Since 1 January 2026 Brazil withholds 10% on every dividend paid abroad. This guide explains who pays, what happened to 2025 profits, the 34% ceiling and its unfinished credit, why treaties will not help, the alternatives — and what a Paraguay holding does and does not change.
For almost thirty years Brazil was one of the few large economies that did not tax dividends at all. Profit was taxed once, in the company, at a combined 34% — and what left the country did so untouched. Law 15,270, signed on 26 November 2025, ends that. From 1 January 2026, profits and dividends paid, credited, delivered or remitted to a shareholder abroad are subject to a 10% withholding tax.
For a foreign owner the rule is blunt. There is no threshold — the BRL 50,000-a-month floor in the new law applies only to Brazilian residents. The rate is the same for individuals and companies, and it is the same 10% for shareholders in tax havens, which elsewhere in Brazilian law usually face 25%. The tax is withheld by the paying company on the day the dividend is paid or credited, and it is final.
Who pays
Every non-resident shareholder: individuals, companies and funds, wherever they are based.
How much
10% of the dividend, from the first real; no deductions.
Who is exempt
Foreign governments with reciprocity, sovereign wealth funds and foreign pension entities — and vehicles wholly owned by them.
When
Payments and credits from 1 January 2026, subject to the transition for older profits.
Law and practice: Law 15,270/2025, art. 3, inserting §4 and §5 into art. 10 of Law 9,249/1995; Receita Federal Q&A of 19 December 2025, questions 17–30.
Profits from 2025 and earlier can still leave tax-free, but only on conditions. The distribution had to be approved by the competent corporate body by 31 December 2025, and the money has to be paid on the terms set out in that approval. A management proposal was not enough; interim dividends approved by the managers count only where the articles allow it.
Two points remain contested. First, the Receita Federal says payment must be made by 2028 — a condition the law imposes on residents but not, on its wording, on non-residents. Leading advisers call the extension to foreign shareholders debatable. Second, the Supreme Court granted an interim order in December 2025 that moved the approval deadline to 31 January 2026; its confirmation by the full court was still pending at the time of writing, so approvals made in January 2026 carry risk.
Capitalising old profits was the other exit. Profits capitalised by 31 December 2025 stay exempt. Any capitalisation from 2026 onwards — even of 2025 profits — is taxed at 10% at that moment, with the tax added to the shareholder’s cost basis.
Law and practice: Law 9,249/1995, art. 10 §5, I; Receita Federal Q&A, questions 19, 20 and 27; STF, ADI 7912, 7914 and 7917 (interim order of December 2025). Check the status of the STF case before relying on a January 2026 approval.
The law contains a safeguard that most summaries skip. Brazil did not intend the new tax to push the total burden above the nominal corporate rate. So where the company’s effective IRPJ and CSLL plus the 10% exceeds 34% — 40% for insurers and some financial entities, 45% for banks — the foreign shareholder may claim a credit for the excess.
The credit equals the dividend multiplied by the gap: effective rate plus ten points, minus the nominal rate. The effective rate is the company’s IRPJ and CSLL divided by its accounting profit before income taxes. A company that genuinely pays 34% therefore gets the whole 10% back; a company paying less gets a part of it, or nothing.
| Full-rate company | Company with incentives | Low effective rate | |
|---|---|---|---|
| Accounting profit | BRL 1,000,000 | BRL 1,000,000 | BRL 1,000,000 |
| Effective IRPJ + CSLL | 34% | 25% | 15% |
| Corporate tax | BRL 340,000 | BRL 250,000 | BRL 150,000 |
| Dividend paid abroad | BRL 660,000 | BRL 750,000 | BRL 850,000 |
| 10% withheld | BRL 66,000 | BRL 75,000 | BRL 85,000 |
| Credit under art. 10-A | BRL 66,000 | BRL 7,500 | — |
| Total burden, once the credit works | 34.0% | 31.75% | 23.5% |
| Total burden today, with no credit procedure | 40.6% | 32.5% | 23.5% |
Here is the catch. The option and procedure have to be regulated by the executive, and the claim must be made within 360 days of each financial year. As of September 2026 no regulation had been issued. Until it is, the credit exists on paper only, and a full-rate company is in practice carrying a 40.6% burden on profit it pays out.
