Offshore Wealth and Moving to Chile

Many of the offshore holdings and structures built five, ten, or fifteen years ago were designed for a tax landscape that no longer exists. Law 14,754/2023 ended the deferral mechanism that made those structures advantageous, and Brazil’s tax reform (Constitutional Amendment 132/2023) reshaped the ground rules for ITCMD — Brazil’s inheritance and gift tax — on estates and gifts with a foreign connection. Together, these two changes have made much of the planning done before 2024 outdated. When a family is also moving to Chile, these two shifts overlap with a third variable: the exact moment tax residency changes from one country to the other.

This guide explains what changed on both fronts — Law 14,754 and ITCMD — and why the timing of a move to Chile is the right moment to review, though not necessarily dismantle, an existing wealth structure.

Law 14,754/2023: the end of deferral for anyone still a Brazilian tax resident

Until 2023, a holding company set up abroad by a Brazilian could accumulate profits indefinitely without triggering Brazilian income tax — tax was only due once the funds were actually distributed or withdrawn. That mechanism, known as deferral, is what Law 14,754/2023 brought to an end.

What took effect starting in 2024

Controlled foreign entities (offshore companies) domiciled in tax havens, or without active income exceeding 60% of total income, began having their profits assessed as of December 31 each year and taxed at a flat 15% rate, even without any distribution to shareholders.
Financial investments held abroad directly by an individual are subject to the same flat 15% rate on returns.
Trusts set up abroad by a Brazilian settlor received specific tax treatment: if the settlor retains influence over the trust, its income is taxed as if it belonged to the individual directly.
The capital gains exemption on the sale of foreign assets acquired during a period of non-residency was repealed, and exchange rate variation on those assets now forms part of the taxable base.

The law also allowed foreign assets to be revalued at market value as of December 31, 2023, upon payment of an 8% tax on the difference — a regularization window that, in many cases, has already closed or is about to close, depending on the schedule set by Brazil’s federal tax authority (Receita Federal).

What changes once someone is no longer a Brazilian tax resident

This is the central point for anyone in the process of moving: Law 14,754/2023 applies to individuals who are Brazilian tax residents. Once a formal exit has been completed — the Communication of Definitive Exit (CSD) and the Definitive Exit Return (DSDP), filed with the Receita Federal — the person is no longer taxed in Brazil on the offshore’s annual profits, because they no longer meet the residency criteria that trigger the law.

That doesn’t mean the structure stops being relevant, however. It then falls under the rules of the new country of tax residency — in Chile’s case, under the three-year regime that taxes only Chilean-source income for a new resident, and under worldwide income taxation after that.

Disclaimer: the interaction between a definitive exit from Brazil, Law 14,754/2023, and Chile’s tax residency regime depends on the exact timing of each event — leaving Brazil, acquiring Chilean tax residency, and any corporate reorganization. The order of these events has a direct impact on the tax outcome. Each case should be modeled individually before any decision is made.

ITCMD on foreign estates and gifts: what changed with Constitutional Amendment 132/2023

This is the most unsettled issue in Brazilian estate planning right now, and any content presenting a simple, definitive answer is oversimplifying a discussion that remains open before the courts.

The background: why there was legal uncertainty before 2023

In 2021, Brazil’s Federal Supreme Court ruled, in Theme 825, that individual states could not collect ITCMD on estates or gifts with a foreign connection — a donor or deceased person residing outside Brazil, or assets located outside the country — because the Constitution required a federal complementary law regulating the matter, which had never been enacted.

What Constitutional Amendment 132/2023 changed

The tax reform created a transitional rule (Article 16 of Constitutional Amendment 132/2023): until the federal complementary law exists, individual states may collect ITCMD in these cases based on their own criteria — generally, the state where the heir or beneficiary is domiciled in Brazil, or the state where the asset is located, when the beneficiary also resides abroad. Several states have already updated their laws to attempt collection under this transitional authorization.

Why it’s still unresolved

The matter remains sub judice. State courts — including the São Paulo Court of Justice (TJ-SP) — are divided on whether the transitional authorization under Constitutional Amendment 132/2023 is already sufficient to legitimize collection, or whether it still depends on the federal complementary law that was never enacted. Specific cases have already reached the Federal Supreme Court for renewed review, and Bill PLP 108/2024, which aims to definitively regulate the matter at the federal level, is pending in Congress.

Situation	Landscape through 2021 (Supreme Court Theme 825)	Landscape after Constitutional Amendment 132/2023
Donor or deceased resides abroad, heir/beneficiary in Brazil	States barred from collecting without a complementary law	States authorized to collect under their own state law, on a transitional basis — but challenged in court in several states
Need for a federal complementary law	Considered mandatory by the Supreme Court	Still not enacted; Bill PLP 108/2024 pending in Congress
Legal certainty for taxpayers	Low, but with a favorable precedent	Low, with diverging state rulings and audit risk in some states

What this means in practice for anyone with a foreign structure

Families with a holding abroad, foreign assets, or heirs living in different countries need to consider that some Brazilian states are already collecting ITCMD on estates and gifts with an international connection, even while the matter is still being litigated. This is especially relevant in three common scenarios among families moving to Chile:

Parents residing in Brazil who gift shares of a foreign holding to children living in Chile.
The death of one of the structure’s holders while still a Brazilian tax resident, with heirs split between Brazil and Chile.
A gift made after already becoming a non-resident of Brazil (following a definitive exit), to an heir who remained a resident of the country.

