Paying Dividends from Brazil to Foreign Shareholders in 2026: The New 10% Withholding Tax

Reviewed by Luiz Eduardo da Silva, director of LegalBR. Updated on 17 October 2026. About 10 minutes to read.

Paying dividends from Brazil to a foreign shareholder now costs 10% withholding income tax, after almost three decades of full exemption. The change came with Law 15,270/2025, applies to payments since 1 January 2026 and reaches every foreign shareholder, treaty country or not. This guide explains the rule, the transition, the credit mechanism, the JCP alternative and the steps to remit profits correctly.

What changed for dividends from Brazil in 2026

Since 1996, profits distributed by Brazilian companies were exempt from income tax, both for residents and for shareholders abroad. Law 15,270/2025, published in November 2025, ended that exemption for payments abroad. It amended article 10 of Law 9,249/1995, so that profits or dividends paid, credited, delivered, used or remitted abroad bear withholding income tax at 10%.

Three features matter for foreign groups. First, there is no threshold: the R$ 50,000 monthly threshold in the same law applies only to individuals resident in Brazil. Second, the rate is the same for shareholders in favored tax jurisdictions, as the Federal Revenue (Receita Federal) confirmed in its Q&A of December 2025. Third, the trigger is broad. Because the law also lists “credited”, booking a dividend as payable to the shareholder can trigger the tax before any money leaves Brazil.

The law also exempts three groups of beneficiaries:

• foreign governments, provided there is reciprocity of treatment;
• sovereign wealth funds, as defined in Brazilian law;
• foreign entities whose main activity is managing pension benefits, as defined in regulation.

The transition rule for profits up to 2025

Profits for periods up to calendar year 2025 remain exempt if two conditions are met. The distribution had to be approved by 31 December 2025 by the competent corporate body, in line with the company’s articles or bylaws. In addition, the payment must follow the terms set in that approval. The Receita Federal’s Q&A, released on 16 December 2025, adds that payment must occur by 2028.

The Q&A also clarified practical points. For example, companies could approve the 2025 distribution based on an interim balance sheet up to November 2025, and the exemption holds even if the final year-end figure is lower, as long as the amount distributed does not exceed the profit actually earned. Once approved, the amount is a liability to the shareholder and can no longer be part of the base for calculating JCP.

The credit when total tax exceeds 34%

The law added article 10-A to Law 9,249/1995 to avoid taxing profits beyond the nominal corporate rate. If the company’s effective rate of IRPJ and CSLL plus the 10 percentage points of withholding exceeds the nominal rate, the foreign beneficiary may opt for a credit. The nominal rate is 34% for most companies, and 40% or 45% for some financial institutions.

The credit equals the dividend multiplied by the difference between the two rates. For instance, a subsidiary under Lucro Real that effectively paid 34% on its profit would show a combined 44%, so the credit would equal the full 10%. By contrast, a company with an effective rate of 24% or less would get no credit. In practice, this means the 10% bites hardest where the company benefits from incentives or from Lucro Presumido margins.

Two cautions apply. The option must be exercised within 360 days after each fiscal year, in the form set by the Executive, so the procedure depends on regulation; confirm its current status before you count on it. In addition, a Brazilian tax that is refundable may not be creditable in the shareholder’s home country. As a result, a group could recover the tax in Brazil but lose the foreign tax credit at home, so coordinate with the parent’s tax advisors.

Do tax treaties reduce the 10%?

Treaties prevail over domestic law in Brazil, so a treaty rate below 10% would apply. However, treaties only cap source taxation. Most of Brazil’s treaties allow 10% or 15% on dividends, so the new 10% already sits at or below the treaty limit. The table shows selected treaty limits, as published in international tax summaries in 2026.

Where treaties do matter is on the home side. A treaty or the home country’s rules usually decide whether the parent can credit the 10% Brazilian tax or exempt the dividend. Since the Brazilian rate is new, check how your jurisdiction treats it before the first remittance. In addition, intermediate holding companies set up only to access a treaty can be challenged under anti-abuse clauses.

