Bill exempting withholding tax on donations and inheritance for beneficiaries abroad advances

On December 13, 2022, the Federal Senate’s Economic Affairs Committee approved Bill No. 4,031/2021. This bill amends Law No. 13,315/2016 to include the amounts received by a person resident or domiciled abroad as an inheritance or donation among the hypotheses of exemption from Withholding Income Tax (IRRF).

The bill will go directly to the House of Representatives without being submitted to the Senate plenary and, if approved, it will then be subject to presidential assent.

Change of Positioning

Until 2018, there was certainty in the non-incidence of IRRF in these cases, as the previous Income Tax Regulation and Income from Any Nature (Decree No. 3000, of March 26, 1999 – RIR/99) had an express provision regarding these cases. The current Income Tax Regulation (Decree No. 9,580/2018) saw the beginning of discussions regarding withholding tax in these situations, given that the new rule (currently in effect) had no provisions on the subject.

In December 2019, through Consultation Solution No. 309, the Federal Revenue itself issued a position stating that the IRRF was due on remittances abroad as donations or as a result of succession processes.

If approved, Bill No. 4.031/2021 will solve this very discussion, bringing legal certainty to the unnecessary collection of IRRF on remittances abroad as a donation or in cases of succession.

For more information, please contact Mattos Filho’s Private Client practice area.