Law and practice: Law 9,249/1995, art. 10-A; Law 9,250/1995, art. 16-B §1 and §3. Figures are illustrative and assume all profit is distributed.
Read the table again: the credit only gives back tax above 34%, so the 10% sticks wherever the company’s effective rate is below that. A company with tax incentives, large deductions or a regime that taxes a presumed base rather than actual profit will often show an effective rate well below 34% on its accounting profit — and will keep paying the full 10% on top.
For many small and mid-sized foreign-owned companies that is the presumed-profit regime (lucro presumido), where tax is computed on a fixed percentage of revenue. Whether the effective rate on your actual profit ends up above or below 34% depends on your margin. High-margin service companies tend to sit below it; thin-margin ones can sit above it. This is now a question to model before choosing the regime, not after.
Actual-profit regime (lucro real)
Tax follows accounting profit; a full-rate company is the one that benefits most once the credit works.
Presumed-profit regime (lucro presumido)
Tax follows revenue; the effective rate on real profit varies with margin, and the credit may be small.
Incentives and deductions
They lower corporate tax but reduce or remove the credit — the saving is partly taken back at distribution.
Financial companies
The ceilings are 40% and 45%, not 34%.
Brazil’s treaties typically cap dividend withholding at 15%, and at 10% at best. A 10% domestic rate therefore sits at or below the treaty ceiling, and no treaty in force is known to reduce it further. The treaty’s practical value lies elsewhere: credit for the Brazilian tax in your country of residence.
In Latin America, Brazil has treaties in force with Argentina, Chile, Ecuador, Mexico, Peru, Uruguay, Venezuela and Trinidad and Tobago; a treaty with Colombia has been approved by Brazil’s Congress. There is no treaty between Brazil and Paraguay.
Law and practice: Receita Federal list of agreements to avoid double taxation; Colombia treaty approved by Legislative Decree 193/2025, entry into force to be confirmed.
Dividends are not the only exit, and the new tax changes the arithmetic between them. Interest on equity (juros sobre capital próprio, JCP) is still deductible for the company, which saves up to 34% of corporate tax, while the withholding on it rose from 15% to 17.5% from 2026. For a full-rate company, a deduction worth 34 against a withholding of 17.5 usually still beats a 10% dividend paid out of fully taxed profit — within the limits the law sets.
| Route | Tax in Brazil from 2026 | Worth knowing |
|---|---|---|
| Dividend | 10% withheld, final | No threshold for non-residents; treaties do not reduce it |
| Interest on equity (JCP) | 17.5% withheld | Deductible for the company at up to 34%; limited by TJLP and retained earnings |
| Capital reduction | None up to the cost basis | Excess is a capital gain; must follow corporate law, or the Receita may recharacterise it |
| Sale of the shares | 15% to 22.5% on the gain | 25% if the seller is in a tax haven |
| Reinvesting in Brazil | None until paid out | Capitalising profit from 2026 triggers the 10% at that moment |
None of these is a loophole; each has its own conditions, and the Receita has said it will look at capital reductions that do not follow private-law rules. The right mix depends on the company’s regime, its retained earnings and where the owner is taxed.
Law and practice: JCP rate under Complementary Law 224/2025 (from 1 January 2026), base restricted by IN RFB 2,296/2025; capital gains under Law 8,981/1995, art. 21; capital reduction under Law 9,249/1995, art. 22; tax-haven gains under Law 10,833/2003, art. 47.
Not with the 10% itself. With no Brazil–Paraguay treaty, a dividend paid by a Brazilian Ltda to a Paraguayan parent bears the same 10% as a dividend paid to anyone else abroad. Anyone selling a Paraguayan holding as a way round the new tax is selling something the law does not support.
