Short answer. There are four routes for money to leave a Brazilian subsidiary toward its foreign parent: dividends, payments for software licences or services, interest on loans, and returns of capital. They are taxed very differently. In an example where the parent receives R$ 85,000, the tax on the way out is about R$ 9,400 as a dividend and about R$ 32,200 as a software licence. The difference is large enough to be decided before the company is set up.
General information as of October 2026. The figures come from our calculation model and depend on the case. A tax treaty between Brazil and the parent's country can change the withholding. Confirm with your advisors.
The four routes
| Route | Tax on the way out | Needs |
|---|---|---|
| Dividends | 10% withholding income tax (Law 15,270/2025, since January 1, 2026). No IOF. | Profits recorded in the books and the investment registered with the Central Bank |
| Software licence or service fee | 15% withholding income tax (25% for a beneficiary in a low-tax jurisdiction), PIS and Cofins on the import of services, ISS and IOF of 3.5% | A real contract and transfer pricing support |
| Interest on a loan from the parent | Withholding income tax on the interest, plus IOF on the exchange operations | The loan registered with the Central Bank |
| Capital return | No income tax up to the registered capital. IOF at zero. | Registered capital and an update of the Central Bank registration |
The prerequisite: the Central Bank registration
None of the routes works smoothly without the registration of the foreign investment. The Brazilian company reports the investment to the Central Bank through the SCE-IED system, which replaced the older RDE-IED. The report identifies the receiving company and the non-resident investor and is what allows a bank to document the origin of the capital when you send a dividend or return capital. Each new contribution or return updates the registration. We describe it in the step-by-step guide.
Dividends
For years, dividends distributed by Brazilian companies were exempt from income tax. Law 15,270/2025 changed that. Since January 1, 2026, dividends paid to non-residents are subject to a 10% withholding income tax, due when the profit is paid, credited or sent abroad. Profits earned up to 2025 and approved for distribution by December 31, 2025 follow transition rules.
- The tax is withheld by the Brazilian company, which pays it to the tax authority.
- The dividend can only be paid from profits that exist in the books. A company that is losing money cannot distribute.
- Under presumed profit, the company may distribute the presumed profit after taxes without additional tax in Brazil on the dividend itself, beyond the withholding above, subject to having the accounting that supports it. This should be confirmed in your case.
- The IOF on the exchange operation for a dividend is zero.
In practice, many foreign groups simply include the 10% in the business case. It is predictable and the cost is stated in the law.
Software licences and service fees
When the parent owns the software or provides services to the Brazilian company and charges for them, the payment is not a distribution of profit. It is a cost of the Brazilian company and a payment abroad, and it carries several layers:
- Withholding income tax, generally 15%, and 25% when the beneficiary is in a low-tax jurisdiction.
- PIS and Cofins on the import of services.
- The service tax (ISS) on the import of services, in cities that charge it.
- IOF of 3.5% on the exchange operation.
- Depending on the contract, other charges can apply, such as the contribution on technology contracts.
Under presumed profit, the company pays income tax on a percentage of its revenue, not on its real profit, so the licence cost does not reduce the Brazilian income tax. That is why a licence is often more expensive than a dividend for a company in this regime. In actual profit, the cost may be deductible within limits, which changes the comparison.
Transfer pricing
Payments between related companies must respect the arm's-length principle. Brazil has applied rules aligned with the OECD standard since 2024. A licence or service fee that is not supported by a real contract, a real service and a reasonable price is a common audit target. Document it from the first payment.
The numbers, for the parent to receive R$ 85,000
| As a dividend | As a software licence | |
|---|---|---|
| What the parent wants to receive | R$ 85,000 | R$ 85,000 |
| Main taxes on the way out | 10% withholding income tax | 15% withholding income tax, PIS and Cofins, ISS and IOF of 3.5% |
| Tax cost | About R$ 9,400 | About R$ 32,200 |
| Reduces the subsidiary's income tax (presumed profit)? | Not applicable | No |
In both cases the Brazilian company bears the tax so that the parent receives the full amount, which is why the tax is calculated on top of the net amount. The licence route costs several times more because it stacks taxes that the dividend route does not have. This is an illustration: the real result depends on your contract, the cities involved, the regime and any treaty.
Run your own numbers. The remittance calculator estimates the tax on dividends, software licences, capital returns and transfer pricing adjustments. Enter the amount, change the rates if a treaty applies, and compare the routes. The result is free to see; the PDF report is for subscribers.
Loans and interest
A parent can lend money to the subsidiary instead of contributing capital. The loan is registered with the Central Bank, interest paid abroad carries withholding income tax and the exchange operations are subject to IOF. Interest has to follow transfer pricing and thin-capitalization rules. A loan can be useful for flexibility, but it is not a way to avoid the withholding on dividends, and the authorities look at the substance.
Returning capital
Capital that the parent has registered at the Central Bank can be returned up to the registered amount without income tax in Brazil, and with IOF at zero. The return reduces the registered capital and updates the registration. A return above the registered amount can have tax effects. Capital returns are a clean way to take money out when the company has more cash than it needs, but they also reduce the capital base, which banks and clients may look at.
Treaties
Brazil has income tax treaties with Portugal, the Netherlands, Luxembourg, France and Spain, among others. A treaty can cap the withholding on dividends, royalties and interest, and gives the parent a way to avoid double taxation in its home country. There is no comprehensive income tax treaty in force between Brazil and the United States. The effect of a treaty depends on the type of payment, the percentage held and the structure, so it is analyzed together with the domestic rules of both countries.
How to choose the route
- Start from what the parent really provides. If it licenses software or provides services, a contract and a price are justified. If it only invests, dividends and capital returns are the natural routes.
- Compare the net cost of each route with your revenue, your margin and your regime.
- Check the treaty between Brazil and the parent's country.
- Build the documentation first: the Central Bank registration, the contract and the transfer pricing file.
- Review every year. The rules changed in 2026 and the consumption tax reform will change the cost of services again.
How we work
Move Advisory is the advisory arm of Move Online, an accounting firm based in São Paulo, founded in 2017. In the diagnosis, we compare the routes with your numbers, and in the operation we run the accounting, the withholding and the Central Bank updates. See the services page.