Tax reform – the impact of The tax burden incident to the holding companies, and in the transition regime

The tax reform adopted in Brazil is governed by the Law of the Complementary 2014/2025, which is resulting in significant changes in the structure of the taxation of holding companies, companies that are frequently used for the organization’s assets and estate.

Today, the holdings in equity, subject to a majority in the scheme of Profit before tax, they have a tax bill is effective in approximately of the 14,53% of revenue comes from the activity of the lease.

With the establishment of the IBS (Goods and Services Tax) and CBS (Contributions in Goods and Services, the new taxes that were brought about by the reformation, the estimate of the burden of paying the tax act on the income from the lease is about to 18,28%, with an increase of 6.95% of the revenue from the holdings of cultural heritage that carry out this type of activity.

In the face of a significant increase in the Complementary Law no. 214/2025 set up a transitional arrangement for the collection of IBS and CBS in order to offer you a adapt more smoothly to the new tax rules. These rules apply to legal entities, and the owners of the holdings in the equity that you carry out the activities of the lease, assignment, or lease of real property, with special provisions for leases of residential and non-residential.

1. The Main Changes Are

The scheme allows for a simplified taxation on the gross income derived from those activities, and the application of a reduced rate of 3.65%. for This measure aims to facilitate the transition to the new tax system, ensuring the reliability and security to the existing contracts.

Thus, the companies that participate in the transition regime, will have a mean load of the 14,53%, tax rate, this is equivalent to the pre-reform.

2. The requirements to Join the Scheme

The conditions for the membership will vary depending on the type of rental:

2.1. The contracts for the Lease of Residential

• The formalization of the contract, until the 16th of January, in the year 2025,this agreement shall be proved by:
  • The firm is recognized;
  • An electronic signature is valid; or
  • Proof of payment of the lease, until the very last day of the month following commencement of employment.
• Duration: membership is valid for:
  • By the end of the original contract; or
  • Until December 31, 2028, whichever comes first.

2.2. Contracts for the Lease of Residential

• The formalization of the contract,as in the leasing of residential, contracts, non-residential, must be submitted by January 16, 2025.
• An Indefinite period of time, or Particular:
  • For contracts with a term of indefinite duration, the membership will be assessed on the basis of the regularity of the payments, and the proof of the activity of the lease up to the date of the publication of the law.
  • For contracts with a term given, in the periods following the same criteria that apply to a rental home.
• Supporting documentation: tax Records and financial statements-updated they are essential for the eligibility for the scheme.

3. The benefits of the Scheme

• Simplification of the Tax: an excise tax only the gross income.
• The security of the LegalProtection of the conditions for a tax agreements are already in place.
• Tax planning: it Provides a time and certainty for the reorganization of the operations.

4. Recommendations

• The review of Contract: Review of all existing contracts to identify those that meet the criteria for membership of the scheme.
• Documentation:- Keep up with the proof of the execution and the records of the financial statements.
• Strategic planning: to Consider the financial impact of the transition regime for the future adequacy of the new tax rules.

5. Conclusion

The Complementary Law no. 214/2025 introduced a temporary mechanism is essential to protect the business and to the holders of the holdings in the equity of the changes to the tax. The membership of the transitional arrangements to ensure stability for the leasing of residential and non-residential use during the transition to the new model of taxation.

For expert support in the membership of the scheme or, in the planning, tax, please get in touch with our team of investors.

Barbara Giansante Moquiute

A lawyer with a bachelor degree in law with an emphasis in tax law from Universidade Presbiteriana Mackenzie (2021), and which is registered at the Ordem dos Advogados do Brasil, São Paulo (OAB/SP) (2022). A post-Graduate degree and a specialization in Tax Law from the Pontifical Catholic University of Rio Grande do Sul (PUC/RS) (2022-2023). A lawyer and a Leader of the Tax have Associated with it.

Raphael O. F. T. Pizza

The socio-Institutional structure, a member of the Board of Directors and is responsible for the area of taxation in the office by TM Associates; Professor of the subjects of Legislation and of Accounting, Tax Planning and taxation at the Institute for Research, Accounting, Actuarial and Financial information (Fipecafi), which is part of the University of São Paulo (FEA-USP), Master’s in Accounting, and Actuarial Science the Pontifical Catholic University of São Paulo, an Economist graduated from the primary school in São Paulo, the current Insper, and Lawyer, a graduate of the University Presbyterian Mackenzie university.