Brazil is known for its immense size, economic strength, and resource wealth, but also its complex tax system. Recent reforms have introduced new rules for foreign trusts, creating significant implications for Brazilian residents who use these structures and an even greater requirement for careful planning.  

 Brazil is the largest country in Latin America and the fifth largest nation in the entire world. It is a country rich in natural resources and a major economic powerhouse in Latin America. It is also a country with one of the most complex tax systems in the world.  

 For many decades the concept of the common law trust has been a subject of discussion and debate in Brazil, particularly as to how assets transferred to a foreign trust by a Brazilian resident should be dealt with under Brazilian tax rules. In fact, up until January 1, 2024, the Brazilian Revenue Service did not recognize trusts per se, in part because there was no real or express recognition of common law trusts in Brazilian tax legislation .   

Under the new rules imposed at the beginning of 2024, all trusts are now considered transparent for tax purposes. As a result, Brazilian tax residents must pay careful attention when structuring and transferring assets to foreign trusts to comply with the new rules regarding the treatment of trusts for tax purposes.   

The new regime imposes reporting obligations for both the settlor and the beneficiaries of the foreign trust, regardless of whether it is a revocable or irrevocable trust, and trust deeds must include provisions that comply with the new reporting obligations.  

Coriats has a broad network of professional contacts who can advise on Brazilian law and tax, and help navigate the complexities of the new legislation.