Legislative Decree approving the Agreement between Brazil and the United States of America for Tax Information Exchange and Instruction 1571/15 IRS
On 26th June 2015, Legislative Decree No, 146/15 ("Decree"), which approved the agreement between Brazil and the United States to allow the exchange of information under the Foreign Account Tax Compliance Act (FATCA), was published in the Official Gazette.
The Decree enables the application of the FATCA with regards to Brazilian financial institutions and expands the scope of tax information to be shared with the Brazilian Revenue Service.
In view of the Decree, on 3rd July 2015 the Brazilian Revenue Service enacted Normative Instruction 1571/15 to establish the procedures to be adopted by "informant Financial Institutions" when reporting financial information of interest to the Brazilian Revenue Service.
Instruction No 1571/15 governs the requirement to provide information as to financial transactions by means of an electronic statement (e-Financial), which is a new obligation for all foreign Financial Institutions. This e-Financial statement includes a number of files that must detail the transaction in question.
The information to be shared with the U.S. Internal Revenue Service (IRS) and the Brazilian Revenue Service includes name, nationality, address, account number or equivalent, individualized for the account or contract in the reporting institution, registration number in the Natural Persons Registry (CPF) or the National Register of Legal Entities (CNPJ), Tax Identification Number (TIN) abroad, when available, trade name, balances and overall monthly amounts transferred and other registration information.
Normative Instruction 1571/15 lists which legal entities are required to submit the e-Financial which are, in short, those entities supervised by the Central Bank of Brazil (BCB), the Brazilian Securities Commission (CVM), the Superintendence of Private Insurance (SUSEP) and the National Superintendence of Pension Funds (PREVIC) whenever the monthly overall amount transferred or balance is greater than R$ 2,000.00 (two thousand reais) for individuals, and R$ 6,000.00 (six thousand reais) for legal entities. Individuals may also be required to comply with such obligations, in the cases described in the regulations.
The e-Financial is mandatory for transactions occurring on or after 1st December 2015, but the IRS may require, under FATCA, that information regarding calendar year 2014 also be shared.
To access the complete Decree and Instruction, click here.
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