The Brazilian Chamber of Deputies approved the taxation of dividends exceeding R$50,000 per month

By Angelica Santos and Regina Gouveia

On October 1st, 2025, Bill No. 1,087/2025 was unanimously approved by the Brazilian Chamber of Deputies, which, in summary: (i) exempts Personal Income Tax on amounts up to R$ 5,000 per month; (ii) imposes a Minimum Personal Income Tax (“IRPFM”, abbreviation in Portuguese) on amounts exceeding R$ 600,000 per year (known as “High Income Taxation”); and (iii) amends the income tax rules for dividends paid to residents and non-residents in Brazil.

Bill No. 1,087/2025 is still subject to review and approval by the Brazilian Federal Senate. If any changes are made, the text will return to the Chamber of Deputies for a new approval. If there are no adjustments by the Senate, the bill will go directly to the Brazilian President for approval. All these steps must be completed by the end of this year (2025) for the new rules to be effective as of January 1st, 2026.

Below is a summary of the key points in the text of Bill No. 1,087/2025 that require attention, focusing on High Income and Dividend Taxation.

(i) High Income Taxation and IRPFM

Monthly

The tax on high incomes through the IRPFM was maintained. Individuals that are resident in Brazil who receive profits or dividends above R$ 50,000 per month from the same legal entity will be subject to a 10% IRPFM withholding tax at source, with no deduction rights.

Bill No. 1,087/2025 also stipulates that profits and dividends relating to results up to and including 2025, which distribution is approved by December 31, 2025, will not be subject to IRPFM withholding, provided they are paid by December 31, 2028, in accordance with the approved terms. This provision gives rise to practical issues, as companies might not have their accounting results concluded by December 31, 2025 to approve the distribution of profits by then.

Annual

There is also a minimum annual tax for individuals who receive profits or dividends above R$ 600,000 per year. The taxable amount is comprised by the total individuals’ income for the year, with a few exceptions, such as donations received, capital gains, savings income, among others.

According to a specific formula provided for in the text of the Bill, a progressive tax rate between 0 and 10% applies to profits or dividends between R$ 600,000 and R$ 1.2 million. For annual profits or dividends above R$1.2 million, the tax rate is 10%.

The taxation of annual IRPFM will be capped, considering the taxation of the legal entity paying the profits and dividends and the individuals receiving them. The sum of the effective combined tax rates shall not exceed the nominal tax rate on corporate income taxes (“IRPJ” and “CSLL”, abbreviations in Portuguese) applicable to the sector (usually 34%).

The tax due will be calculated by multiplying the tax rate by the tax base, with the legal deductions. If the result is negative, the IRPFM will be zero. If the result is positive, the monthly tax withheld will be offset. The final balance (payable or refundable) will be reported in the Tax Return.

(ii)  Taxation on dividends paid to non-residents in Brazil

Bill No. 1,087/2025 also amends Article 10 of Law No. 9,249/95 to establish that profits or dividends paid, credited, delivered, employed or remitted abroad to individuals and legal entities will be subject to a 10% rate of Withholding Income Tax.

The rules regarding taxable amounts and the transition period (for the payment of exempted dividends which distribution is approved until December 31, 2025, provided payment is made in accordance with the terms originally set out in the relevant corporate approval) also apply to non-residents.

In any case, the rules of international agreements to avoid double taxation must be observed.

If the sum of the effective IRPJ and CSLL rates of the paying company, plus the 10% of IRRF, results in taxation higher than the nominal rate applicable to corporate taxes (usually, 34%), a credit will be granted to the non-resident. This credit may be requested by the non-residents within 360 days after the end of the fiscal year. The way in which this credit will be made available has yet to be defined.

We will continue to monitor the issue, expecting to have a definition in the near future.

This bulletin is for information purposes only and shall not be relied upon for legal advice on any of the topics covered here. For further information, please contact the leaders of the Tax Team. CGM Advogados. All rights reserved.