THE SPECIAL TAX REGIME OF NONRESIDENT INVESTORS AND THE FINAL BENEFICIARY IDENTIFICATION

Abstract

This article describes the special tax regime applicable to foreign investments in the Brazilian capital markets. It also addresses the obligation imposed by the Brazilian Federal Revenue to identify the natural person who is the final beneficiary of the foreign investment, in order to demonstrate that this information cannot be used to attest the applicability of the tax benefits to nonresident investors, considering that the Brazilian tax law does not forbid round-tripping structures and does not require a nonresident investor outside tax havens as the final beneficiary. At last, this article describes situations of fraud, willful misconduct and simulation in which the jurisdiction of the direct investor may be legitimately disregarded in determining the origin of the investment for the special taxation regime application purposes.