Investments abroad are the choice of many Brazilians looking to diversify their portfolio and protect themselves against market financial. However, this type of investment requires caution and, particularly, attention to the requirements of the Central Bank and the Federal Revenue Service.

Understand the legal obligations of Brazilian investors in the international financial market and learn about the advantages and disadvantages of this type of investment:

Why Invest Abroad? (advantages and disadvantages)

1. Why Invest Abroad?

If you're still asking yourself this question, let's outline some good reasons why people nowadays seek to invest abroad:

The Brazilian stock exchange trades shares of only about 1% of the companies available in the market;

This means that investing in Brazilian stock restricts the number of companies in which you can invest.

For this reason, many people choose to invest both in Brazil and abroad as a form of diversification. To do so, it's necessary to check with financial institutions the procedure for opening an investment account abroad.

Diversification of investments

This strategy is essential to maintain the stability of investments when the local market, namely fixed income and variable income, does not yield good results.

Are there risks in investing abroad?

Like any investment, international investments also come with risks. It's also necessary to understand the investments being made, as well as their respective markets, or alternatively, hire specialized consultancy to guide you.

2. What are the legal obligations for those who invest abroad?

When investing abroad, similar to the domestic market, it's necessary to register the investments and their respective earnings with the Federal Revenue Service (Income Tax) and the Central Bank of Brazil. Let's see:

a. Central Bank

Obligations towards the Central Bank apply to investors who have US$ 100,000 or more invested abroad, through:

• Participation in company capital;
• Fixed income securities;
• Shares;
• Deposits;
• Real estate; and others.

For these investors, it is necessary to annually submit the DECLARATION OF BRAZILIAN CAPITAL ABROAD (CBE - Bacen), under penalty of monetary fines.

Note that investments abroad below US$ 100,000 are exempt, provided that obligations to the Federal Revenue Service are met.

The deadline for submitting this declaration must be observed, under penalty of fines for:

• Failure to submit the declaration
• Late submission;
• Declaration of false information.

Fines can range from 1% (with a limit of R$ 25,000) to 10% (with a limit of R$ 250,000), depending on the severity of the offense. The declaration can be made through the Central Bank's website.

b. Federal Revenue Service

Obligations with the Federal Revenue Service relate to the Income Tax Declaration (annual deadline until April 30th).

Therefore, those with investments abroad must declare this investment in the annual declaration, whether above or below US$ 100,000.

Note that there is a cumulative obligation for those with investments abroad above US$ 100,000, i.e., before the Federal Revenue Service and the Central Bank.

Additionally, it is necessary to verify with the authorities of the country where the investment is made the rules to be observed for taxation.

In case of doubts, seek guidance from a specialist to ensure compliance with all legal regulations, ensuring the profitability of the investment and your legal security.

Source: Jusbrasil

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