Holding assets outside Brazil may give rise to specific obligations before the Central Bank of Brazil, regardless of whether any tax is payable. These obligations are discharged through the Declaration of Brazilian Capital Held Abroad — CBE, also known as DCBE.
The CBE is not a declaration of nationality. As a rule, the duty to file arises from being resident in Brazil and from holding certain property, rights, funds or assets abroad. The matter is governed mainly by Law No. 14,286/2021 and by BCB Resolution No. 279/2022.
What is Brazilian capital held abroad?
The legislation treats as Brazilian capital held abroad the funds, property, rights and assets of any nature held outside national territory by individuals or legal entities resident in Brazil.
In practice, the following may be covered:
- equity interests in foreign companies;
- bank accounts and deposits held abroad;
- foreign investment funds;
- debt securities issued by non-residents;
- loans, financings and trade credits granted to foreign individuals or companies;
- real estate located abroad;
- derivatives traded on foreign markets;
- virtual assets held or traded in structures abroad;
- export revenues kept outside Brazil;
- income arising from Brazilian capital held abroad;
- certain assets managed by foreign trusts or fiduciary agents on behalf of beneficiaries resident in Brazil.
Certain financings, direct loans and trade credits granted in Brazil to non-resident individuals or companies may also be treated as Brazilian capital held abroad.
Current regulation now expressly addresses transactions involving virtual assets, including them within the Central Bank’s international capital regime.
Who must file the CBE?
The obligation extends to individuals resident in Brazil and to legal entities headquartered in the country that hold capital abroad above the regulatory thresholds.
The main criterion is not Brazilian nationality. A foreign national resident in Brazil may also be required to file. Likewise, a Brazilian who has regularly acquired non-resident status, following definitive departure, is not subject to the CBE merely by virtue of holding Brazilian nationality.
For CBE purposes, the residence of an individual follows, in general terms, the criteria of tax legislation. In the case of legal entities, a company incorporated and headquartered in Brazil is considered resident.
As a rule, responsibility for providing the information lies with the holder of the assets. There are, however, specific situations in which the obligation may fall on:
- the depositary institution of BDRs;
- the manager of an investment fund with holdings abroad;
- the resident beneficiary of certain trust arrangements or similar structures.
Annual CBE and quarterly CBE
The regulation provides for two filing modalities: annual and quarterly.
| Modality | Minimum threshold | Reference date |
|---|---|---|
| Annual CBE | US$ 1 million | December 31 |
| Quarterly CBE | US$ 100 million | March 31, June 30 and September 30 |
The annual declaration is mandatory when the totality of Brazilian capital held abroad reaches, on the December 31 reference date, an amount equal to or greater than US$ 1 million, or the equivalent in other currencies.
The quarterly declaration is required when the assets reach or exceed US$ 100 million on the reference dates of March 31, June 30 or September 30.
There is no specific quarterly declaration for the fourth quarter. The December 31 position is reported in the annual declaration.
To verify the dollar equivalent, the criteria and the converter made available by the Central Bank for the relevant reference date must be observed.
How are the thresholds calculated?
The calculation takes into account the totality of the assets subject to the declaration, and not a single asset in isolation. To verify whether filing is mandatory, assets with positive values must be considered.
There is an important rule for property held in co-ownership or in joint accounts. The full value of the asset is used to verify whether the mandatory filing threshold has been reached. However, each holder declares only their own share.
For example, if two people jointly own real estate worth US$ 1.4 million, the full value of the property will be considered to verify the filing obligation. Even though each person owns only 50%, both must file the CBE and report only their respective interest.
This rule may extend to spouses, partners, joint holders of bank accounts and other co-owners, regardless of the matrimonial property regime or of the manner in which the asset was reported to the Brazilian Federal Revenue Service.
On the other hand, BCB Resolution No. 279 provides that, for residents in general, the following are not included in the calculation of the threshold:
- BDRs, except for the rules applicable to the depositary institution;
- quotas of investment funds established in Brazil that hold assets abroad.
In these cases, the specific rules applicable to the depositary institution or to the fund manager must be observed.
Filing deadlines
The general filing deadlines are as follows:
| Reference date | Filing period |
|---|---|
| December 31 | From February 15 to April 5 of the following year |
| March 31 | From April 30 to June 5 |
| June 30 | From July 31 to September 5 |
| September 30 | From October 31 to December 5 |
When the Central Bank is not open for business on the last day, the deadline may be extended to the next business day. For this reason, the operational calendar published annually by the Central Bank must always be checked.
The declaration is filed exclusively by electronic means, through the Central Bank’s CBE system. Filing is only considered complete once the declarant has finalized the form and obtained the corresponding protocol number.
