Brazil · Tax Law
Key Facts
—The fresh ruling: A Brazilian federal court suspended on Friday the application of the dividend distribution tax provision contained in Law 15,270 of 2025, extending the string of judicial setbacks to the most consequential restructuring of Brazilian shareholder taxation since 1996 and the first material reintroduction of dividend tax in Brazil after a 30-year exemption regime.
—The underlying tax structure: Law 15,270 of 2025, sanctioned by President Luiz Inácio Lula da Silva on November 26, 2025 and effective January 1, 2026, imposes a 10 percent withholding tax on dividend distributions made to non-resident shareholders regardless of amount, and a 10 percent withholding tax on dividend distributions made to Brazilian individual residents above a threshold of 50,000 reais per month from a single company.
—The structural conflict: The federal courts have repeatedly found that the dividend tax transition rule conflicts with the Brazilian Lei das Sociedades por Ações of 1976 and the Código Civil of 2002, which require corporate assemblies to deliberate on profit destination during the first four months after the close of the fiscal year; the tax law had required approval before December 31, 2025, a deadline judges have characterized as juridically impossible.
