Following approval in the Federal Senate, the wording of Bill No. 1,087/25 continues to raise doubts as to whether profits calculated up to 31 December 2025 will be exempt from taxation for individuals if paid after that date.

Article 6-A of the bill establishes that profits and dividends paid from 2026 onwards, in a monthly amount exceeding R$50,000.00 per beneficiary, will be subject to 10% withholding of personal income tax by the paying legal entity. Excluded from this rule are results calculated up to 2025 whose distribution has been approved by 31 December 2025, provided they are payable under civil or corporate law and paid in accordance with the corporate act of approval.

In addition, article 16-A, which deals with the minimum taxation of annual personal income tax on high incomes, expressly excludes from the tax base dividends whose distribution has been approved by 31 December 2025, paid, credited or delivered in 2026, 2027 and 2028, provided the terms set out in the corporate act of approval are observed.

From the analysis of these provisions of the tax law, an apparent divergence arises with corporate law. Article 205, §3, of the Brazilian Corporations Law determines that the payment of dividends must occur within the same financial year in which they are approved, as a form of protection for minority shareholders. Bill No. 1,087/25, however, allows dividends declared by 31 December 2025 to be paid in 2026, 2027 and 2028 without loss of tax exemption – provided they are payable under civil or corporate law and paid in accordance with the corporate act of approval. Should the corporate act then provide for payment beyond the deadline permitted in the Corporations Law?

The Corporations Law provides that dividends become payable from the date of their declaration, even if their payment occurs at a later date. In other words, the shareholder comes to hold a certain and enforceable claim from the act of declaring the dividends, assuming the position of creditor of the company. The moment at which the shareholder can collect such claim is merely a question of when, which does not remove the enforceability of the dividends, but delimits the company’s default. The fact is: §3 of article 205 of the Brazilian Corporations Law establishes that, in the absence of a decision by the general meeting, the maximum payment period is 60 days, but in any event, it must occur within the same financial year.

The controversy therefore arises from the question of whether it is actually possible to provide for the payment of dividends 3 years after the resolution and whether corporate law would still be being observed. In other words, could the temporal limitation imposed by corporate law affect the tax exemption provided for in the Bill? Could the tax inspector argue that by providing for payment beyond the financial year of the resolution, corporate law was not observed and neither was the requirement for exemption?

From a tax perspective, article 16-A of Bill No. 1,087/25 is express in excluding from the calculation base for minimum personal income tax, from the 2027 tax year (2026 calendar year) onwards, profits and dividends whose distribution has been approved by 31 December 2025 and paid in 2026, 2027 and 2028. Any attempts by the Federal Revenue Service to remove the exemption based on the temporal limitation imposed by the Corporations Law would encounter an obstacle in the express provision of article 16-A, and should therefore not succeed.

Furthermore, it should be emphasized that the Bill does not require that dividends be paid in the same financial year in which they are declared for non-taxation purposes. The requirement is that such dividends be payable under the law and that they observe the terms of the act of approval.

In this regard, from the perspective of corporate law: (a) dividends become payable from the act of their declaration; (b) if the corporate act approves payment in a subsequent financial year (even if contrary to the legislation), the nature and enforceability of the dividends remain unchanged; and (c) in any collection action brought by minority shareholders, the delay in payment does not annul the corporate resolution that approved the distribution, nor does it alter the legal nature of the dividends.

In the event of any challenges by the Federal Revenue Service, even if non-compliance with article 205, §3, of the Corporations Law is alleged, there is consistent legal basis to support the non-taxation of these dividends. However, anticipating whether there will be assessments and, if so, how they will be judged, is a difficult exercise in fortune-telling, especially considering the history of fluctuation in the application of new tax rules in the country.

In any case, one thing is certain: this is the time for companies with positive results in 2025, and/or with accumulated profits from previous financial years, to evaluate the best allocation of these amounts, anticipating the likely tax impacts to be introduced by Bill No. 1,087/25.