Brazil: Withholding tax, capital gains of non-residents - KPMG Global
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Brazil: Withholding tax on capital gains of non-resident investors

Brazil: Withholding tax, capital gains of non-residents

Capital gains realized by non-resident investors are subject to withholding tax, at “progressive rates” ranging from 15% to 22.5%.


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This treatment was clarified by guidance (Instrução Normativa nº 1.732/2017) published in the official gazette on 29 August 2017. 


Historically, non-resident investors were subject to the withholding tax on capital gains at a rate of 15% (25% when the amounts were remitted to an investor located in a “tax haven” jurisdiction).

In 2016, legislative changes provided that the income tax on capital gains would be based on progressive rates, from 15% to 22.5%, according to the ownership share related to the capital gains. At that time, it was not clear whether these progressive rates for taxation of capital gains would also apply with respect to the capital gains of non-resident investors. The law only referred to the taxation of capital gains for individuals who were residents in Brazil, and did not mention the application of the new tax rates with respect to non-resident investors. 

Under Brazilian tax law, the rules for capital gains taxation that are applicable to individual residents in Brazil must be applied to non-resident investors (both individuals and legal entities).


Instrução Normativa nº 1.732/2017 clarifies that capital gains realized by non-resident investors on the sale of assets and/or rights of non-current assets located in Brazil are subject to withholding tax at progressive rates of tax, according to the following schedule:

  • 15% on the portion of the gains not exceeding R $ 5 million
  • 17.5% of the portion of the gains that exceeds R $ 5 million but not exceeding R $ 10 million
  • 20% of the portion of the gains that exceeds R $ 10 million but not exceeding R $ 30 million
  • 22.5% of the portion of the gains that exceeds R $ 30 million

The applicable rate up to 31 December 2016 was 15% and the progressive rates (show in the schedule above) are applicable as from 1 January 2017. However, with respect to non-resident investors located in a tax haven jurisdiction, the capital gains remain subject to withholding tax at a rate of 25%.

In addition, certain transfers of an asset "in parts" will be collapsed and treated as a single transaction for purposes of the taxation of capital gains, and to address attempts to reduce the rate of taxation.


Read a September 2017 report (Portuguese) prepared by the KPMG member firm in Brazil

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