2015 INDIVIDUAL INCOME TAX RETURN (“DIRPF”) (year-base 2014)

On February 4, 2015, the Brazilian IRS enacted the Normative Ruling No 1,545 (hereinafter “IN 1,545/2015”), which has established rules and proceedings for individuals in order to file the 2015 Income Tax Return (year-base 2014) (“DIRPF”)

Key points brought by IN 1,545/2015 are related to the possibility of filing the DIRPF 2015 directly via e-CAC (the Virtual Center of the Brazilian Federal Revenue), on a specific link, through digital signature. IN 1,545/2015 also updates the figures that leads to the obligation of mandatory filing of the DIRPF.

The DIRPF must be filed until April 30, 2015 by all individuals residing in the country, regardless their nationality, in accordance with IN 1,545/2015. In general, the hypothesis are: (i) individuals who had annual income higher than the tax exemption limits (BRL 25,661.70 per year for taxable income and BRL 40,000.00 for nontaxable income already subject to withholding tax), (ii) owners of assets totaling BRL 300,000.00 and (iii) taxpayers who achieved capital gain on the disposal of assets.

Taxpayers shall declare all assets located in Brazil and/or abroad, in connection with the worldwide taxation principle, pursuant to which all income obtained by a Brazilian residents must be taxed under the Brazilian laws, regardless the source of the income. For countries which Brazil has entered into a double-taxation agreements (which is not the case of the United States), the rules stated in such agreement shall prevail.

It is also important to highlight the Intergovernmental Agreement (“IGA”) entered between Brazil and the United States enabling the automatic exchange of tax data between the Brazilian Federal Revenue and the U.S. International Revenue Service (IRS).

In other words, all income earned by a Brazilian resident, even if earned abroad, is subject to the Brazilian Income Tax, therefore one that holds assets abroad should be very cautious with the proper form in order to declare all revenues and assets owned abroad.

The information sent to the Brazilian Federal Revenue must be in accordance with the information sent to the Brazilian Central Bank through the Brazilian Capital Abroad Declaration (“DCBE”).

Navarro Advogados together with Piquet Law Firm have large expertise in conducting those matters and are at your entire disposal to assist you in the preparation, revision and/or orientations for the filing of the DIRPF and DCBE, and to assist you with relevant issues regarding asset structuring and organization.