The Brazil dividend tax now reaches Brazilian-resident shareholders too: since 1 January 2026, a company that pays more than R$ 50,000 in a month to the same resident individual must withhold 10% on the full amount (Law 15,270/2025). In addition, residents with more than R$ 600,000 of annual income face a minimum tax of up to 10%, settled in the 2027 return. For foreign-owned subsidiaries with local partners, managers holding equity or expatriate shareholders, this changes how and when profits should be distributed.
In brief
- In force since
- 1 January 2026
- Resident withholding
- 10% above R$ 50,000/month
- Annual minimum tax
- Up to 10% above R$ 600,000
- Foreign shareholders
- 10% flat, no threshold
- The subsidiary is the withholding agent, so a mixed shareholder base now needs two payment routines.
- Withholding applies to the whole monthly amount, not only the part above R$ 50,000.
- Profits through 2025 approved in time remain exempt if paid by 2028 as approved.
- Subsidiaries paying full corporate tax can neutralize the minimum tax through a statutory reducer.
What changed in Brazil’s dividend tax in 2026
For three decades, Brazil exempted dividends from income tax under article 10 of Law 9,249/1995. Law 15,270, signed on 26 November 2025 and effective from 1 January 2026, kept that article but made it subject to two new rules in Law 9,250/1995. As a result, the exemption is now partial for resident individuals.
- Monthly layer (article 6-A): 10% withholding when one legal entity pays one resident individual more than R$ 50,000 in the same month.
- Annual layer (article 16-A): a minimum individual income tax (known locally as IRPFM) of up to 10% for residents whose total annual income exceeds R$ 600,000, starting with calendar year 2026.
Shareholders resident abroad follow a separate rule: 10% withholding on every payment, with no monthly threshold. Therefore, a subsidiary owned by a foreign parent and by Brazilian individuals applies two different regimes to the same dividend resolution. Our corporate tax overview explains the company-level taxes that sit underneath these rules.
Who counts as a Brazilian-resident shareholder
Foreign groups often assume their Brazilian subsidiary only pays dividends abroad. In practice, many have resident individuals on the register of quotaholders or shareholders:
- Local co-founders or joint venture partners who kept a minority stake after the foreign investment.
- Brazilian managers with equity, for example through quota grants or stock plans settled in shares.
- Expatriate executives who hold a nominal or real stake and have become Brazilian tax residents.
- Founders of an acquired company who remain partners during an earn-out period.
Tax residency follows Federal Revenue rules (IN SRF 208/2002). In general, a foreigner becomes resident on arrival with a residence permit tied to employment, or after more than 183 days in Brazil within a 12-month period. Consequently, an expatriate shareholder may switch from the foreign regime to the resident regime mid-year, and the subsidiary must update its records. See our guides on foreign directors and on investor residence for the immigration side.
The monthly 10% withholding above R$ 50,000
Article 6-A of Law 9,250/1995 applies to the payment, credit, use or delivery of profits “by the same legal entity to the same individual resident in Brazil” above R$ 50,000 in a month. The rate is 10% on the total amount, with no deductions. Several payments in the same month are added together and the withholding is recalculated.
This design creates a cliff effect. For example, a partner who receives R$ 50,000 in a month suffers no withholding, while a partner who receives R$ 60,000 suffers R$ 6,000. In addition, the Federal Revenue (Receita Federal) treats the capitalization of profits from 2026 onward as a “use” of profits. Therefore, converting retained earnings into capital above the threshold also triggers withholding.
The withholding is an advance, not a final tax. The resident offsets it against the annual minimum tax, and the Federal Revenue’s Q&A states that it may be refunded when total income stays below R$ 600,000. The subsidiary reports these payments in the EFD-Reinf digital filing, which its accountant already uses for other withholdings.
The annual minimum tax on high incomes
Article 16-A creates the minimum tax from fiscal year 2027, calendar year 2026. As a result, the first settlement happens in the individual return filed in 2027. The rate is zero up to R$ 600,000 of annual income. Between R$ 600,000 and R$ 1.2 million it rises linearly, following the formula (income ÷ 60,000) minus 10. Above R$ 1.2 million, it is 10%.
For example, a resident partner with R$ 900,000 of income in 2026 has a 5% minimum rate. From the resulting amount, the partner deducts income tax already paid during the year, amounts withheld under article 6-A and the reducer described below. The base includes dividends and most income, but excludes listed items such as most capital gains, savings accounts, certain real estate and agribusiness securities, and dividends protected by the transition rule.
The reducer for fully taxed companies
Article 16-B prevents the combined burden from exceeding the company’s nominal rate. If the subsidiary’s effective corporate income tax rate plus the partner’s effective minimum tax rate exceeds 34% (40% or 45% for certain financial institutions), the excess becomes a reduction. Consequently, partners of subsidiaries under the actual profit regime (Lucro Real) that pay the full 34% often owe little or no minimum tax on those dividends.
However, the reducer depends on financial statements prepared under Brazilian corporate and accounting rules. Subsidiaries under the presumed profit regime (Lucro Presumido) usually have a lower effective rate, so the minimum tax bites harder there. They may opt for a simplified computation of accounting profit, as article 16-B, §6 allows.
