Rafael Amorim and Caio Malpighi, partner and associate in the Tax & Customs practice, coauthored an article featured on the cover of this week’s edition of Tax Notes International, analyzing recent changes to the tax treatment of foreign investments in Brazil.
The article discusses recent changes in Brazil’s tax treatment of foreign investments, highlighting longstanding uncertainty faced by nonresident investors regarding the tax effects of investment restructurings, loss of tax residency, and the use of depositary receipts — all historically linked to the symbolic foreign exchange transaction.
This mechanism was traditionally used to formalize changes in investment modality, permanent departures from Brazil, and depositary structures, even without actual fund transfers. Over time, the Brazilian Federal Revenue Service began treating it as a potential trigger for capital gains taxation.
Rafael and Caio review the legal and administrative evolution of the issue, including key case law, and analyze the impact of Brazil’s new foreign exchange framework and its regulation by banking and monetary authorities, which eliminated the need for symbolic registration in these cases. While the reform modernizes procedures, it does not resolve existing tax uncertainty. On the contrary, Provisional Measure No. 1,303/2025 reinforces the tax authority’s position by expressly allowing capital gains taxation even for mere regulatory reclassifications — now without the procedural buffer once provided by symbolic registration.
Challenging this view — now reflected in the Provisional Measure — the article argues that neither symbolic registration nor a simple change in investment modality should, on its own, trigger income tax. However, this interpretation remains legally uncertain and lacks definitive guidance from Brazilian courts.
The full article is available here.