Where a Paraguay base earns its place is in what happens next. Profit that stays in the Paraguayan company to fund the next market, or that comes from the Paraguayan company’s own operations taxed at 10%, is not paying Brazilian rates at all. When the Paraguayan company in turn pays its owner abroad, Paraguay withholds 15% IDU — so a chain Brazil → Paraguay → owner can cost more than a direct holding if everything is paid straight out.
Helps
A regional hub that reinvests across several markets, or real operations run from Paraguay.
Neutral
Profits that simply pass through Paraguay on their way to the owner.
Hurts
Paying everything straight out: 10% in Brazil plus 15% IDU in Paraguay.
Must be modelled
How Paraguay treats the Brazilian dividend in the parent depends on the facts — see our Paraguay tax guide.
The honest answer is the one in our market-entry guide: Paraguay is a base for operating and expanding, not a filter for Brazilian dividends.
Paying a dividend abroad is also a foreign-exchange operation. Foreign direct investment in a Brazilian company is reported to the Central Bank in the SCE-IED system, which replaced the old RDE-IED registration in 2022. Distributions of US$100,000 or more must be reported within 30 days, and companies above certain asset thresholds file periodic declarations.
Under the current framework this is a reporting duty rather than a formal condition for the remittance, but in practice the remitting bank will want to see the investment properly recorded before it sends dividends abroad. An out-of-date record is the most common reason a payment stalls at the bank.
Law and practice: Law 14,286/2021 and Central Bank Resolution 278/2022 (SCE-IED); penalties under Resolution 131/2021.
Confirm what was approved by 31 December 2025, on what terms, and when it will be paid.
IRPJ and CSLL over accounting profit — it decides whether the credit is worth anything.
Presumed or actual profit now affects the cost of distributing, not only of operating.
At 17.5% withholding and 34% deduction, it may still beat a dividend.
Make sure the Central Bank record is current before the first 2026 payment.
Brazil, any holding company, and the owner’s own country — together, not one at a time.
Yes. From 1 January 2026, profits and dividends paid, credited or remitted to non-resident shareholders are subject to a 10% withholding tax under Law 15,270/2025.
No. The BRL 50,000-a-month threshold applies only to Brazilian residents. For non-residents the 10% applies from the first real.
No. Unlike most Brazilian withholding taxes, dividends to shareholders in tax havens are taxed at the same 10%.
Yes, if the distribution was approved by 31 December 2025 and is paid on the terms of that approval. The Receita Federal adds a payment deadline of 2028, which is disputed for non-residents, and a Supreme Court interim order moved the approval deadline to 31 January 2026, pending confirmation.
The law gives non-residents a credit where the company’s effective corporate tax plus 10% exceeds 34% (40% or 45% for financial institutions). As of September 2026 the procedure had not been regulated, so the credit could not yet be claimed.
Not in practice. Brazil’s treaties cap dividend withholding at 10% or 15%, at or above the new domestic rate. There is no treaty between Brazil and Paraguay.
Often, yes. JCP is deductible for the company and is withheld at 17.5% from 2026; for a company paying the full 34%, it can still cost less than a dividend.
No. A Paraguayan parent pays the same 10%. A Paraguay base helps when profit is reinvested regionally or earned in Paraguay, not when everything is paid straight through to the owner.
Ltda, CNPJ and the Central Bank, handled from a Paraguay base.
What a company and its owner pay in 17 countries.
Tell us how your Brazilian company is taxed and where you live. We model the full chain — Brazil, any holding, and you — and send a fixed quote within one business day.
We use Google Analytics to see which pages help visitors, only if you agree. Security cookies and your choice are always stored. Cookie policy
Tell us what you need. We’ll reply within one business day.
We’ll reply within one business day, by email or WhatsApp.
or message us on WhatsApp