The Federal Revenue Service confirms the classification of U.S. LLCs as a privileged tax regime

Investors should be aware of the assessment of Income Tax (IRPF) in Brazil on profits earned in the United States

Published on April 15, Cosit Consultation Ruling No. 56/2026 clarified that Limited Liability Companies (LLCs) whose ownership consists of non-U.S. residents and that are treated as pass-through entities under U.S. tax law are classified as a privileged tax regime for tax purposes in Brazil.

The Federal Revenue Service’s decision was based on essential conditions for this classification:

• ownership interest in an LLC held by non-U.S. residents; and
• an LLC that is not subject to U.S. federal income tax in its own name.

This interpretation has implications for the owners of such structures, particularly under Law No. 14,754/2023 (the Offshore Law).

nce classified as a preferential tax regime, the foreign subsidiary is subject to certain rules, notably:

• the profits of subsidiaries eligible for a preferential tax regime must be calculated in accordance with Brazilian accounting standards (BR GAAP);
• such profits are subject to annual income tax in Brazil as of December 31 of each year, regardless of any decision regarding their distribution.

Given this new landscape and in order to ensure tax compliance, we recommend reviewing these investment structures. A specialized analysis is essential to ensure compliance with relevant obligations and avoid exposure to risks.

Tax Services

Domingues e Pinho Contadores has a specialized team that advises individuals and businesses on the proper application of tax laws. Get up-to-date guidance aligned with best tax practices: dpc@dpc.com.br.