With the enactment of the new law, taxpayers will have the opportunity to update the value of movable and immovable assets by paying taxes at reduced rates. The deadline to join the new special regime is 90 days.
By Rafael Maniero and Mauricio Nucci
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Legale Overseas, no. 961.
Last Friday (21), a law was enacted establishing the Special Regime for Asset Updating and Regularization (Rearp), which allows taxpayers to update and regularize assets and rights for Income Tax purposes. The new regime, applicable to both individuals and legal entities, offers a window of opportunity—especially for updating the value of movable and immovable property—through the payment of taxes at reduced rates.
The law grants the following prerogatives to taxpayers:
• Updating movable and immovable property to market value: Individuals may opt to pay Income Tax at a definitive rate of 4%; legal entities may pay Corporate Income Tax (IRPJ) at a 4.8% rate and Social Contribution on Net Profit (CSLL) at a 3.2% rate.
• Regularization of undeclared or incorrectly declared assets and rights: Payment of Income Tax on capital gains at a 15% rate, plus a 100% penalty, for both individuals and legal entities.
The deadline to join the special regime is 90 days. Within this period, taxpayers must submit a specific declaration to the Brazilian Federal Revenue Service and pay the taxes due, either in full or in installments. Payment may be divided into up to 36 installments.
The purpose, in the first scenario, is to allow taxpayers to update the value of older assets whose declared values are outdated for Income Tax purposes. As this constitutes an advance tax payment, the government grants the benefit of definitive taxation at reduced rates.
As a counterpart, taxpayers wishing to preserve the tax benefits granted may not dispose of the revalued assets for the next five years (for real estate) or two years (for movable assets). Early disposal triggers full taxation on capital gains, eliminating the benefits of the Rearp.
The procedures for joining the Rearp still depend on regulations to be issued by the Brazilian Federal Revenue Service, which are expected in the coming days.
The Vaz de Almeida Advogados team has extensive expertise in tax planning and is prepared to advise companies on the impacts of the new special regime and support strategic decision-making.
Translation Disclaimer
This document was originally drafted in Portuguese and subsequently translated into English using artificial intelligence (AI).
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