Double-Layer Offshore Structures: Do They Make Sense for Brazilians?
In recent years, more and more Brazilian families have been looking for ways to internationalize and structure their wealth. The goals are, among others:
Diversify investments abroad,
Protect wealth from local risks,
Plan succession efficiently,
And optimize taxation.
One of the solutions that frequently comes up is the double-layer offshore structure.
What is a double-layer structure?
Essentially, there are two levels:
Bottom layer: An investment fund (such as a Luxembourg SICAV, Irish UCITS, or even an international insurance product like PPLI).
Top layer: A holding company (for example, a Luxembourg SARL or Dutch BV) that owns the interest in the fund.
The logic is straightforward: the fund or insurance, if properly structured, can enable tax deferral in Brazil (tax is only triggered upon redemption). The holding company provides governance, succession planning, and sometimes access to tax treaties.
Why not just use a holding company?
Brazil’s CFC rules (Controlled Foreign Company) require Brazilian tax residents to pay tax each year on the profits of the foreign companies they control.
That means if you only set up a holding company abroad, it will be taxed annually in Brazil — even if it does not distribute dividends. This can lead to tax being paid on unrealized gains, which can later disappear if market conditions deteriorate.
By contrast, if the holding company sits on top of a fund, the holding only records profits when the fund distributes or redeems. As long as the fund reinvests, there is no annual tax in Brazil.
Practical examples
Luxembourg SARL → SICAV/UCITS
Pros: Works well if the fund is truly collective, with many investors.
Cons: If it’s a “family-only fund,” the Brazilian tax authorities may reclassify it and tax annually.Cayman/BVI → Broadly held funds (Luxembourg/Irish UCITS)
Pros: Can work for families that already have structures in Cayman or BVI.
Cons: Since these jurisdictions are blacklisted in Brazil, the risk of challenge is higher.International insurance (PPLI / Unit-Linked)
Pros: Not subject to CFC rules. Taxed only on redemption or payout.
Cons: Must be genuine insurance, issued by an independent insurer.Foundations (Panama, Liechtenstein, etc.)
Pros: Useful for succession.
Cons: Often disregarded by Brazilian tax authorities, who attribute income directly to the founder.
When does it make sense?
For families and individuals with significant wealth (USD 2 million +).
For those seeking international succession planning.
When investing in regulated European funds, seen as secure and reputable.
Key considerations
Structures must be properly designed, with legal and tax advice.
There is no one-size-fits-all: each case has different needs and objectives.
Brazilian tax authorities are increasingly vigilant — transparency and continuous compliance are essential.
Conclusion
Double-layer offshore structures can provide deferral, governance, and succession benefits, but they are not suitable for everyone. The key is to align the structure with the family’s goals while respecting Brazilian tax rules.
Before making a decision, seek professional advice to determine whether this strategy fits your situation.
This article is for informational purposes only and does not constitute legal or tax advice.