After much argumentation – very passionate, at some instances – the Law 13,254/16 has been enacted, opening the possibility for the Brazilian citizens to legally adjust undeclared foreign assets. The national disclosure.
The proposal has been strongly criticized, with bets that it would be an opportunity for drug dealers, black market currency dealers and money launderers to clean up their assets, integrating dirty money into the formal economy.
However, the law follows the example of dozen other countries, such as Germany, the United States, Italy, Portugal, who understood the need to enable declaration of omitted assets, provided that they bear legitimate origin. The Brazilian legislator, aware that thousands of Brazilian citizens sent, at other times, licit assets offshore in order to protect them from the national economic instability, decided to open a window, to offer an opportunity for the legal adjustment. As long as those assets are licit and the declarant pays fine for the past omission.
Therefore, from now on, every Brazilian citizen can legally update offshore assets which were undeclared or declared with omission or inaccuracy, with no fear of being sued for crime against the taxation order or by tax evasion, provided that such values bear licit origin.
Lawfulness of the assets’ origin does not have to be demonstrated by documents, but it has to be declared by the applicant to the legal adjustment. Such declaration cannot be used for criminal investigation, as a single sign, neither to substantiate any administrative proceeding bearing taxation or foreign exchange nature, in relation to the referred assets or funds.
It is important to highlight that although the law is referred to, by some people, as the “repatriation law”, the assets do not need to be brought to Brazil, and the values offshore may be legally adjusted. However, if the declarant decides for the repatriation, the transaction must be performed through financial institution authorized to operate in the Country and to operate in the foreign exchange market.
The law also sets forth that the legal adjustment can be done by the de jure or de facto owner of the assets. Hence, it is possible to legally adjust values in the name of third-parties, provided that both acknowledge that situation and that the declarant has not been convicted in final criminal proceeding for the crimes that are granted amnesty under the new law, as subsequently listed.
In that sense, the declarant will have to pay income tax at the aliquot of 15% over the value of the assets, calculated under the specific terms of the law, and 100% fine over such ascertained value, within two hundred and ten days, as of the effective date of the act which regulates the law, issued by the Brazilian Internal Revenue Office.
After the legal adjustment is concluded, enforcement of punishment shall be extinguished for the following crimes, derived from keeping of undeclared assets offshore: (i) crimes against the taxation order (set forth in art. 1 and clauses I, II and V of art. 2 of Law no. 8,137/90; in Law no. 4,729/65 and in art. 337-A of the Criminal Code); (ii) the crimes of falsity and use of false document connected to those acts (Criminal Code, arts. 297, 298, 299 and 304); (iii) the crimes of tax evasion and irregular foreign exchange transaction (arts. 21 and 22 of Law no. 7,492/86); (iv) the crime of money laundry when derived from the former ones.
The recommendation is for every Brazilian citizen with undeclared assets offshore to opt for the legal adjustment, adhering to the Program created by Law no. 13,254/16. Once the defined period is expired, the omission will once more be considered as crime of tax evasion and crime against the taxation order, and the risk of being subject to investigation and suing will be majorly increased, as treaties for exchange of fiscal information between Brazil and numberless other countries shall be approved and become effective. Through those treaties, data on accounts, assets and rights of Brazilian citizens offshore will be conveyed by the foreign fiscal authorities to the Brazilian Internal Revenue Office, which will then have sufficient information to enforce tax collections and criminal proceedings.
Therefore, even if fines are to be incurred, the declaration is safer than running the risk of being subject to criminal suing in the future as a result of a conduct that can be legally adjusted nowadays.
*Pierpaolo Cruz Bottini, Igor Sant’Ana Tamasauskas, Ana Fernanda Ayres Delosso and Claudia Vara San Juan Araujo are attorneys at Bottini & Tamasauskas Advogados.
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