Offshore companies: balance sheets, individual income tax returns, and choice of tax regime require attention

Accounting and tax compliance for offshore companies involves preparing balance sheets and correctly completing tax returns

Individuals who use offshore structures as a strategy for planning and protecting their assets must comply with the rules to remain in good standing in Brazil.

In recent years, Brazilian authorities have published measures to ensure greater transparency and prevent tax evasion, such as Law No. 14,754/2023 and RFB Normative Instruction No. 2,180/2024, which imposed obligations related to these entities.

Investors should be aware of the requirements, starting with the need to provide the necessary information about offshore entities in their annual income tax return (DAA). With the 2026 income tax season approaching, it is worth getting organized to fill out the form correctly.

Offshore companies and income tax

Profits generated by offshore companies are subject to a 15% tax rate and income tax once a year, on December 31. Taxation occurs when profits are calculated in the balance sheet, regardless of any decision to pay dividends, and the tax must be paid by the date set for the filing of the individual's Annual Adjustment Statement.

Taxpayers who choose to treat offshore entities as “transparente” for income tax purposes declare the assets held by the entity as if they were held directly by the individual. In this situation, the taxation rule corresponding to each type of asset or right applies. Thus, if the offshore entity has financial investments abroad, the individual will be subject to the taxation rules for income and capital gains generated by these assets.

For holdings in controlled entities acquired on or after January 1, 2024, the option for transparency must be formalized in the individual's income tax return statement filed within the deadline for the calendar year in which the acquisition occurred.
The controlled entity may receive “opaco” or “transparente” tax treatment. Understand these regimes:

Offsetting gains and losses

Losses incurred on financial investments held directly by individuals—including those arising from offshore assets and rights for which the taxpayer has opted for tax transparency—may be offset against gains obtained on other investments abroad. This offset may be made within the base year itself, in the Annual Adjustment Statement.

It is also possible to offset losses with profits and dividends from controlled entities abroad. If there is an accumulation of losses, they may be used for compensation in subsequent fiscal years.

However, the losses calculated can only be offset against gains from the same offshore entity in subsequent years, provided that they correspond to periods after January 1, 2024, and have been calculated from the moment the taxpayer took control of the entity.

Offshore accounting

Recent rules require offshore companies to have their accounts monitored regularly, which will also make it easier to fill out income tax returns with accurate information.

Hence the importance of preparing financial statements in accordance with the required standard, with the entity's accounting documentation being signed by a duly qualified accounting professional.

The use of international accounting standards (IFRS) or Brazilian accounting standards (BR GAAP) is permitted for entities controlled abroad. However, for entities in “tax havens,” the adoption of BR GAAP is mandatory.

Central Bank Requirements

It is also necessary to comply with Brazilian Central Bank rules, including the submission of the Statement of Brazilian Capital Abroad, according to the volume of goods, rights, and assets held outside the national territory by residents of the country.

See the 2026 schedule:

In other words, anyone who has more than US$ 1 million outside the country in bank accounts, financial investments, and other assets must also be aware of this statement.

Note: In cases where the deadline for submission to Bacen coincides with a non-business day, as will occur with the dates listed above, we recommend submitting the declaration on the business day immediately prior to the fixed deadline.

Support for offshore accounting and tax compliance

From the classification of offshore operations and preparation of financial statements to the reporting requirements of the Central Bank and Federal Revenue Service, count on DPC's specialized team to keep entities compliant with Brazilian rules. Contact us: dpc@dpc.com.br.