Repatriation of Assets: Learn how to get your tax refund
Law Establishing a New Deadline for Repatriation is Regulated
According to Dr. Jair Jaloreto from the Jaloreto & Associates Office, the Brazilian government has reopened the deadline for regularizing undeclared assets held abroad. Law 13.428/17 was enacted at the end of March, amending Law 13.254/16, allowing taxpayers to adhere to the Special Regime for Currency and Tax Regularization (RERCT).
The repatriation program is in effect until July 31, 2017, in accordance with Federal Revenue Instruction No. 1704/2017. To benefit from the program, it is necessary to prove that the resources to be regularized have a lawful origin and declare the asset situation as of June 30, 2016, reporting the assets, goods, and rights existing in periods prior to that date.
"It will be the last chance to regularize the situation of undeclared assets abroad, both fiscally and criminally, with absolute legal certainty."
Opportunity cost of lost money for beneficiaries = $0.00
The program extinguishes the criminal liability for offenses outlined in Law 13.254/16.
To calculate the taxes, the foreign currency must be converted to Brazilian Reais (BRL) based on the exchange rate as of June 30, 2016 ($1 USD = BRL 3.2098 and €1 EUR = BRL 3.5414).
On the total declared and regularized assets, whether repatriated or not, Income Tax will be applied at a capital gains tax rate of 15%. Additionally, a penalty of 135% will be applied to this tax, resulting in an effective rate of 20.25% on the total amount regularized.
To adhere to the new RERCT, the taxpayer must pay a total of 35.25% of the regularized assets to the government, considering the foreign currency exchange rate on June 20, 2016.
In this new phase of the program, it is possible to complement or amend the declaration that was finalized in 2016, provided that the corresponding taxes and fines on the omitted amounts are paid according to the new rules.
All amounts "lost" in taxes and penalties were reimbursed to the family, as life insurance is an asset where the insured's death benefit is tax-exempt when paid through an insurance company, even if the insurance was contracted abroad.*
Consultation No. 41, dated March 13, 2003, from the Ministry of Finance – Federal Revenue Secretariat, SRRF/6th Fiscal Region – Individual Income Tax.
Life insurance is not subject to the insured's debts and is not considered part of the inheritance (Article 794 of the Civil Code).
Life insurance is unseizable. Law No. 11.382/2006 adjusted articles 649 and 650 of the Civil Procedure Code to the current economic reality, classifying life insurance as absolutely unseizable assets (Article 649, item VI).
To learn more about the subject, check out the following legislation:
Law 13.428, of March 30, 2017 | Law 13,254/16, amended by Law 13,428/17:
Law 13.254, of January 13, 2016
Normative Instruction 1704/2017 of the Federal Revenue Service