Brazil: A Private Wealth Law Overview

For those who follow Brazil’s political and economic landscape closely, a certain degree of instability is nothing new. For decades, the country has grappled with economic stagnation and deep-rooted productivity challenges. Governments across the ideological spectrum have continued to pursue highly restrictive protectionist policies, while maintaining fiscal balance remains a persistent challenge for the Brazilian economy, creating uncertainty for both Brazilian families and foreign investors.

Compounding these issues, recent changes to the country’s tax legislation have further increased the complexity and cost of investing in Brazil. Much has changed in the Brazilian tax environment over the past four years, and not necessarily for the better – particularly with regard to the taxation of income and wealth.

In 2023, Law No 14,754/23 overhauled the taxation rules applicable to certain investment funds in Brazil, as well as to income derived from financial investments, controlled entities and trusts held abroad by individuals resident in the country. The economic significance of these changes is considerable: according to data published by the Central Bank of Brazil, the total value of capital held abroad by individuals and legal entities resident in Brazil exceeded USD700 billion at the end of 2025.

At the beginning of 2026, Law No 15,270/25 came into force, introducing minimum income taxation mechanisms and changing the tax treatment of profits and dividends distributed by Brazilian companies to beneficiaries resident in Brazil or abroad. These distributions became subject to progressive taxation at rates of up to 10%, increasing the cost of equity capital and reducing investors’ net returns.

Also in January 2026, Supplementary Law No 227/26 introduced a particularly far-reaching change to the taxation of inheritances and gifts in Brazil. As a general rule applicable to all Brazilian states, inherited or gifted assets must now be taxed at market value. This has substantially increased the cost of succession planning in the country and has also raised complex legal questions regarding the methods and procedures to be used in valuing taxable assets.

The same legislation also made it possible to levy Brazilian tax on inheritances and gifts involving assets held abroad, which, in practice, had not previously been validly taxed. Before the enactment of national supplementary legislation, the Brazilian Supreme Court had ruled that the states and the Federal District could not impose such taxation solely on the basis of their own state legislation.

In addition to these changes, new rules introduced by Supplementary Law Nos 214/25 and 227/26 are also intended to transform the taxation of consumption in Brazil. They provide for the gradual replacement of several indirect taxes by the Tax on Goods and Services (Imposto sobre Bens e Serviços – IBS), which will be jointly administered by the states, the Federal District and the municipalities, and the Contribution on Goods and Services (Contribuição sobre Bens e Serviços – CBS), which falls within the jurisdiction of the federal government. Inspired by the VAT model, the new system seeks to:

• simplify consumption taxation;
• enhance economic neutrality;
• reduce the cascading effect of taxes; and
• improve the transparency of Brazil’s overall tax burden.

Although this new legislation represents progress towards simplifying consumption taxation, its implementation continues to raise significant concerns from the perspective of legal certainty. Several operational and procedural matters remain dependent on secondary regulation, creating uncertainty as to the practical application of matters such as:

• the input tax credit regime;
• the rules governing complex transactions;
•  the criteria for allocating tax revenues; and
• audit procedures.

There is also the possibility of divergent interpretations among the different federal entities, together with the inevitable litigation arising from new or insufficiently established legal concepts. At least during the initial implementation period, these circumstances may undermine one of the reform’s principal objectives: creating a more predictable and stable Brazilian tax system.

Despite these challenges, it would be a mistake to conclude that Brazil lacks solid economic foundations or that the difficulties arising from the current circumstances have entirely diminished the appetite of Brazilian entrepreneurs or foreign investors’ interest in the country. Few countries possess the same favourable combination of structural assets as Brazil, including:

• an abundance of strategic natural resources such as critical minerals;
• one of the world’s largest freshwater reserves;
• an agricultural sector capable of feeding hundreds of millions of people around the world;
• one of the cleanest and most diversified energy mixes globally; and
• a vast consumer market of more than 200 million people.

In a global economy increasingly shaped by the energy transition, food security concerns and the reorganisation of supply chains, these attributes should place Brazil among the natural destinations for international capital. The fact that this enormous potential has not generated the immediate economic results one might expect demonstrates that Brazil’s principal obstacles are institutional rather than geographical. They do not arise from a lack of resources or opportunities, but from the difficulty of creating a legal and economic environment capable of converting them into consistent growth.