By Dr. Remko Van Ekelen – Chief Executive Officer, Amergeris Wealth Management Group AG | Sam van Gisbergen, Global Head of Capital Markets, Amicorp
For decades, Brazilian investors used foreign structures to access global opportunities while benefiting from tax deferral on retained profits.
That changed with the introduction of Law 14,754/2023.
The legislation fundamentally reshaped the taxation of foreign investments by introducing annual taxation on profits held within certain foreign entities, even when those profits have not been distributed. For high-net-worth individuals, family offices and wealth managers, the question is no longer whether to invest internationally, but how to do so efficiently.
The New Challenge for Foreign Investors
Many traditional foreign structures now face annual taxation under Brazil’s Controlled Foreign Corporation (CFC) rules. This means investors may be required to pay tax on accounting profits and unrealized gains, reducing the compounding effect of long-term investments and creating unnecessary cash-flow pressure.
For investors managing global portfolios, the long-term impact can be significant.
Why Structure Matters More Than Ever
Not all international investment structures receive the same tax treatment.
Under Law 14,754, certain financial investments continue to benefit from cash-basis taxation, where tax is only triggered when a liquidity event occurs, such as a sale, redemption or maturity. This is one of the reasons many wealth managers are increasingly exploring solutions such as Actively Managed Certificates (AMCs). Depending on how they are structured, AMCs can provide investors with access to professionally managed global portfolios while potentially benefiting from tax deferral under the current legislative framework.
Tax Deferral in Practice
Consider two investment approaches that both attract a 15% tax rate:
- A traditional foreign structure subject to annual taxation could incur a 15% tax charge every year on taxable gains.
- A qualifying investment solution such as an AMC may only trigger the same 15% tax when the investment is redeemed.
While the tax rate remains the same, the timing of the tax can materially affect long-term portfolio growth because more capital remains invested for longer.
A Growing Shift Towards Institutional Investment Platforms
As a result, many Brazilian investors are reviewing traditional foreign holding structures and considering institutional investment platforms that provide:
- International diversification
- Professional portfolio management
- Strong governance standards
- Access to global markets
- Potential tax efficiency under current legislation
Luxembourg continues to play a central role in this transition thanks to its well-established regulatory framework, international reputation and sophisticated investment ecosystem.
Why Act Now?
Brazil’s new tax landscape has prompted family offices, private banks and wealth managers to reassess existing foreign structures. Reviewing your investment structure today could help reduce unnecessary tax leakage, improve long-term portfolio efficiency and ensure your investments remain aligned with current legislation.
If you would like to setup a call with us to discuss this further, please be in contact with us here.
Disclaimer: This article is provided for general informational and educational purposes only and does not constitute legal, tax, regulatory, investment or financial advice. Structures, products and solutions referenced herein may not be available or suitable in all jurisdictions and remain subject to applicable laws, regulations and regulatory approvals. Readers should seek independent professional advice based on their specific circumstances before making any structuring, investment or governance decisions.