Offshore: Balance sheet supports provision of information to the IRPF report

The increasingly efficient crosschecking and the accurate inspection demand the taxpayer's attention in the elaboration of the Individual Income Tax Report (IRPF). The Federal Revenue has been intensifying control over who keeps resources abroad, in which case are those who maintain quotas offshore.

Offshore is a company located, almost always, in countries with favorable taxation (so-called “tax havens”), without a need to hire work force or engage in productive activity. This resource is used as a form of investment, asset protection or succession planning.

The practice is legal, as long as the obligations towards the tax authorities are met. In order to keep up with Brazilian standards, it is essential to maintain the transparency of operations through regular accounting and the annual balance sheet, since the offshore data must be reported to the IRPF and the Central Bank by their holders.

Importance of the offshore balance sheet

The shareholders' equity total value, assets and liabilities total, capital, the reserve and profits sharing, the income for the year, among other information from the offshore are stated in the balance sheet.

Therefore, this document helps the shareholder resident in Brazil to prove his position in the company’s capital to the RFB, when filling out the IRPF report.

Keeping a credit card directly related to the offshore bank account has tax consequences that must be measured. This patrimonial confusion situation makes the taxes payment be demanded from individuals here in Brazil.

Values from offshore intended to their holders, for example, may be a profits sharing, which would be taxable through the Carnê-Leão (at the rate of 27.5%).

The information gathered in the balance sheet helps individuals to provide the Annual Report of Brazilian Capitals Abroad (CBE) information to the Central Bank.

CBE also requires information on shareholders' equity and income for the year, figures reached by the Financial Statements, which are also essential for the documents compliance of the offshore company.

Attention to deadlines in Brazil

As the deadline to report to the 2020 IRPF should be April 30, the taxpayers that make up the offshore corporate structure should hurry to gather the required information, such as the balance sheet and other statements, in addition to other receipts and documents common to the residents and domiciled in Brazil.

Nevertheless, the CBE’s deadline is in early April (on the 6th, in 2020) and this means that the offshore financial statement has to be executed with greater advance, being the recommended deadline by the end of March.

The balance sheet and statements can be prepared both in the country where the offshore is located and by a qualified Brazilian accountant, as long as the relevant accounting rules are respected.

Specialized advice for tax compliance

Domingues e Pinho Contadores has a team ready to advise offshore holders on the documents related to this practice required by the domestic tax authorities.

The investor finds in DPC the required direction to comply with the Federal Revenue and the Central Bank, counting on the support of the accounting and tax team specialized in serving the individual, either in rendering accounts or in the establishment phase of this type of business, providing support for the legalization of this business in Brazil.

Read more:

Balance sheet for offshore companies - why is this so necessary?

Taxation on the withdrawal of funds by shareholders of offshore companies