Individual taxpayers: aspects to consider for annual tax planning

Tax planning for individuals can help reduce their tax burden in 2023

By Augusto Andrade

Getting organized for next year’s taxes is a worthwhile strategy not only for companies, but also for individuals. A well-thought-out tax planning for 2023 makes it possible to point out efforts that can contribute to reducing the tax burden on one’s personal finances.

Certain factors may provide more relief and offer benefits to individual taxpayers over the coming year.

Investments on a Free Benefit Generator Plan

Those who invest in a private retirement plan classified as a Free Benefit Generator Plan (“Plano Gerador de Benefício Livre” - PGBL) may deduct the payments made to their plan from their income tax return up to 12% of their annual taxable gross income. This deductibility applies to taxpayers who file their complete Income Tax Return declaring the corresponding legal deductions.

On the other hand, those wishing to deduct their PGBL payments from their income tax in 2023 should be mindful of the deadline set by the Federal Revenue Service. Taxpayers have until December 30, 2022 to enroll in this type of retirement plan or to issue the first payment.

Counting on specialized support is invaluable to ensure compliance with the rules in effect and to choose the tax treatment most favorable to each situation, as rates can be graduated or regressive.

Other investments

Heavy taxation can jeopardize the feasibility of investments. Therefore, tax planning should also assess the impact those taxes will have on an investor's portfolio.

Relying on consulting support as to the tax rates and exemptions currently in force helps the financial planning, by shedding light on the investor’s prospective net gains. This is also useful for properly determining one’s capital gain and the income tax due for each month, thus preventing fines and penalties.

Income tax deductions

Experts agree that solid planning and organization are key to get the best results when it comes to remaining in good standing with the tax authorities. So start saving your payment slips and receipts to apply for tax deductions when you file your income tax return in 2023.

With this data at hand, you can seek early guidance on how to reduce your tax burden to a minimum within the legal boundaries.

Read more:Income Tax: Federal Revenue Service will refund amounts collected on family support

Accounting and tax obligations for offshore companies

Anyone wishing to set up an offshore company should be aware of the tax obligations related to such investment, which, by the way, can be highly positive in terms of assets, succession, and tax burden.

It is worth planning ahead to meet the requirements set by the Federal Revenue Service and the Central Bank for the coming year, and to file the required financial statements and accounting records, considering asset variability as an indicator to define the tax schedule for the offshore business.

Read more:

Offshore: 5 questions about accounting, taxation and IRPF report

Estate planning

Good organization and planning can also benefit Individuals who wish to dispose of all or part of their wealth in 2023 through estate planning.

With support from experts, one can devise plans that lead to tax reduction and deferral, reducing the impact of taxes levied on family wealth.

Moving abroad

Tax planning is also ideal for those who are leaving Brazil in the coming year due to professional relocation or on their account.

Expatriates must meet the requirements set forth by the Federal Revenue Service and make choices that will entail tax-related outcomes. Taking these steps in a planned and well-informed manner can cut down on costs and reduce tax risks. Thus, to avoid double taxation, one should take their time to analyze international agreements on tax and social security matters.

Solutions tailored to individuals

Those wishing to achieve positive results in tax-related matters and make sound decisions can rely on the custom consulting services provided by Domingues e Pinho Contadores.

DPC has a department focused on individual taxpayers that provides tax planning guidance so that they remain in good standing with the Federal Revenue Service and the Central Bank. You can rely on our tailored support, whether on a regular basis or on occasion: dpc@dpc.com.br.