Foreign Wealth: 8 Signs Your Structure Needs a Review
Trust, holding company or tax exit set up before 2024? Eight concrete signs your structure needs reviewing in light of the 2024 to 2026 rule changes.
A structure that was right in 2021 may no longer be right in 2026
Many people organized their international wealth — a holding company abroad, a trust, a move to Chile, accounts and investments outside Brazil — based on rules that have changed significantly over the past three years. The problem is that these structures are rarely reviewed once they’re set up: they worked, the money is there, and nobody goes back to check whether the legal basis behind the original decision still holds.
Between December 2023 and January 2026, at least four significant changes directly affected people with wealth outside Brazil and ties to Chile:
| Change | Date | What it affects |
|---|---|---|
| Law 14,754/2023 (Brazil’s “Offshore Law”) | in effect since 01/01/2024 | Automatic annual taxation of offshore and foreign trust profits, at 15% |
| Amending protocol to the Chile-Brazil tax treaty | in effect since 10/31/2025, applicable from 01/01/2026 | Principal purpose test (PPT) for accessing treaty benefits; expanded information exchange |
| Complementary Law 227/2026 (international inheritance tax) | enacted 01/13/2026 | Closes the loophole that prevented collection of inheritance/gift tax with a foreign element |
| Automatic auditing via information exchange (CRS) | reporting since 2018, with growing use by the SII and the Brazilian tax authority | Cross-referencing of bank data across more than 100 countries |
If your structure was designed before these changes — and was never reviewed afterward — it’s worth going through the checklist below before assuming it still works as originally planned.
8 signs your structure needs a review
1. Your trust deed was never updated
Law 14,754/2023 requires the settlor or beneficiaries of a trust abroad to amend the trust deed (or letter of wishes) to include a compliance clause reflecting the new law — or, when they don’t have the authority to amend the document, to send formal notice to the trustee. Revocable trusts now have their assets treated as belonging to the settlor; irrevocable trusts, to the beneficiary. If that update was never made, the structure may be operating under an outdated legal classification before the Brazilian tax authority.
2. Your foreign holding company never triggered automatic taxation on December 31
Since 2024, profits of controlled foreign entities — domiciled in a favorable-taxation jurisdiction, or with active income below 60% of the total — are automatically taxed at 15% on December 31 each year, regardless of distribution. If your holding fits that profile and no corresponding tax has ever shown up on your return, that’s a sign the structure hasn’t been adjusted to the new law.
3. You live outside Brazil, but never formalized your tax exit
Without the Communication of Definitive Exit and the Definitive Exit Return, the Brazilian tax authority continues to treat the person as a tax resident, subject to worldwide income taxation — even if they’ve lived in Chile for years and never remitted money to Brazil.
4. Your estate plan assumes “foreign assets don’t pay Brazilian inheritance tax”
Until January 2026, that assumption was technically correct in most cases, due to the absence of a federal complementary law regulating the matter. It stopped being correct with Complementary Law 227/2026: if the heir or beneficiary is domiciled in a Brazilian state, that state may now have authority to collect ITCMD, even when the wealth holder is domiciled in Chile.
5. Your Brazil-Chile structure relies on a holding with no real economic activity
The protocol updating the Chile-Brazil tax treaty, applicable since January 2026, introduced a principal purpose test: structures whose predominant goal is accessing treaty benefits — without real economic substance — can have those benefits denied. “Paper” holdings, with no activity, employees, or effective management decisions in the country where they’re registered, are the most exposed.
6. You don’t keep documented records of your trips between Chile and Brazil
The day count that determines whether someone becomes a Brazilian tax resident again is based on a rolling 12-month window — not the calendar year — and adds up separate trips. Without records of entry and exit dates, it’s difficult to defend that count if it’s ever questioned.
7. You hold foreign investments and never filed the DJ 1929 declaration
If you’re domiciled or resident in Chile with foreign investments subject to this obligation, failing to file Sworn Declaration No. 1929 (due by June 30 each year) carries a fine of 10 to 50 UTA — and the gap between what the SII automatically receives from other countries and what appears on the declaration is currently one of the main triggers for an audit.
