Brazil Names Your US LLC on a List. By Name.

TL;DR

Most articles about non-residents and US LLCs discuss the US side. For a Brazilian tax resident, the US side is usually the smaller problem.

Brazil’s Receita Federal lists the foreign-owned US LLC as a “privileged tax regime” — explicitly, by entity type, in Normative Instruction RFB 1,037/2010, Article 2, item VII. A binding ruling published in April 2026 confirms it applies to fiscally transparent LLCs owned by non-US residents, in the individual income tax context.

Once that is true, Law 14.754/2023 taxes the LLC’s profits in your hands at 15% on 31 December each year, whether or not you distribute anything.

First, the US side, briefly

There is no US-Brazil income tax treaty. Brazil does not appear on the IRS’s United States Income Tax Treaties — A to Z page or in IRS Table 3. What exists is:

• A tax information exchange agreement, signed at Brasília 20 March 2007, in force 19 March 2013 (TIAS 13-319.1).
• A FATCA intergovernmental agreement (Model 1), signed 23 September 2014, in force 26 June 2015 (TIAS 15-626.2).

Both move information. Neither reduces tax, and neither creates a permanent establishment threshold — IRC §894(b) makes PE a treaty-only concept. So on the US side your position rests entirely on the domestic test in IRC §864 and §871(b): are you engaged in a US trade or business, and what income is effectively connected to it?

And Form 5472 with a pro-forma Form 1120 is due regardless — that obligation, under Reg. §301.7701-2(c)(2)(vi), turns only on the LLC being a domestic disregarded entity solely owned by one foreign person.

Now the part that is specific to you.

Fact 1 — The LLC regime is on the list, by name

Normative Instruction RFB nº 1.037, of 4 June 2010, Article 2, item VII (original Portuguese):

VII - com referência à legislação dos Estados Unidos da América, o regime aplicável às pessoas jurídicas constituídas sob a forma de Limited Liability Company (LLC) estaduais, cuja participação seja composta de não residentes, não sujeitas ao imposto de renda federal;

Translation: “with reference to the legislation of the United States of America, the regime applicable to legal persons constituted in the form of state Limited Liability Companies (LLC), whose membership is composed of non-residents, not subject to federal income tax.”

Read the three conditions. A state LLC. Non-resident membership. Not subject to federal income tax. That is the standard structure sold to Brazilians every day.

Who counts as “non-resident”? Receita Federal settled this in Solução de Consulta Cosit nº 218, de 29 de novembro de 2018: the term “refers to non-residents of the United States of America” — precisely because those owners are not subject to US federal tax. Not non-residents of Brazil. Non-residents of the US.

Is it still live? Solução de Consulta nº 56, de 9 de abril de 2026, published in the Diário Oficial da União, answers it — and it is an individual income tax (IRPF) ruling:

As LLCs cuja participação seja composta de não residente nos Estados Unidos da América e que sejam tratadas como transparentes de acordo com a legislação fiscal norte-americana são caracterizadas como regime fiscal privilegiado nos termos do inciso VII do art. 2º da Instrução Normativa RFB nº 1.037, de 4 de junho de 2010.

Translation: “LLCs whose membership is composed of non-residents of the United States of America and which are treated as transparent under US tax law are characterised as a privileged tax regime under item VII of Article 2 of Normative Instruction RFB 1,037/2010.”

Treated as transparent is the disregarded single-member LLC. In an individual tax ruling. Four months ago.

Two corrections to things you will read elsewhere:

• The provision is item VII, not VI. It is the most checkable fact in this article and it is commonly miscited.
• The listing has never been suspended, and it is not state-specific. It refers to state LLCs generally. There is no Wyoming carve-out, no New Mexico carve-out. Brazil has used its suspension mechanism for other countries’ regimes; it has not used it here.

Fact 2 — “Privileged tax regime” is not the same as “tax haven”

Brazilian law keeps two lists, and conflating them produces wrong answers in both directions.

The distinction matters most for withholding. Article 8 of Law 9,779/1999 imposes 25% withholding on remittances to a beneficiary in a jurisdiction that does not tax income or taxes it at under 20% — and it cross-refers to Article 24, the jurisdiction article. Not 24-A.

So a Brazilian payer remitting to a US LLC is not automatically subject to 25% withholding. You will see that claim made confidently. It overstates the rule. Specific provisions do extend 25% to privileged-regime beneficiaries in defined situations — vessel charter under IN RFB 1.455/2014, for instance — but there is no general rule.

What does follow from the Article 24-A listing is real enough:

• Transfer pricing, even between unrelated parties. Article 24-A applies Brazil’s transfer pricing rules (now the OECD-aligned rules of Law 14.596/2023) to transactions with a privileged-regime entity “inclusive na hipótese de parte não relacionada” — including where the party is unrelated. An arm’s-length Brazilian customer paying your US LLC is pulled into transfer pricing compliance.
• Thin capitalisation. Under Article 25 of Law 12.249/2010, interest paid to a privileged-regime entity is deductible only where total debt to such entities does not exceed 30% of the Brazilian payer’s net equity.
• And the one that actually decides most cases — the gateway into Law 14.754/2023.

Fact 3 — Annual taxation, whether or not you take the money

Law nº 14.754, of 12 December 2023, in effect from 1 January 2024 (Article 47, item II), rewrote how Brazilian individuals are taxed on offshore entities.

Article 5, caput:

Os lucros apurados pelas entidades controladas no exterior por pessoas físicas residentes no País… serão tributados em 31 de dezembro de cada ano…

Translation: profits of foreign entities controlled by individuals resident in Brazil “shall be taxed on 31 December of each year.”

