On March 18th, 2025, the Federal Government of Brazil presented Bill 1,087 (PL) to the National Congress, which modifies income tax over dividends for non-residents.
The PL provides for withholding income tax on the payment, crediting, employment, or delivery of profits and dividends, at a rate of 10%, for individuals or legal entities domiciled abroad, on any amount.
If the sum of the effective CIT rate (IRPJ + CSLL) added by the 10% WHT surpasses the CIT nominal rate*, the non-resident beneficiary will be granted a credit. The credit will be calculated based on the following formula:
- Dividends paid x ((effective CIT rate + 10% WHT) – nominal CIT rate)
The non-resident beneficiary may request the credit in up to 360 days after the end of the fiscal year.
The Bill now proceeds to the National Congress, where it will follow the urgent procedure, with discussions, possible amendments, and votes in both Houses of Congress. If approved by Congress this year, the proposed changes will come into effect in January 2026.
The Tax team at Cescon Barrieu remains available to discuss the topic.
*Nominal CIT rate:
- 34% – Non-financial companies
- 40% – Insurance and capitalization
- 45% – Financial companies