Stock of assets and flow of income
The CBE is predominantly a stock declaration. This means that the assets existing on the reference date must be reported, such as:
- bank balance;
- market value of investments;
- value of the equity interest;
- value of the real estate;
- balance of loans granted;
- position in virtual assets;
- amounts receivable from non-residents.
In addition to the stock of assets, the declaration may require information on flows occurring during the period, such as income, distributed profits, interest, rents and export revenues.
In the annual declaration, flows must correspond to the period from January 1 to December 31. In the quarterly declarations, they must reflect only the corresponding quarter.
This distinction is relevant. Annual income should not be repeated in full in each quarterly declaration, just as quarterly amounts should not be unduly accumulated.
Required documentation
The documentation must make it possible to prove the existence, ownership and value of the assets reported.
Depending on the nature of the assets, the following may be required:
- bank statements;
- reports from brokers and custodians;
- real estate purchase contracts;
- deeds and property registrations;
- articles of association of foreign companies;
- financial statements;
- loan or financing contracts;
- export documents;
- proof of remittances;
- reports from virtual asset platforms;
- trust, foundation or fiduciary arrangement documents;
- appraisals or asset valuations;
- proof of income and of distributed profits.
The person responsible must keep the documentation used to support the declaration for ten years, counted from the corresponding reference date. During this period, the Central Bank may request the documents in order to verify the consistency of the information provided.
The CBE does not replace the declaration to the Brazilian Federal Revenue Service
The CBE has a regulatory and statistical purpose, aimed at determining the international capital held by Brazilian residents. It does not replace the obligations before the Brazilian Federal Revenue Service.
An individual may need to report the same assets in the Annual Income Tax Adjustment Declaration. Likewise, income, capital gains, profits, dividends, rents and other revenues obtained abroad may produce their own tax consequences.
Companies must also assess the accounting, tax and corporate obligations related to assets held outside the country.
These are therefore distinct obligations:
- the CBE is filed with the Central Bank;
- the declaration of assets and income is filed with the Brazilian Federal Revenue Service;
- any declarations in the foreign country must be assessed according to local legislation.
Filing one declaration does not automatically replace the other.
Penalties for non-compliance
Failure to provide the information, filing after the deadline or submitting incorrect data may result in administrative sanctioning proceedings before the Central Bank.
Under the criteria set out in BCB Resolution No. 131/2021, fines may be imposed, among other cases, in the following situations:
- late filing: 1% of the amount subject to declaration, capped at BRL 25,000;
- incorrect or incomplete information: 2%, capped at BRL 50,000;
- failure to file or absence of supporting documentation: 5%, capped at BRL 125,000;
- provision of false information: 10%, capped at BRL 250,000.
In certain cases of delay, the fine may be reduced according to the number of days elapsed. The penalty may also be increased if the declarant fails to correct or supplement the information when requested by the Central Bank.
The fine does not necessarily depend on the existence of a tax loss or of unpaid tax. It is an administrative infringement related to the duty to provide information to the regulatory authority.
Can a late declaration be remedied?
The Central Bank’s system remains available for filing declarations after the regulatory deadline has expired. A late declaration may be filed at a later date, but it will be subject to the applicable penalties.
It is also possible to rectify a declaration already filed when errors or omissions are identified. Rectification must be carried out carefully, especially when it involves a material change in amounts, ownership, income or the classification of the assets.
Remedying the situation at a later date does not automatically eliminate the infringement already committed through the delay or through the failure to file. Nevertheless, the voluntary and correct submission of the information is an important measure to reduce the declarant’s exposure and to demonstrate cooperation with the regulatory authority.
Conclusion
Holding capital abroad by residents in Brazil requires an analysis that goes beyond the income tax return. Depending on the value and nature of the assets, there may be an obligation to file the annual or quarterly CBE with the Central Bank.
Proper compliance with this obligation depends on:
- identifying all assets held abroad;
- verifying the holder’s residence status;
- calculating the assets as of the correct reference date;
- observing the rules applicable to property held in co-ownership;
- distinguishing between the stock of assets and the flow of income;
- filing the declaration within the deadline;
- keeping the supporting documentation;
- coordinating the information provided to the Central Bank with tax and accounting filings.
Failure to file, the omission of assets or the submission of inconsistent information may result in significant fines and regulatory inquiries. For this reason, the calculation should be carried out before the deadline expires, especially in structures involving foreign companies, real estate, trusts, financial investments or virtual assets.
The information in this article is for general and educational purposes. The specific obligation depends on the holder’s residence, on the composition of the assets, on the manner in which the assets were acquired and on the regulation in force on the relevant reference date.
