side of the structure is covered in tax planning and the setup in corporate structures.