Offshore Trust for Brazilians: How It Works and Is Taxed in 2026

An offshore trust for Brazilians is a contract governed by foreign law: the settlor transfers assets to a trustee, who manages them for the beneficiaries. For Brazil's Federal Revenue Service (Receita Federal), since Law No. 14,754/2023 (Lei 14.754/2023), those assets remain the settlor's until distribution or the settlor's death.

Income is taxed as if it were the settlor's, and the passage to the beneficiaries counts as a donation or inheritance.

This guide explains how a trust works, how it is declared in Brazil, what changes between a revocable and an irrevocable trust, and how to choose the jurisdiction. The specific question of protection against creditors is covered in trusts and asset protection.

How does an offshore trust work?

There are four roles. Law 14,754/2023 defines the first three (art. 12); the protector is a figure from the trust deed:

Two documents govern the trust: the trust deed, with the management and distribution rules, and the letter of wishes, which guides the trustee on the settlor's intent.

How is the trust taxed in Brazil?

Under Law 14,754/2023, the trust is transparent for income tax. The assets remain with the settlor after the trust is established and pass to the beneficiary on distribution or on the settlor's death, whichever comes first (art. 10). Until then, the income and capital gains belong to the holder and follow the income tax rules that apply to the holder.

The return lists the assets inside the trust, not the trust itself (art. 11). The law also requires the settlor or the beneficiary to ask the trustee for the resources and information needed to pay the tax. If the trustee refuses, the obligation to pay remains (art. 10, §§ 5 and 8).

When the transfer is treated as a donation or inheritance, ITCMD applies. Constitutional Amendment 132/2023 assigns the tax on the deceased's assets, even if located abroad, to the state where the deceased was domiciled (art. 16, III).

Revocable or irrevocable trust: what changes?

Under foreign law, the difference is large. In a revocable trust, the settlor can undo the trust. In an irrevocable one, the settlor cannot. In Brazilian taxation, the general rule is the same for both: the assets remain the settlor's until distribution or death.

The exception is in art. 10, § 1: if the settlor irrevocably gives up the right over part of the trust's assets, the transfer to the beneficiary may be considered to have occurred at that moment. The consequence is an early donation, with ITCMD, and the income from that part becomes the beneficiary's.

Which jurisdiction should you choose?

The choice depends on the goal. For protection against creditors, Nevis and the Cook Islands have laws designed to make attacking the transfer harder: they require the creditor to prove the claim beyond a reasonable doubt and impose short deadlines (Nevis Ordinance, section 26; Cook Islands, section 13B). For succession and management of large estates, the jurisdiction's reputation, the quality of the trustees and acceptance by banks weigh more.

For those who live in Brazil, no jurisdiction changes the taxation: Law 14,754/2023 attributes the assets to the settlor in any country. Details in trust in Nevis and trust in the Cook Islands. The comparison with the civil law alternative is in private interest foundation in Panama.

Does the trust protect against creditors?

It protects against future creditors, and with limits. A transfer made after the debt already exists can be attacked in Brazil, as fraud against creditors or fraud on enforcement, and the Brazilian judge still reaches the settlor who lives here. The full rules are in protecting assets from creditors.

Trust, LLC or holding company: when to use each?

The Brazilian holding company is covered in family holding company, and succession of assets abroad in offshore and succession without probate.

How do you set up an offshore trust, step by step?

1. •Goal. Define whether the focus is succession, protection or management, and who the beneficiaries will be.
2. •Tax calculation. Simulate income tax and ITCMD under Law 14,754/2023, including the effect of any irrevocable renunciation.
3. •Jurisdiction and trustee. Choose the applicable law and a trustee licensed in the jurisdiction.
4. •Deed and letter of wishes. Include a clause requiring the trustee to provide the information and resources for taxes in Brazil, as the law requires.
5. •Transfer of assets. Done before any debt or lawsuit, with the source of funds documented.
6. •Declarations. Trust assets on the holder's income tax return and, if assets abroad total US$ 1 million or more on December 31, on the CBE filed with the Central Bank.

Designing each case is part of the succession planning service.

Conclusion

The offshore trust remains useful for Brazilians, but for the right reason: organizing the succession of assets abroad with clear rules. Since Law 14,754/2023, it neither hides nor defers tax. The assets and income stay with the settlor until distribution or death, and the passage to the beneficiaries pays ITCMD. Before establishing one, run the income tax and ITCMD numbers and prepare the deed to meet the Brazilian obligations. To assess your case, book a consultation or see the tax planning service.