Dividends and the Non-Resident Shareholder: Paraguay’s Role
Brazil’s Law 15,270/2025 withholds 10% on dividends sent abroad, with no minimum. Three worked scenarios show what changes in the corporate design.
For almost 30 years, distributing profits from a Brazilian company to a shareholder was, in most cases, exempt from income tax. That ended on 1 January 2026.
Law No. 15,270/2025, signed on 26 November 2025, closed the unrestricted exemption regime in place since 1996. For anyone holding a Brazilian company while living — or planning to live — outside the country, the effect is direct: profit remittances abroad became subject to 10% withholding, with no minimum threshold at all. This article sets out the mechanism and shows, with worked figures, what changes when part of the structure sits in Paraguay.
What the law changed, precisely
Law 15,270/2025 created two distinct mechanisms, and it matters not to conflate them:
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Withholding at source on profits and dividends. From January 2026, the payment, crediting, application or delivery of profits and dividends by a company became subject to 10% withholding where:
- The beneficiary is an individual resident in Brazil, and the amount paid by the same company to the same shareholder exceeds BRL 50,000 in a month.
- The beneficiary is an individual or entity resident or domiciled abroad — in which case there is no minimum whatsoever: any remittance abroad attracts the 10% withholding, regardless of the beneficiary’s jurisdiction, and with no corresponding reduction for the corporate taxes the company already paid on that profit.
One technical detail catches many structures out: the law treats capitalising profits — adding them to share capital instead of distributing them — as “application” of the funds, and therefore as a taxable event once the thresholds are crossed. Corporate reorganisations that relied on capitalising profits to defer tax need revisiting.
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Minimum personal income tax. This applies to anyone whose annual return aggregates global income — including exempt income and income subject to final withholding — above BRL 600,000. The rate scales linearly from 0% to 10% between BRL 600,000 and 1.2 million, and is fixed at 10% above that. It takes effect from the 2026 calendar year, reflected in the 2027 return.
Note on scope: transitional relief exists for profits determined up to 2025 whose distribution was approved by the competent corporate body by 30 April 2026 — those profits generally remain outside the new rules. There is already legal debate about the constitutionality of part of the mechanism as applied to shareholders protected by double taxation treaties. We confirm each structure’s exact position before any distribution decision.
Three worked scenarios
To illustrate the practical effect, take a Brazilian company reporting BRL 1,000,000 of net profit in a financial year, after corporate taxes, available for distribution to a single shareholder.
| Scenario | Shareholder’s position | Withholding on distribution | Net amount received |
|---|---|---|---|
| A | Resident in Brazil, distribution staged below BRL 50,000/month from the same company | Exempt (within the monthly threshold) | BRL 1,000,000 |
| B | Resident in Brazil, distributed in one payment (above the monthly threshold) | 10% on the excess over the threshold | Around BRL 900,000, depending on staging |
| C | Non-resident (e.g. tax resident in Paraguay), distribution of any amount | 10%, no minimum | BRL 900,000 |
The central point: for the non-resident there is no option to stage the distribution below a threshold to avoid the withholding — it applies from the first real remitted. That changes the calculation for anyone who assumed a tax exit from Brazil would be neutral as regards distributions from a Brazilian company that continues operating there.
Where the Paraguayan structure comes in
If, instead of distributing directly from a Brazilian company to a non-resident individual, the profit passes through a Paraguayan structure — an EAS holding an interest or providing related services, for instance — the calculation changes shape. Three points from our article on setting up a company in Paraguay bear repeating:
- Paraguayan corporate income tax (10% on company profit) and the dividends tax (8% for a resident, 15% for a non-resident of Paraguay) form the local burden on a Paraguayan structure — independent of the Brazilian 10% withholding on remittances from a Brazilian company.
- The 10% withholding under Law 15,270/2025 applies to the remittance made by the Brazilian company — not to what the Paraguayan structure may receive from sources outside Brazil.
- Without clear confirmation that a Brazil–Paraguay double taxation treaty is fully in force, a credit for one tax against the other cannot be assumed — each layer has to be calculated independently, not treated as automatically creditable.
Note on scope: the optimal corporate design depends on the source of the income (Brazilian or otherwise), the intended cash flow and the holder’s actual tax residence. There is no standard structure that fits every case — each scenario requires its own modelling with the real figures.
What this changes in practice
Distributing profit from a Brazilian company stopped being neutral for anyone becoming non-resident. Before formalising a tax exit, it is worth modelling the cost of a 10% withholding with no threshold on future remittances.
Capitalising profit is no longer automatic deferral. The law treats capitalisation as a taxable event once thresholds are crossed — older reorganisations built on that premise need review.
The minimum tax looks at global income, not just Brazilian income. Anyone planning to keep some declarable income link to Brazil during a transition to Paraguay should factor that in.
Frequently asked questions
Does the 10% withholding on dividends abroad have any minimum threshold?
No. Unlike the rule for Brazilian residents (a BRL 50,000 monthly threshold from the same company), for non-residents the 10% withholding applies from the first real remitted.
Can profits approved before 2026 still be distributed without the new withholding?
Generally yes, for profits determined up to 2025 whose distribution was approved by the competent corporate body within the transitional window — but each case has to be checked specifically.
Does having a Paraguayan structure eliminate the Brazilian 10% withholding?
It does not eliminate the withholding on the remittance made by the Brazilian company. The Paraguayan structure carries its own tax burden (corporate income tax and dividends tax), independent and not automatically creditable against the Brazilian tax.
Does the minimum tax apply to someone who becomes non-resident in Brazil?
It applies to the annual return of anyone who remains a Brazilian tax resident. Someone who correctly formalises their tax exit ceases to be subject to the Brazilian annual return on global income from the date they become non-resident.
How to verify for yourself
- Law No. 15,270/2025 — Planalto / Brazilian Chamber of Deputies.
- Normative Instruction RFB No. 2,299/2025 (clarifications on the withholding) — Receita Federal do Brasil.
- Law No. 6,380/2019 (Paraguayan corporate income tax and dividends tax) — DNIT.
The starting point
Law 15,270/2025 does not make a tax exit from Brazil disadvantageous — but it turns the distribution of profit from a Brazilian company to a non-resident into a variable that has to be calculated, not assumed neutral. Anyone with a Paraguayan structure, or planning one, benefits from modelling both sides of the equation before distributing, not after.
One conversation is enough to know whether it makes sense to proceed.
Informational content. It does not constitute legal, tax or investment advice. The rules cited were verified against the official sources indicated in July 2026 and may be amended or further regulated. Individual situations produce different outcomes and should be analysed case by case.