Brazil dividend tax by shareholder type
The table summarizes how Brazil’s dividend tax applies to each type of shareholder in a foreign-owned subsidiary, based on Law 15,270/2025 and the Federal Revenue’s published position.
| Shareholder | Withholding at source | Later settlement |
|---|---|---|
| Foreign parent company or individual abroad | 10% on every payment | Possible credit under article 10-A of Law 9,249/1995 |
| Resident individual, up to R$ 50,000 per month | None | Minimum tax if annual income exceeds R$ 600,000 |
| Resident individual, above R$ 50,000 in a month | 10% on the full monthly amount | Credited against minimum tax or refunded |
| Brazilian holding company | None (article 6-A covers individuals only) | Taxed when the holding pays its individual partners |
| Profits through 2025, approved in time | None if paid as approved by 2028 | Excluded from the minimum tax base |
| Interest on net equity (JCP), any resident | 17.5% since 2026 | Final withholding for individuals |
The JCP rate rose from 15% to 17.5% on 1 January 2026 under Complementary Law 224/2025, article 8. JCP remains deductible for Lucro Real companies, so the comparison with dividends must be rerun with each subsidiary’s figures.
Profits through 2025: the transition rule
Law 15,270/2025 protects profits from results through 2025. To stay outside both the withholding and the minimum tax, they had to meet three conditions:
- Relate to results computed up to fiscal year 2025.
- Have their distribution approved by the competent corporate body by 31 December 2025.
- Be paid on the terms originally set in the approval, in 2026, 2027 or 2028.
In December 2025, Justice Nunes Marques of the Supreme Federal Court (STF) granted an injunction in direct actions ADI 7912 and ADI 7914 and extended the approval deadline to 31 January 2026. The confirmation vote was moved from the virtual to the in-person plenary in February 2026, with no date announced in reports from March. Meanwhile, Senate bill PL 5,473/2025 would extend the deadline to 30 April 2026. It was approved by the Senate Economic Affairs Committee on 2 December 2025 and, according to the Senate website, was still awaiting a floor vote on 30 September 2026.
For a subsidiary that approved 2025 profits in time, the key is discipline. The approved amounts should sit as dividends payable, and payments should follow the schedule in the minutes. For a corporation (S.A.), the Federal Revenue requires a shareholders’ meeting resolution, although interim dividends may be declared by management if the bylaws allow it (Law 6,404/1976, article 204).
Distribution playbook for foreign-owned subsidiaries
With the new rules, headquarters should treat Brazilian distributions as a recurring governance item rather than a year-end accounting entry. The steps below fit both limited companies (Ltda) and corporations (S.A.), described in our guide to types of companies.
Classify every shareholder
Split the register into foreign residents, Brazilian legal entities and resident individuals. Then confirm each individual’s tax residency, especially expatriates.
Estimate the effective corporate rate
Ask the local accountant for the subsidiary’s effective corporate income tax rate. This shows whether the reducer will neutralize the resident partners’ minimum tax.
Design the payment calendar
Monthly payments up to R$ 50,000 per resident partner avoid withholding and smooth cash flow. However, for partners above R$ 600,000 a year, this only defers tax to the annual return.
Check the articles and shareholder agreement
Confirm that they allow interim balance sheets, advance distributions and, in a Ltda, disproportionate distributions (Civil Code, article 1,007). Amend them before relying on these tools.
Approve distributions formally
Record amounts, the balance sheet used and the payment schedule in minutes. The annual meeting must occur within four months after year end (Civil Code, article 1,078; Law 6,404/1976, article 132).
Align withholding and reporting
Withhold 10% for foreign shareholders on every payment and for residents above the threshold. Report in EFD-Reinf and, for the foreign parent, keep the SCE-IED registration current so remittances run smoothly.
Common pitfalls
- Applying the R$ 50,000 threshold to the foreign parent: the threshold exists only for resident individuals; non-residents suffer 10% on every payment.
- Missing a residency change: an expatriate shareholder who becomes resident moves to the resident regime, with different withholding and annual reporting.
- Rescheduling approved 2025 dividends: paying outside the terms in the minutes may cost the transition exemption.
- Capitalizing profits without withholding: since 2026, capitalization above the threshold is treated as a payment.
- Distributing profits that do not exist: under Civil Code article 1,009, administrators and partners who knew of fictitious profits are jointly liable.
- Weak financial statements: without statements prepared under corporate law, resident partners lose the reducer.
The tax reform on consumption (CBS and IBS, phased in from 2026 to 2033) runs in parallel and does not change these rules. Our page on the tax reform for foreign companies covers it.
Questions investors ask
Are dividends taxed in Brazil in 2026?
Yes, partly. Since 1 January 2026, dividends to shareholders abroad suffer 10% withholding, and dividends above R$ 50,000 per month from one company to one resident individual suffer 10% on the full amount. Residents with more than R$ 600,000 of annual income also face a minimum tax of up to 10%.
Is the 10% charged only on the amount above R$ 50,000?
No. Once the monthly total paid by the same company to the same resident individual exceeds R$ 50,000, the 10% applies to the entire amount. Several payments in the same month are added together.
Does the R$ 50,000 threshold apply to a foreign parent company?
No. The threshold applies only to individuals resident in Brazil. Shareholders resident abroad, including foreign parent companies, suffer 10% withholding on every dividend payment.
Can profits earned up to 2025 still be paid tax-free?
Yes, if the distribution was approved by 31 December 2025, or by 31 January 2026 under the STF injunction, and is paid by 2028 on the approved terms. Profits from 2025 approved later follow the new rules.
How does the minimum tax reducer work?
If the company’s effective corporate tax rate plus the partner’s effective minimum tax rate exceeds 34% (40% or 45% for some financial institutions), the excess is credited back to the partner. Therefore, partners of fully taxed Lucro Real companies often owe little or no minimum tax on those dividends.
Does a Brazilian holding company avoid the withholding?
Dividends paid to a Brazilian holding company are not subject to the article 6-A withholding, which targets individuals only. However, when the holding distributes to its resident individual partners, the withholding and the minimum tax apply.