Brazilian-source income, ITCMD on Brazilian-sited assets, and the planning most expatriates have not done.
There is a recognisable Brazilian expatriate. The executive who built a São Paulo business and moved to Lisbon, Madrid, Miami, or Dubai. The entrepreneur who sold a Brazilian operating company and now lives, on the proceeds, between Switzerland and the United States. The next-generation heir who studied abroad, never went home, and inherited a Brazilian portfolio they have not yet had time to think about. The common feature is that the move out of Brazil was, for personal income tax purposes, complete: the Declaração de Saída Definitiva was filed; the Brazilian fiscal year closed; worldwide income is now taxed in the country of new residency, not in Brazil.
What is not complete, in any of these cases, is the Brazilian tax exposure on what was left behind. Brazil’s tax system has always claimed two things from non-residents: the right to tax Brazilian-source income at withholding, and the right to tax succession of Brazilian-sited assets through ITCMD. Both claims survive the policyholder’s emigration. Both have become more demanding since 2024. And the planning that addresses them — most often, but not always, through offshore life insurance — is largely undone for the Brazilian expatriate community.
The dividend WHT just came back
From 1 January 2026, Brazil reintroduced withholding tax on dividends. Law 15,270/2025, signed in November 2025, applies a 10% WHT to dividends paid by Brazilian companies to non-resident shareholders. The same 10% applies to distributions to Brazilian-resident individuals above BRL 50,000 per month from a single company. Profits accrued through 31 December 2025 may still be distributed under the old (exempt) rules through 2028, provided the corporate body formally approved the distribution before year-end 2025 — a transition window of meaningful planning value for those still holding distributable retained earnings.
The new law includes a refund mechanism: where the combined corporate tax (typically 34%, or 40%/45% in financial services) plus the 10% WHT exceeds the nominal corporate rate, the non-resident can claim a refund. For most non-resident shareholders of established Brazilian operating businesses, the combined burden will be at or close to the corporate rate, with limited refund relief. The headline reality, for a Brazilian expatriate who continues to receive dividends from a Brazilian holding company, is that those dividends are now meaningfully more expensive.
Brazilian-source interest, royalties, and rental income remain at their existing rates — generally 15% WHT on interest and royalties, 25% on rents, 25% on payments to tax-haven recipients. Capital gains realised by non-residents on Brazilian-sited assets remain subject to Brazilian capital gains tax: 15% on the first BRL 5 million of gain, rising progressively to 22.5% on gains above BRL 30 million. These rates apply on the transaction; offshore PPLI cannot shelter Brazilian-source income from Brazilian source taxation. That limit is hard and should not be glossed over.
What PPLI does for ITCMD
Where PPLI can do real work, for a non-resident with Brazilian assets, is on the succession side. The Brazilian inheritance and gift tax (ITCMD) is state-level. Constitutional Amendment 132/2023, PLP 108/2024 (currently progressing through the Senate, with the Constitution and Justice Committee’s September 2025 substitute text adopted), and the long-standing Senate Resolution Bill 57/2019 (which would raise the federal cap from 8% to 16%) are pushing ITCMD in the same direction: mandatory progressivity, market-value tax base, harmonised state rules, and almost certainly higher headline rates.
For a non-resident who dies holding Brazilian-sited assets — Brazilian real estate, shares in a Brazilian operating company, a Brazilian bank account, a Brazilian investment portfolio — ITCMD is payable to the relevant state. The state competence rules, restructured by EC 132/2023, now look to the state of domicile of the heir for assets that pass to a Brazilian-resident heir from a foreign-domiciled deceased; to the state where the assets are located for parties all domiciled abroad. For the typical Brazilian expatriate family — a non-resident parent with Brazilian-resident adult children, holding shares in a Brazilian company — Brazilian ITCMD is a real number, and is rising.
PPLI cannot stop Brazilian withholding tax on Brazilian-source income. What it can do is restructure Brazilian-sited wealth so it passes outside ITCMD on death — and the December 2024 Supreme Court decision has made the mechanism more robust than it was.
On 13 December 2024, the Brazilian Supreme Court ruled unanimously (Theme 1.214) that ITCMD cannot be levied on VGBL or PGBL benefits paid to beneficiaries on the policyholder’s death. The reasoning rested on Civil Code Article 794: life insurance capital is not part of the estate, for any legal purpose. The reasoning is generic to life insurance contracts; it extends, in principle, to any genuine life insurance — including an offshore PPLI policy issued by an authorised carrier in Luxembourg, Ireland, or Bermuda.
