On October 18, the Brazilian Supreme Court (STF) ruled that the 25% withholding income tax (IRRF) on pensions and retirement payments to Brazilian residents abroad is unconstitutional. This matter was discussed in the judgment of ARE 1327491 (Topic 1174), where the Court formed a majority opinion declaring the unconstitutionality of the rule provided in Article 7 of Law No. 9,779\/99, as amended by Law No. 13,315\/16.<\/p>\n
The case involved a retired woman living in Portugal who receives an amount equivalent to the Brazilian minimum wage and was subject to a 25% tax rate. The taxpayer argued that if she were domiciled in Brazil, she would not be subject to this taxation, as her income would be exempt based on the progressive income tax table.<\/p>\n
The STF\u2019s decision was grounded in key constitutional principles such as tax progressivity, equality, contributory capacity, and the prohibition of confiscatory taxation. The case\u2019s rapporteur, Minister Dias Toffoli, argued that the fixed 25% rate on pension and retirement income for Brazilians abroad violates these principles by disregarding the income brackets of taxpayers.<\/p>\n
The imposition of a single tax rate, without considering each individual\u2019s ability to pay, was deemed disproportionate, disproportionately affecting those with lower incomes. The Minister also emphasized that the Federal Constitution, in Article 230, underscores the State’s duty to support the elderly, which translates into the need for fair and balanced taxation for this segment of the population.<\/p>\n
Possibility of New Legislation<\/strong><\/p>\n Although the decision declared the current rule unconstitutional, Minister Fl\u00e1vio Dino highlighted that this does not prevent the National Congress from drafting new legislation to tax income paid to residents abroad. However, any new rule must adhere to the principle of tax progressivity, ensuring that higher-income taxpayers pay proportionally more.<\/p>\n Until new legislation is approved, Dino suggested applying Brazil\u2019s current progressive tax table for retirees and pensioners living abroad to correct the current distortion.<\/p>\n With the STF’s decision, it is expected that Brazilian retirees and pensioners residing abroad, especially those with modest incomes, will benefit from the non-application of the fixed 25% rate, with the progressive income tax table applied as it is for residents in Brazil.<\/p>","protected":false},"excerpt":{"rendered":" On October 18, the Brazilian Supreme Court (STF) ruled that the 25% withholding income tax (IRRF) on pensions and retirement payments to Brazilian residents abroad […]<\/p>\n","protected":false},"author":2,"featured_media":1899,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1898","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-tributario"],"acf":[],"_links":{"self":[{"href":"https:\/\/oliveiraalves.com.br\/en\/wp-json\/wp\/v2\/posts\/1898","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/oliveiraalves.com.br\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/oliveiraalves.com.br\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/oliveiraalves.com.br\/en\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/oliveiraalves.com.br\/en\/wp-json\/wp\/v2\/comments?post=1898"}],"version-history":[{"count":3,"href":"https:\/\/oliveiraalves.com.br\/en\/wp-json\/wp\/v2\/posts\/1898\/revisions"}],"predecessor-version":[{"id":1909,"href":"https:\/\/oliveiraalves.com.br\/en\/wp-json\/wp\/v2\/posts\/1898\/revisions\/1909"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/oliveiraalves.com.br\/en\/wp-json\/wp\/v2\/media\/1899"}],"wp:attachment":[{"href":"https:\/\/oliveiraalves.com.br\/en\/wp-json\/wp\/v2\/media?parent=1898"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/oliveiraalves.com.br\/en\/wp-json\/wp\/v2\/categories?post=1898"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/oliveiraalves.com.br\/en\/wp-json\/wp\/v2\/tags?post=1898"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}