Article 5, §10, item III removes any doubt about deferral — profits are included in the annual return on 31 December “independentemente de qualquer deliberação acerca da sua distribuição”: independently of any decision regarding their distribution.

Article 2, §1 gives the rate: 15%, in the annual adjustment, with no deductions from the base.

Does a US single-member LLC fall inside it?

Three steps, each in the statute:

1. Is it a “controlada”? Article 5, §1 defines controlled entities as “as sociedades e as demais entidades, personificadas ou não” — companies and other entities, whether or not they have legal personality — where the individual holds, directly or indirectly, more than 50% of the capital. A wholly-owned LLC is 100%. The “personificadas ou não” language is deliberately wide enough to capture a disregarded entity.

2. Does it pass the scope gate? Article 5, §5 limits the regime to controlled entities that meet at least one of two conditions:

I - estejam localizadas em país ou em dependência com tributação favorecida ou sejam beneficiárias de regime fiscal privilegiado de que tratam os arts. 24 e 24-A da Lei nº 9.430…; ou II - apurem renda ativa própria inferior a 60% da renda total.

Item I is satisfied by the IN 1.037/2010 Article 2, VII listing — the point Solução de Consulta nº 56/2026 confirms. You do not need to reach item II. But note that item II would independently catch many holding-type structures: Article 5, §6(I) excludes royalties, interest, dividends, rents, most capital gains and financial investments from “active income.”

3. Consequence. Profits are taxed to you at 15% on 31 December each year, distributed or not.

The credit problem

Article 5, §15 allows a deduction for income tax paid abroad by the controlled entity. Here is the difficulty: a disregarded US LLC pays no US federal income tax at entity level. There is typically nothing to credit at that level.

If you personally pay US tax on effectively connected income via Form 1040-NR, whether and how that credits against the Article 5 charge is a question for a Brazilian adviser — and it is exactly the kind of question that has no clean answer without a treaty.

And no, the rate did not go up

Planalto’s header for Law 14.754 carries a reference to Medida Provisória nº 1.303/2025, marked vigência encerrada. That provisional measure would have changed investment taxation, but it was pulled from the agenda and lapsed without conversion into law on 8 October 2025. Content asserting a 17.5% or 18% rate is describing a measure that expired. The 15% rate in Law 14.754/2023 stands.

What this actually means

The structure most Brazilians are sold — a Wyoming or Delaware single-member LLC, disregarded, banked at a US fintech, profits accumulating — is:

• Named on a Receita Federal list as a privileged tax regime;
• Therefore inside Law 14.754/2023’s controlled-entity regime through the §5(I) gate;
• Taxed annually at 15% on accrued profits, with no deferral available;
• Not sheltered by any treaty, because there is none;
• Still required to file Form 5472 in the US, with a $25,000 penalty for failure;
• Potentially dragging Brazilian customers into transfer pricing, even at arm’s length.

None of that makes a US LLC a bad idea. It makes the “0% offshore” version of the pitch false, and it means the compliance cost has to be priced in on both sides before you decide.

What to do

1. Establish whether you are a Brazilian tax resident. Everything above depends on it. If you have left Brazil and filed the Declaração de Saída Definitiva do País correctly, the analysis changes completely.
2. Assume the LLC is in scope of Article 5 unless a Brazilian adviser tells you otherwise on your facts. Do not build a plan on the hope that a disregarded entity is not a “controlada” — the statute says personificadas ou não.
3. Budget for the 31 December accrual, not for the date you move money. This is the single most common surprise.
4. Ask your Brazilian adviser about the §5, §11 election and about the entidade transparente options in Law 14.754 — there are elective regimes and they are outside the scope of this article, but they exist and they change the arithmetic.
5. Do the US side properly and cheaply. Form 5472 with pro-forma 1120 every year; a protective 1040-NR where the trade-or-business question is live, to preserve deductions under IRC §874(a).
6. Do not rely on English-language sources for the Brazilian half. Almost none of them mention item VII.

Frequently Asked Questions

Q: My accountant in Brazil has never heard of item VII. Should I be worried? A: Point them to Solução de Consulta nº 56, de 9 de abril de 2026, published in the Diário Oficial da União, and to Solução de Consulta Cosit nº 218/2018. Both are binding on Receita Federal and both are findable by name.

Q: What if my LLC is a multi-member LLC, not disregarded? A: The IN 1.037 item turns on membership composed of non-residents and the entity not being subject to federal income tax. A partnership-taxed multi-member LLC is also not subject to federal income tax at entity level. Get it assessed rather than assuming multi-member solves it.

Q: What if I elect C-corporation treatment for the LLC? A: Then it is subject to US federal income tax at entity level, which speaks directly to the third condition in item VII. It also means paying US corporate tax. That is a real trade-off to model, not an obvious win.

Q: Does the UAE listing story apply to me? A: Brazil removed the United Arab Emirates from its favoured-taxation jurisdiction list in May 2025 (IN RFB 2.265/2025). That is a different list from the one your LLC is on, and it does not affect item VII.

Q: Is any of this new? A: The listing dates from 2010. What is new is Law 14.754/2023, effective 2024, which turned the listing from a transfer-pricing footnote into an annual income tax charge on individuals.

Next Steps

The Brazilian half of this is not something a US preparer can answer, and the US half is not something a Brazilian contador usually handles. What you need is both done properly and neither one guessed at.

We handle the US side — Form 5472 and the pro-forma 1120, and Form 1040-NR where it applies — and we will tell you plainly when a question belongs to your Brazilian adviser. For how Brazil compares to treaty countries, see US LLC tax by country.

This article is general information, not tax advice, and the Brazilian analysis in particular requires a qualified Brazilian professional. Provisions are cited so you and your adviser can verify them directly. Have your specific facts assessed before acting.