CFC rules affecting a Brazilian resident

[Outlander]

A friend of a friend of my cat is a Brazilian resident and came to me with the following problem. He's got a e-commerce/software company in a classic tax haven and a Transferwise account with a six figures balance, and is in the process of opening a bank account. He wasn't aware of CFC rules and was under the wrong assumption that he wouldn't have to pay Brazilian taxes on this setup. As a resident of Brazil, my understanding is that he does.

- Will Transferwise exchange information with Brazil?
- Does anyone have knowledge about CFC rules in Brazil and whether they apply to persons owning offshores, or only to domestic companies owning foreign companies? (I tried translating the law and it seems it's the later option, but frankly it's cryptic and it'd make no sense not to apply to persons as well)
- In the event that he has to pay taxes on dividend distribution as per CFC rules, how can he safely minimize taxation? I suggested the following for consideration: A) Have a foreign shareholder not subject to Brazilian taxes; B) Minimize company profits artificially increasing his expenses, payroll, etc. What are the risks of each solution?

Thanks everyone

 

[Artemis Eleutheria]

Let the friend of the friend of your cat know that if he moves to Paraguay he gets to keep all the mice he catches outside Paraguay.

 

[Outlander]

For anyone interested in this topic, I found one article with a few answers

Information Exchange Brazil and United States | Tax Planning & More

This article highlights information exchange between Brazil and the US, and that the US is a good jurisdiction for tax planning, asset protection, and more.

www.solblum.com