Each of these scenarios has a different tax treatment, and the specific Brazilian state involved (São Paulo, Rio de Janeiro, Minas Gerais, etc.) also matters, because each state’s legislation has moved at a different pace in updating its laws.

How a move to Chile fits into the planning

The most common mistake isn’t having an outdated structure — it’s failing to review the structure at the exact moment tax residency changes countries, which is precisely when it should be reassessed.

Why the timing of the move is the right opportunity

A definitive exit from Brazil already requires the family to report all assets, accounts, and corporate holdings for the exit return — this is the most cost-effective moment, in terms of effort, to also review whether the structure still makes sense.
Chile’s three-year regime (taxing only Chilean-source income for someone who has just become a resident) creates a meaningful window to decide whether, when, and how to reorganize foreign corporate holdings, without triggering immediate taxation in the new country of residence.
Decisions about where to keep a holding company, whether the ultimate beneficiary should be an individual or a new structure, and how this connects to the heirs’ succession, all depend directly on where each family member will be a tax resident — information that only becomes final once the visa and residency in Chile are formalized.

Common mistakes

Leaving the holding “as is” simply because it worked until now. A structure designed for pre-2024 deferral may now be generating unnecessary annual taxation, or losing efficiency after a definitive exit from Brazil.
Making gifts to heirs in Brazil without evaluating the ITCMD rules of the destination state. In a climate of legal uncertainty, assuming “a gift from abroad doesn’t get taxed” is the riskiest assumption right now.
Reorganizing the structure before settling the date of the definitive exit from Brazil. The order of events — tax exit, corporate change, acquisition of Chilean residency — affects the final tax outcome, and reorganizing too early or too late can cost more than not reorganizing at all.
Treating Law 14,754 and ITCMD as the same issue. They are separate regimes — one taxes ongoing income, the other taxes the transfer of wealth (inheritance/gift) — and each requires its own analysis.

Compliance diagnostic: what to review before deciding

For families who already have a foreign structure and are evaluating a move of tax residency to Chile, a preliminary diagnostic typically covers:

Classifying the controlled entity under the criteria of Law 14,754/2023 (tax haven status, active vs. passive income, whether annual assessment is due).
The status of the foreign asset and rights declaration filed with the Receita Federal up to the date of the definitive exit.
Mapping where the structure’s ultimate beneficiaries and heirs currently reside, and which Brazilian states are already collecting ITCMD on foreign connections.
Whether the current corporate structure is compatible with Chile’s three-year tax regime and with the definition of Chilean tax residency (183 days within a 12-month period).
The time window between the definitive exit from Brazil and any corporate reorganization, to minimize overlap between the two tax regimes.

Frequently asked questions

If I stop being a Brazilian tax resident, does my offshore automatically stop owing Brazilian tax?

The annual taxation under Law 14,754/2023 applies to Brazilian tax residents. Once a definitive exit has been properly formalized, the rule no longer applies to the individual — but the structure then falls under the rules of the new country of tax residency, which may have its own transparency criteria.

Will a gift I make from Chile to my child in Brazil be subject to ITCMD?

It depends on the child’s state of residence and the state legislation in effect at the time of the gift — an issue currently being resolved differently across various state courts. This is a scenario that requires specific analysis before the transaction, not after.

Is it worth closing the holding before moving to Chile?

Not necessarily. In many cases, maintaining and reorganizing the structure is more efficient than closing it, especially when there are heirs in more than one country. The decision depends on a full diagnostic of the structure, not on a general rule.

Is the market-value asset revaluation option (at the 8% rate) still available?

The window created by Law 14,754/2023 had a specific deadline set by the Receita Federal, and it may have already closed or be in the process of closing, depending on the type of asset. Verify the specific status before assuming the option is still open.

Does the Brazil-Chile tax treaty also prevent double taxation on inheritance?

No. The treaty between Brazil and Chile to avoid double taxation covers income tax, not inheritance and gift tax. There is currently no specific treaty between the two countries to avoid double taxation of ITCMD — which reinforces the need for case-by-case planning.

Next steps

A wealth structure that’s poorly aligned with the timing of a move is the kind of mistake that often only surfaces years later — by which point fixing it costs far more than planning it would have. Global & Co. carries out full diagnostics of foreign structures for families evaluating or already formalizing residency in Chile, covering Law 14,754/2023, ITCMD, and the interaction with Chile’s three-year tax regime.

This content is for informational purposes only and was prepared based on the legislation in effect as of its publication date, including matters that remain under discussion in the courts (ITCMD on international estates and gifts, post-Constitutional Amendment 132/2023) and in Congress (Bill PLP 108/2024). It does not constitute legal, tax, or accounting advice. Decisions about corporate structures, gifts, and succession should be made only after individual analysis by qualified professionals.