Although trusts are widely used in jurisdictions such as the United States, the United Kingdom and several European countries for estate planning, asset protection and wealth succession, the legal concept of a trust does not exist under Brazilian private law.
Nevertheless, Brazilian tax legislation now expressly regulates the tax treatment of foreign trusts for Brazilian tax residents. Since the enactment of Law No. 14,754/2023, trusts are no longer treated as “black box” structures for Brazilian tax purposes. Instead, the law establishes specific rules on ownership, taxation and annual reporting obligations.
Under the current framework, Brazil adopts a transparency approach.
In general, assets transferred to a foreign trust continue to be treated as owned by the settlor until either a distribution is made to the beneficiary or the settlor dies, whichever occurs first. If the settlor irrevocably relinquishes rights over part of the trust assets before that moment, ownership may shift earlier. Consequently, income and capital gains generated by the trust assets are generally taxed as if they had been earned directly by the person deemed to be the owner under Brazilian law, regardless of how the trust is characterized under foreign legislation.
The reporting obligations have also changed significantly. Rather than declaring only an interest in the trust itself, Brazilian tax residents are generally required to disclose the underlying assets held by the trust, following the ownership rules established by Law No. 14,754/2023. The Brazilian Individual Income Tax Return now contains specific sections addressing trusts and similar foreign arrangements, reflecting the country’s move toward greater tax transparency and alignment with international reporting standards.
For international families, one of the most common misconceptions is assuming that a trust validly established abroad will automatically receive the same legal and tax treatment in Brazil. This is not the case. Brazilian tax authorities focus on the economic ownership of the underlying assets rather than the formal legal structure adopted under foreign law. As a result, distributions, succession events, income recognition and even the interaction between trusts and foreign holding companies should be analyzed from both a Brazilian and a foreign tax perspective to avoid unintended tax consequences, double taxation or reporting failures.
For individuals relocating to Brazil, Brazilian nationals returning from abroad or families with cross-border wealth structures, reviewing existing trust arrangements has become an essential part of international tax planning. Proper classification of the trust, identification of the tax owner, accurate reporting of the underlying assets and coordination with the applicable foreign legal framework are now fundamental steps to achieve compliance while preserving the estate planning objectives originally intended when the trust was created.