JCP: the alternative to dividends

Interest on net equity (juros sobre capital próprio, JCP) lets a Brazilian company pay its shareholders a return on equity and deduct it from its IRPJ and CSLL base. The amount is limited by the long-term interest rate (TJLP) applied to certain equity accounts and by profit. Since January 2026, two rules changed: withholding rose from 15% to 17.5% (Complementary Law 224/2025), and the calculation may only use profits from prior years.

A simple comparison shows why JCP survives. Take R$ 100 of pre-tax profit paid to the parent:

• As a dividend: R$ 34 of IRPJ and CSLL, then 10% on the R$ 66 left, or R$ 6.60. Total Brazilian tax: R$ 40.60, before any credit.
• As JCP: deductible for the company, so no corporate tax on that amount, and 17.5% withholding, or R$ 17.50. Total Brazilian tax: R$ 17.50.

However, the parent usually treats JCP as interest income, which can be fully taxable at home, while dividends often benefit from participation exemptions. Some treaties also classify JCP as interest and cap the rate. The right mix therefore depends on the parent’s country and should be modeled every year.

Approving dividends: corporate formalities

A dividend is only as solid as the corporate act behind it. Banks, auditors and the tax authority will all check that the distribution was properly approved and backed by profits.

• Limited companies (Ltda and SLU). Partners approve the accounts within four months after year end (Civil Code, article 1,078). Distribution follows the articles of association, which may allow interim distributions and, with care, distributions not proportional to the quotas.
• Corporations (S.A.). The annual general meeting approves the accounts and the allocation of profits within four months after year end (Law 6,404/1976, article 132). Bylaws set the mandatory minimum dividend, and interim dividends depend on interim balance sheets.
• Tax debts. Companies with unsecured overdue federal tax debts may not distribute profits (Law 4,357/1964, article 32), and fines apply to the company and its managers.

Many foreign-owned subsidiaries hold their accounts approval by written resolution signed digitally by the parent’s attorney-in-fact. Keep the minutes in the corporate books and, where required, file them at the Board of Trade (Junta Comercial).

How to remit dividends from Brazil step by step

1. Close the accounts and confirm distributable profit

   The accountant prepares the financial statements, and the company checks that there are profits or profit reserves to distribute.

2. Approve the distribution

   Partners or shareholders approve the accounts and the dividend, with amount, date and form of payment, in line with the articles or bylaws.

3. Withhold and pay the 10%

   The company withholds the tax on the date of payment or credit and pays it with a federal tax payment slip (DARF). It also reports the withholding in its monthly returns.

4. Contract the foreign exchange

   The company closes an FX contract with a Brazilian bank under Law 14,286/2021. The bank usually asks for the minutes, the financial statements, proof of the tax paid and the foreign investor’s data.

5. Update SCE-IED

   Under Resolution BCB 278/2022, distributions of profits and dividends of US$ 100,000 or more must be reported in the Central Bank’s SCE-IED system within 30 days of the event.

The foreign capital must already be registered in SCE-IED; our guide on SCE-IED registration explains how. Companies with total assets of R$ 100 million or more also file an annual economic and financial declaration, and those with R$ 300 million or more file quarterly. For the wider tax picture, see our page on corporate tax in Brazil.

Mistakes that block or tax a distribution

• Booking dividends without withholding. Crediting a dividend to the parent’s account can trigger the 10% even if the money stays in Brazil.
• Distributing without approved accounts. A dividend without a valid corporate act can be treated as a loan or recharacterized by the tax authority.
• Ignoring SCE-IED. An outdated registration delays FX contracts and can lead to Central Bank fines.
• Paying more than the profit. Amounts above accumulated profits or reserves can be treated as taxable payments, not dividends.
• Treating 2025 profits as exempt without the December 2025 approval. Without it, those profits bear 10% when paid from 2026.
• Forgetting the home side. A refundable Brazilian tax may not be creditable abroad, so check the parent’s position before choosing between credit, JCP and dividends.

When the shareholder structure changes, the resident legal representative and the foreign parent’s CNPJ must also be up to date; see our guides on choosing a legal representative and CNPJ for foreign companies.

Questions investors ask