The Interpretative Declaratory Act No. 1/2016 ("ADI No. 1/2016") was published last Monday by the Federal Revenue Service regarding the taxation of financial investments held by individuals that become non-residents.

The mentioned ADI No. 1/2016 established that the person liable to tax (financial institutions, for example) must:

(i) Require evidence, from the individual, that the Communication of Definitive Departure from Brazil was filed; and
(ii) pay the tax on the income arising from the investments until the day before the individual′s departure from Brazil.

In other words, individuals that become non residents (and considering that they do not change their residence to a country listed as a tax haven) must liquidate the investments held in Brazil before the mentioned departure.

In case the individual becomes, once again, Brazilian tax resident, such information shall be reported to the financial institution in charge of the investments.

We remain at your entire disposal should you need any further information or clarification on this matter.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.