For a non-resident with Brazilian assets, the structural opportunity is this: place the underlying Brazilian assets (most commonly, shares of a Brazilian holding company) inside an offshore PPLI policy. The policyholder is the non-resident. The named beneficiaries are the chosen heirs. On the policyholder’s death, the death benefit is paid contractually to the beneficiaries; the shares of the holding company remain owned, throughout, by the carrier’s policy account. There is no inheritance event in respect of the shares. ITCMD does not apply to the death benefit (under the STF reasoning) and the shares were not transmitted (because they remained owned by the policy).
The structure has limits. It does not work for direct Brazilian real estate — real estate is sited in Brazil, ITCMD attaches to the transmission, and no wrapper changes that result. It works for movable wealth and for shares of corporate vehicles, with careful structuring. It requires Brazilian counsel: the holding company structure, the beneficiary clause, and the integration with any will or trust must be coordinated so that the result is robust to a state tax authority challenge. None of this is do-it-yourself.
The carrier matters when there is Brazilian-source income
If the policy holds shares in a Brazilian company that pays dividends, those dividends — from 2026 — attract 10% WHT in Brazil. The 10% is a Brazilian-source tax, withheld at the moment of payment. It is not affected by the wrapper. What can be affected is whether the carrier’s home jurisdiction has a tax treaty with Brazil that mitigates the burden or provides credit relief for the underlying corporate income tax.
Brazil has no tax treaty with Luxembourg — the dominant European PPLI jurisdiction. Brazil does have a tax treaty with Ireland (signed 2006, in force from 2008), which provides treaty-rate relief on a range of cross-border flows. For a non-resident family whose PPLI portfolio is meaningfully exposed to Brazilian dividend income, an Irish carrier is often materially more efficient than a Luxembourg carrier. The carrier choice is not abstract; it is a function of the portfolio composition and the expected pattern of income flows.
Brazil has tax treaties with most European jurisdictions (Spain, Italy, Portugal, France, Germany, Switzerland, the Netherlands, the United Kingdom, and others) and with key Asian and Latin American partners. It has no treaty with the United States, Bermuda, the Bahamas, the Cayman Islands, the BVI, or the UAE. For US-connected families, the absence of a Brazil–US treaty is a known constraint — and it does not change with the wrapper choice.
Where this leaves a Brazilian expatriate family
The practical conclusion, for the non-resident with Brazilian assets, is that ignoring Brazil is no longer an option. The 2024 reform raised the running cost of holding Brazilian shares (annual 10% dividend WHT from 2026). The ITCMD reform is raising the cost of leaving them behind on death. The income tax exposure is what it is — no wrapper can remove Brazilian-source taxation — but the succession exposure is precisely the area where offshore life insurance, properly structured, delivers a measurable outcome. The mechanism is now both legislatively and judicially protected: by the Civil Code, by the Income Tax Code, by the Receita Federal’s published position on foreign-contracted life insurance, and by the Supreme Court’s December 2024 ruling on VGBL and PGBL.
Brazilian expatriates often delay this conversation. The Brazilian assets are familiar, the dividends are received, the next-generation succession feels distant. The reforms enacted in 2023, 2024, and 2025 have, between them, accelerated the timeline. The window for putting structure in place — while the policyholder is healthy, before ITCMD reform is fully implemented, with formal beneficiary designations filed and Brazilian counsel engaged — is open now.
| Three questions for a Brazilian expatriate What Brazilian-source income do I still receive, and what is the Brazilian tax cost of receiving it from 2026 (dividends 10%, interest 15%, royalties 15–25%, rents 25%)? What Brazilian-sited assets would attract ITCMD on my death — at the current state rate, and at the rate that may apply by 2027 when reform is fully implemented? What of the above can be restructured into an offshore life insurance wrapper, with named beneficiaries, before the cost of restructuring rises? The answer is rarely zero, and the planning is rarely urgent until, suddenly, it is. |
Download the full Brazil PPLI Whitepaper
From 1 January 2024, Brazilian residents pay 15% tax annually on offshore investment gains — regardless of whether they realise or remit those gains. The central question this guide addresses: does offshore PPLI fall inside or outside that rule? The answer depends on how the policy is structured and with which carrier. This guide covers the Law 14,754/2023 framework in full, the ITCMD inheritance tax reform (rates rising toward 16%), VGBL as a domestic alternative, and the BACEN exchange control requirements that govern any offshore transfer. Free for professional advisers. Verified email required.