The taxation of dividends and profits in Brazil has undergone a major transformation with the enactment of Law No. 15.270 of 2025. Starting in 2026, companies and shareholders will face new rules on withholding income tax, monthly thresholds, annual high income taxation and strict compliance requirements.

This article provides a complete and official questions and answers guide based on the Brazilian Federal Revenue Service publication, offering clear explanations to help businesses, investors and executives understand how dividend taxation in Brazil will work in practice.

1. What are the objectives of Law No. 15.270 of 2025?

Law No. 15.270 of 2025 aims to expand the personal income tax exemption range, introduce a minimum taxation on high income individuals and establish the taxation of dividends and profits distributed by Brazilian companies.
The law seeks to increase tax progressivity and reduce structural distortions between labor income and capital income.

2. What are the main changes introduced by Law No. 15.270 of 2025?

The main changes include the expansion of the personal income tax exemption threshold, the creation of an annual high income tax regime for individuals earning more than BRL 600,000 per year and the taxation of dividends paid to residents and non residents.

3. When does the taxation of dividends and profits take effect in Brazil?

The withholding income tax on dividends and profits begins in January 2026.
The annual high income taxation regime applies starting in the 2027 tax assessment year, based on income earned in 2026.

4. Are dividends paid to Brazilian tax residents subject to taxation?

Yes. As of January 2026, dividends paid to Brazilian tax residents are subject to withholding income tax when the amount paid by the same company to the same individual exceeds BRL 50,000 in the same month.

5. What is the withholding tax rate applied to dividends paid to residents?

The withholding tax rate is 10 percent, applied to the total amount paid in the month in which the BRL 50,000 threshold is exceeded.

6. What is the deadline for paying the withholding income tax on dividends?

The withholding income tax must be paid by the last business day of the second ten day period of the month following the taxable event.

7. Are there exemptions from dividend taxation for Brazilian residents?

Yes. Dividends below BRL 50,000 per month are not subject to withholding tax.
In addition, profits earned up to December 31, 2025 are exempt if the distribution was approved by that date and paid according to the approved schedule, which may extend until 2028.

8. What conditions must be met to exempt profits earned until 2025?

The distribution must be formally approved by December 31, 2025 by the competent corporate body, be legally enforceable under corporate law and paid according to the original approval terms.

9. How can companies approve profit distributions before the end of 2025?

Companies may prepare interim financial statements or trial balances up to November 2025 and formally approve the distribution by December 31, 2025.
If final profits are lower, the exemption applies only to the actual profit earned.

10. Does dividend taxation also apply to companies under the Simples Nacional regime?

Yes. Companies under the Simples Nacional regime are also subject to dividend withholding tax when monthly payments to the same individual exceed BRL 50,000.

11. What tax code must be used to pay the withholding income tax?

The tax payment must be made using revenue code 1841 for both residents and non residents.

12. Is the capitalization of profits subject to taxation?

Yes. Starting in 2026, profit capitalization is considered a form of profit use and triggers withholding income tax at a 10 percent rate.

13. Is the capitalization of profits earned until 2025 taxable?

No. Profits earned up to December 31, 2025 and capitalized with formal approval by that date are not subject to taxation.

14. Can capital reduction generate taxation?

Yes. Capital reduction may be subject to capital gains tax if the amount returned exceeds the acquisition cost of the equity interest.
Artificial or abusive reductions may be challenged by tax authorities.

15. Are dividends paid to non residents subject to taxation?

Yes. As of January 2026, dividends paid to non residents are subject to withholding income tax in Brazil.

16. What tax rate applies to dividends paid abroad?

The applicable withholding tax rate is 10 percent.

17. Is there a different rate for low tax jurisdictions?

No. The 10 percent rate applies even to jurisdictions that do not tax income or tax it at rates below 17 percent.

18. When must the withholding tax on payments abroad be paid?

The tax must be paid on the date of payment, credit, delivery, use or remittance.

19. Are there exemptions for dividends paid abroad?

Yes. Exemptions apply to profits earned until December 31, 2025 that meet approval and payment requirements.
There is also exemption for foreign governments, sovereign wealth funds and foreign pension entities, subject to legal conditions.

20. What conditions apply to exempt profits paid abroad earned until 2025?

The distribution must be approved by December 31, 2025, legally enforceable and paid according to the approved terms until 2028.

21. Does the exemption for sovereign entities depend on the year the profit was earned?

No. The exemption applies regardless of the year in which the profit was generated.

22. Is there a minimum value exemption for payments to non residents?

No. Dividend payments to non residents are taxable regardless of the amount.

23. What tax code applies to dividend payments abroad?

The same revenue code applies: 1841.

24. Is profit capitalization taxed under Brazilian income tax law?

Yes. From 2026 onward, capitalization of profits constitutes a taxable event under Brazilian income tax legislation.

25. Is capitalization of profits earned until 2025 taxable?

No, provided the capitalization was approved by December 31, 2025.

26. Can capital reduction after capitalization be taxed?

Yes. Capital reduction that generates capital gain may be taxed. Improper reductions may invalidate exemptions.

27. Is capitalization of profits earned after 2025 taxable?

Yes. Profits earned after December 31, 2025 or approved later are subject to taxation.

28. How must foreign pension entities be structured to qualify for exemption?

They must be legally formed entities or investment vehicles whose main activity is pension or retirement benefit management.

29. Do pension entities receiving sovereign wealth contributions remain exempt?

Yes. Receiving sovereign wealth contributions does not disqualify the exemption.

30. Does the exemption apply to investment vehicles owned by sovereign entities?

Yes. The exemption extends to investment vehicles fully owned, directly or indirectly, by sovereign governments, sovereign funds or qualifying pension entities.

How CLM Controller supports dividend taxation planning in Brazil

The new dividend taxation framework requires precise corporate planning, accounting accuracy and strict compliance with Brazilian tax rules.
CLM Controller provides specialized accounting, tax advisory and corporate structuring services for companies operating under Lucro Presumido and Lucro Real regimes, helping businesses anticipate risks, structure profit distributions and remain compliant with Brazilian tax reform.