The legislation approved in 2016 by the ex-president Dilma Rousseff establishes the special regime for tax and exchange settlements (RERCT) which has the objective of legally regulating and settling all of the lawful equity owned outside the country or already repatriated but not yet reported, as well as those assets incorrectly reported up to 31st of December 2014, by the country’s residents through voluntary assets declaration.

How does this fund repatriation work?

The item of legislation Ley 13.254/2015 decrees the collection of a 15% income tax on imports that are to be regularised and a penalty in the same per cent amount. The cost of settlement will thus be 30% of total assets held non-compliantly, while further taxation and penalties on these amounts will be pardoned.

Why declare these assets?

All persons owning balances in accounts held outside the national territory, goods or any other asset abroad are obligated to include them in their income tax report (IRPF). The omission of these goods in the income tax report is a crime according to Ley 7.492/1986 and this repatriation process is therefore of great importance.

Criminal offence of not reporting assets in other countries

The omission in one’s tax report of goods and amounts abroad constitutes fiscal offence and tax evasion, with the potential severity of its penalty being arrest without bail, depending on the gravity of the respective case.

The objectives of the Repatriation Law

This Repatriation Law is one of the main points in the Government’s fiscal adjustments, which view this as an important and considerable source of additional revenue, in the effort to increase the net taxes for this year and so achieve its goal, of a R$ 170.5 billion deficit.

According to the Treasury Deparment “Ministerio de Hacienda Pública”, the Temer government plans to collect up to R$ 50 billion through the legal regulation and settlement proposed by this piece of legislation. The benefit to tax payers will be the reduction in the amount to be paid to the Treasury and amnesty from possible crimes they may have been charged with.