Following the approval of the Tax Reform on Consumption (Complementary Law 214/25), the Federal Government submitted Bill 1087/25 to Congress, which proposes changes to the Personal Income Tax (IRPF). The focus is on expanding tax exemptions for lower income brackets and introducing a minimum tax for high-income individuals, with a direct impact on those receiving dividends.
Key Points on the Proposed High-Income Taxation:
1. Minimum Tax for High-Income Individuals
• Applies to individuals earning more than R$600,000 per year.
• The minimum tax rate increases progressively, reaching 10% for incomes above R$1.2 million per year.
• If the income tax paid does not meet the minimum threshold, the difference must be settled in the annual tax return (DIRPF)
2. Dividend Taxation
• Starting January 2026, dividends paid to individuals in excess of R$50,000 per month (per paying entity) will be subject to a 10% withholding tax.
• This is an advance tax payment and will be reconciled in the 2027 annual return (DIRPF).
• The rule does not apply to legal entities or domestic investment funds.
3. Dividends Paid to Non-Residents
• Will be subject to a 10% withholding tax at source, regardless of the type of investor (individual, legal entity, or foreign fund).
4. Offsets and Adjustments
• If the sum of the effective tax rate paid by the distributing company and the individual’s income tax exceeds the nominal corporate tax rate (e.g., 34%), no additional tax will be required.
• Possibility of refund for any excess withheld tax, based on data reconciliation in the DIRPF.
Recommendations:
• Avoid making rushed changes to structures or assets before the final approval.
• The proposal is still subject to changes in Congress.
• Consult your tax advisor to assess the specific impact on your situation.