Trust or Uruguayan Holding: Which Succession Structure
With trusts treated as transparent structures, a regional holding has become the more predictable vehicle. When each one fits.
For almost three decades, the trust was treated in Brazilian tax practice as a grey zone: a common-law institution with no direct equivalent in domestic law, used by many high-net-worth families, but without clear taxation rules.
That grey zone ended in December 2023, with Law 14,754/2023. And in April 2025 the tax authority published its first formal position on the subject — COSIT Ruling 75/2025 — confirming a strict reading of the rule.
Anyone still planning around a trust on the assumption of the indefinite deferral of past decades is working from a measure that both the law and the authority have already replaced.
What Law 14,754/2023 established
The rule treats a foreign trust as a fiscally transparent structure: for Brazilian tax purposes, the trust’s assets and rights are attributed to the settlor or the beneficiary, as the case may be — not to the trust itself.
- Mandatory identification. The law requires identification of the settlor, the trustee and the beneficiaries, widening transparency over ownership and income.
- Annual taxation, even without distribution. Income and capital gains on the trust’s assets are now taxed annually in Brazil at a uniform 15%, regardless of whether the beneficiary has actually received anything.
- Distribution treated as a gift or inheritance. Transferring trust assets to a beneficiary now has, for Brazilian tax purposes, the character of a gift (where it happens during the settlor’s life) or a transfer on death (where it follows the settlor’s death) — subjecting the transaction, as applicable, to estate or gift tax.
- Mandatory reporting. Trusts and their assets must appear in the annual income tax return and, above USD 1 million, in the Central Bank’s Declaration of Brazilian Capital Abroad (CBE).
The irrevocable trust, specifically
One point COSIT Ruling 75/2025 clarified, and which regularly surprises those who structured irrevocable discretionary trusts with deferral in mind: in irrevocable trusts, where the settlor renounces any right over the assets, beneficiaries are treated from the outset as the tax owners of those assets — even without having received any actual distribution, and even in discretionary structures where the beneficiary controls neither the timing nor the amount of any distribution.
In practice: the trustee’s discretion over when and how much to distribute does not displace the beneficiary’s obligation to report and pay tax annually on the trust’s income as though holding it directly.
Note on scope: COSIT Ruling 75/2025 formally binds only the specific case examined, but it consolidates the reading the tax authority has been adopting — eliminating indefinite deferral in complex fiduciary structures. We confirm the position applicable to the specific structure before any decision, particularly for revocable trusts, trusts with multiple beneficiaries, or those established through a legal entity.
The practical problem: getting information from the trustee
The law provides that, where settlor and beneficiary have no control over the trust, formal notice must be sent to the trustee about the obligation to observe the Brazilian rule — but that notice is no guarantee of compliance. The trustee, subject to another jurisdiction and another confidentiality regime, may simply not provide the financial information the beneficiary needs to meet their reporting and payment obligations.
That mismatch is particularly acute in trusts with minor beneficiaries, minority beneficiaries, or where the structure has no protector — situations where the practical ability to obtain information from the trustee is more limited still.
What changes with an irrevocable discretionary trust
| Situation | Before Law 14,754/2023 | Afterwards |
|---|---|---|
| Taxation of undistributed income | Zone of uncertainty, deferral in practice | Mandatory annual taxation at 15%, regardless of distribution |
| Beneficiary with no control over distribution | A common argument for postponing reporting | Does not displace the obligation — the beneficiary is tax owner from establishment |
| Distribution from the trust to a beneficiary | Unclear tax treatment | Treated as a gift (during life) or a transfer on death, subject to estate or gift tax |
| Reporting obligation | Not spelled out in law | Mandatory in the annual return and, above USD 1 million, in the CBE |
When a trust still makes sense — and when it does not
The trust remains a legitimate instrument for objectives that are not primarily about tax deferral: protection against wealth litigation, multi-generational succession governance, protection of vulnerable beneficiaries (minors, people with disabilities) and legitimate privacy in jurisdictions where public probate records are more exposed.
It no longer makes sense — and arguably never did, sustainably — as a vehicle designed primarily to postpone taxation on income indefinitely. That specific use, which the structure permitted in the pre-2024 grey zone, is exactly what Law 14,754/2023 closed.
The regional alternative: a Uruguayan holding company
For families whose objective is succession governance and wealth organisation — not tax deferral through opacity — a holding company incorporated in Uruguay, with real substance and correct legal design, is usually a more predictable vehicle than a trust: clearer ownership rules under home law, without the uncertainty of depending on a trustee’s cooperation in a foreign jurisdiction.
What this changes in practice
- Do not assume indefinite deferral. Annual taxation of undistributed income, even in discretionary trusts, has been the rule since 2024 — and COSIT 75/2025 reinforced that reading.
- Map, now, the real ability to obtain information from the trustee. If the structure does not guarantee a flow of financial data to the beneficiary, the risk of involuntary non-compliance is real and grows with each calendar year.
- Reassess the structure’s original objective. If the trust was set up primarily for tax deferral, that specific rationale does not survive Law 14,754/2023 — but that does not mean it should be unwound without first understanding the gift and succession implications the unwinding itself can trigger.
Frequently asked questions
Are trusts still lawful for Brazilians?
Yes. Legality was never the issue — what changed is the tax treatment: they are now treated as transparent structures, with annual taxation and mandatory reporting.
Do I have to report a trust of which I am only a beneficiary, having never received anything?
In irrevocable discretionary trusts, yes — the authority takes the view that being a named beneficiary already triggers the obligation to report and pay tax on income, regardless of actual distribution.
Is distributing trust assets taxed as inheritance or as a gift?
It depends on timing: if it happens during the settlor’s life, it is treated as a gift; if it follows the settlor’s death, as a transfer on death. Both can attract estate or gift tax.
Does a Uruguayan holding replace a trust for succession purposes?
It can perform an equivalent wealth and succession governance function, with a legal design better aligned to home law — but choosing between the two structures depends on the family’s specific objectives; it is not an automatic substitution.
The starting point
The trust has stopped being a fiscal grey-zone tool and become a fully regulated structure — with real advantages for those seeking succession governance, and no remaining room for those who were only seeking to postpone tax.
If you have, or are considering, a trust as part of your family’s wealth planning, it is worth reviewing — in light of Law 14,754/2023 and COSIT 75/2025 — whether the structure still serves its original objective, or whether a different design, such as a regional holding company, serves it better.
One conversation is enough to map that.
Informational content. It does not constitute legal or tax 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.