8. You never evaluated extending Chile’s three-year exemption period
The benefit of being taxed only on Chilean-source income, under Article 3 of Chile’s Income Tax Law, runs for three years, extendable in qualifying cases through a request filed before the deadline. Anyone approaching the end of that period without having evaluated this option loses the chance to request it.
What an international compliance diagnostic actually is
A compliance diagnostic is a focused review — not a full restructuring project — that compares an existing wealth and tax structure against the legislation currently in effect, in both Chile and Brazil, and specifically flags where there’s a mismatch, a risk of penalty, or an unmet obligation. It doesn’t assume anything was done improperly: in most cases, the structure was correct when it was set up, and what changed was the law — not the intent of whoever created it.
This type of diagnostic typically covers, at minimum:
- domicile and tax residency status in each of the two countries;
- classification of existing holdings and trusts under Law 14,754/2023;
- compliance with reporting obligations (DJ 1929, IN RFB 2,180/2024, among others);
- the estate plan’s exposure to Complementary Law 227/2026;
- the economic substance of structures that rely on Chile-Brazil treaty benefits.
Step by step for a first review, before seeking professional support
- Gather the founding documents for each structure (trust deed, articles of incorporation, holding company bylaws) and check the date of the last update.
- Confirm whether the tax exit from Brazil was formalized — check for records of the Communication and the Definitive Exit Return.
- Verify whether DJ 1929 was filed every applicable year, not just the year there was a gain.
- Identify the current domicile of each heir or beneficiary, not just the wealth holder, to assess exposure to the new ITCMD rules.
- Assess the economic substance of each holding involved in Brazil-Chile flows — real activity, effective management, employees, decisions made in the place of registration.
- Check the start date of the three-year exemption count in Chile and whether it’s time to evaluate an extension.
- Document trips and stays between the two countries over the last 12 months.
Advantages and costs of reviewing now
| Advantages of reviewing now | Cost of postponing |
|---|---|
| Corrects exposures before a notice or audit, at lower regularization cost | Outdated structures accumulate exposure every December 31 (Law 14,754) with no automatic alert |
| Still allows requesting an extension of the Chilean exemption period, if applicable, before the deadline | Once the three-year period expires, the extension is no longer possible |
| Aligns the estate plan with the new ITCMD jurisdiction before an actual succession event | After a death or gift, planning options shrink drastically |
| Reduces the risk of double taxation by aligning the timing of both countries | Every year without alignment is another year of accumulated exposure |
Common mistakes
- Assuming a structure that “always worked” will keep working without review, even after relevant legislative changes.
- Treating the tax exit, Chilean residency, and estate planning as three isolated decisions, without a joint timeline.
- Leaving the review for after an event (penalty, death, asset sale) instead of before.
- Assuming “no one will find out,” ignoring the growing volume of automatic information exchange between countries.
Frequently asked questions
Does a compliance diagnostic replace restructuring the holding or trust?
Not necessarily. The diagnostic identifies where there’s a mismatch with current legislation; the decision to restructure, maintain, or close a structure is a later step, informed by what the diagnostic reveals.
Do I need to have done something wrong to need a diagnostic?
No. Most cases involve structures that were correct when created and that the law, upon changing, began treating differently — not an original error.
Is the diagnostic only useful for someone already living in Chile, or also for someone planning the move?
It’s useful in both cases. For someone who hasn’t moved yet, the diagnostic helps design the structure with current rules already in mind; for someone who has already moved, it helps identify adjustments.
How long does a diagnostic like this take?
It varies based on the number and complexity of the structures involved, but it’s usually significantly faster than a full restructuring, precisely because it’s an identification phase, not an execution phase.
Conclusion
None of the eight situations listed here, on its own, means something was done incorrectly. They mean the law changed more than most wealth structures were updated — and the gap between the two is exactly where penalties, fines, and estate-planning surprises originate. A focused diagnostic, done before any event forces the review, is usually simpler and cheaper than fixing things after the fact.
This content is for informational purposes only and was prepared based on the legislation in effect as of its publication date. It does not constitute legal, tax, or accounting advice. Each situation should be reviewed individually by qualified professionals.