Time for a Move? Why Brazil’s New Rules Make “Fiscal Exit” a Strategic Option for HNWIs

In the last couple of years, Brazil has changed the game for wealthy residents with foreign investments. For Brazilian-resident HNWIs (high-net-worth individuals) who hold offshore assets, control foreign companies, or are planning a major liquidity event, the question is no longer if but when they should consider a fiscal exit or significant restructuring. Here’s why, and how to think about it.

1. What’s changed: Key regulatory shifts in Brazil (2023-25)

Several important developments mean that staying tax-resident in Brazil while holding or building offshore wealth is now more burdensome and risk-intensive. Notably:

a) Law No. 14.754/2023 (effective 1 Jan 2024)

This law significantly expanded taxation on individuals’ foreign-held investments, offshore companies, and trusts. Key elements:

• It brings a flat 15% rate on many foreign financial investments and controlled entities owned by Brazilian taxpayers.

• It enforces an “automatic” or annual taxation of profits in controlled foreign entities (CFCs) for individuals, even if no dividends are distributed. In other words, the tax is triggered on 31 December each year for qualifying entities.

• It clarifies that trusts abroad will be treated as owned by the settlor, meaning transfers will be seen as donations or inheritance, and associated taxation applies.

• It provides an optional “step-up” of the value of foreign assets (as at 31 December 2023) with a special 8% tax rate if elected.

b) Enhanced reporting & compliance

• The update to the federal income tax return (IRPF), changes to the assets & rights section, and clearer fields for foreign investments and controlled entities in 2024-25 mean that the Brazilian tax authorities have more automated data and higher visibility into overseas assets.

• The expansion of the concept of “financial investments abroad” to include a broad spectrum (crypto, digital wallets, foreign bank accounts, foreign insurance) increases exposure.

c) Broader international tax alignment

• Brazil is moving toward implementation of global minimum tax standards (OECD Pillar Two, GloBE rules), and the local legislation demonstrates alignment with anti-deferral rules.

• The increased focus on substance and controlling foreign companies means structures relying on “paper” holding companies or tax-haven entities will be under more scrutiny.

2. Why this matters for HNWIs (and why fiscal exit makes sense)

Given the above, here are the core reasons a wealthy Brazilian with international assets should consider stepping back from Brazilian tax residency or at least repositioning structures:

• Loss of deferral

Previously many Brazilians used offshore companies (in low-tax jurisdictions) to accumulate investment income without annual Brazilian tax — tax was only due when money was repatriated. The new law ends much of that deferral. So if wealth is locked in a controlled foreign entity, tax is triggered annually.

• Rising compliance and uncertainty

The cost of compliance has increased (reporting, accounting, documentation, audit risk). Also, tax planning strategies that were acceptable may now be under challenge. The visibility to the authorities is higher.

• Efficiency in exit/liquidity events

If you anticipate a sale, transfer or major wind-down in the next few years, moving residence before that event may significantly improve net proceeds (or at least preserve deferral).

• Succession, lifestyle & jurisdiction stability

For families with global lives, the ability to choose residence in a stable jurisdiction with favourable tax and legal rules offers planning advantages (succession, asset protection, diversification of risk).

• Treaty access and jurisdiction credibility

By relocating to or using a jurisdiction with strong treaties and substance, you reduce the risk of being treated as “tax-haven exploit” and can benefit from planning with more legal comfort.

3. Which jurisdictions make sense — and for whom

Here are some of the leading options, with high-level pros/cons and suitable client types:

• Portugal

Pros: Language/cultural affinity with Brazil; historically attractive tax regimes (NHR); EU membership.

Cons: Regime changes may reduce benefits; relocation lifestyle and cost considerations.

For whom: HNWIs seeking a European base, comfortable with moving, and wanting moderate tax exposure.

• Switzerland

Pros: Cantons with low effective corporate tax; strong legal infrastructure; treaty network incl. Brazil.

Cons: High cost of living and operations; non-EU VAT regime may complicate business.

For whom: Business owners relocating personally, or holding/treasury functions seeking stable jurisdiction.

• Luxembourg

Pros: Excellent holding/fund infrastructure; participation exemptions; substance-friendly.

Cons: Not focused purely on low personal tax; costs and compliance for real substance.

For whom: Families with sizeable holdings, cross-border enterprises, fund/private equity exposures.

• Ireland

Pros: 12.5% corporate tax for trading income; English language; EU membership; good infrastructure.

Cons: Substance requirements strict; personal tax may not be as favourable.

For whom: Operating companies relocating business functions to Europe; owners wanting an efficient corporate base.

• Netherlands

Pros: Excellent tax treaty access; participation exemption; logistics & holding hub.

Cons: Higher trading tax rate than Ireland; operations cost still significant.

For whom: Groups with multiple operating subsidiaries in Europe, or centralised holding/treasury needs.

• Alternative lifestyle/pro-tax bases (Malta, UAE, etc.)

Pros: Potential for very favourable personal tax regimes.

Cons: Treaty depth, substance scrutiny and reputational/operational considerations vary widely.

For whom: Individuals prioritising personal tax and mobility over traditional substance-heavy structures.

4. How to use this in planning

• Model scenarios: Sell locally vs migrate first, compare net after exit tax, residency, and new jurisdiction tax.

• Timing matters: Make sure any move is done before a major liquidity event if possible, and consider Brazilian exit tax triggers.

• Structure check: Are you using offshore companies that now trigger annual taxation? Are you compliant with new IRPF reporting fields?

• Substance plan: Any new jurisdiction must be real (office, management, decision-making, payroll) to be respected.

• Continue compliance in Brazil: Even if moving, there are DCBE/IRPF obligations up to date of residency cessation.

• Partner ecosystem: Brazilian international tax counsel + local advisor in the destination jurisdiction + corporate services provider = minimum team.

5. Final thought

The threshold for “should I do something” has shifted. What was once “nice to plan” has become “urgent to review.” If you are a Brazilian resident with offshore assets, controlled entities, or a business planning an exit, ignoring the new rules could mean paying more tax, facing increased risk, or losing flexibility. On the flip side, careful planning now—especially before major events—can save significant tax and open real global mobility options.

“In a world of rising global transparency and more aggressive anti-deferral rules, staying put often carries hidden cost. For globally minded Brazilian HNWIs, relocating residency or restructuring proactively isn’t a compromise—it’s strategic optimisation.”

(This article is for informational purposes only and does not constitute legal or tax advice. Specific planning must involve qualified professionals in Brazil and the jurisdiction concerned.)