Brazil introduces 0% withholding tax regime for non-resident investors in private equity funds

Law No 14,711/2023 also revokes the so-called '40% test' and portfolio composition requirements

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Published on October 31, 2023

This morning (October 31), Law No. 14,711 of October 30, 2023 came into force. Based on Bill No. 4,188, it has introduced, among other things, some improvements to the rules provided for in Law No. 11,312/2006 and grants a zero percent withholding income tax rate for non-resident investors who own stakes in Brazilian Private Equity Funds (“FIPs”). The Law was enacted without any vetoes to the changes we discussed in our previous update on the Bill No. 4,188.

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This means that the 40% test and the portfolio composition rules that Law No. 11,312/2006 provided are no longer valid.

For further information on Law No. 14,711/2023 and its impacts, please contact Mattos Filho’s Asset Management Services & Investment Funds and Tax practice areas.