# Receita Federal and US LLCs: No Tax Treaty, No Safety Net

> Brazil has no US tax treaty. Since 2024 a founder-owned US LLC is taxed annually at 15% under Lei 14.754, and SC Cosit 56/2026 settles that the LLC is a privileged regime. CBE reporting from US$1 million.

- Canonical: https://www.globalsolo.global/blog/receita-federal-us-llc-no-treaty-brazilian-founders-2026
- Published: 2026-03-28 · Last updated: 2026-09-07
- Author: Jett Fu
- Topics: tax, brazilian-founders, receita-federal, bacen, us-llc, cross-border, no-treaty
- Affiliate disclosure: some links are affiliate links — https://www.globalsolo.global/about/how-we-make-money

---

Brazil is the world's ninth-largest economy. The US is its second-largest trading partner. And there is no income tax treaty between them. No reduced withholding rates. No tie-breaker provisions. No mutual agreement procedure. No competent authority mechanism when both countries tax the same income.

Most LLC formation guides assume some treaty relief exists between the founder's home country and the US. They talk about reduced withholding, tie-breaker rules, foreign tax credit mechanisms. For Brazilian founders, none of that applies. The tax relationship between Brazil and the US runs entirely on each country's domestic law, with no coordination beyond the FATCA Intergovernmental Agreement (IGA) signed in 2014.

What does that actually mean? The IRS applies the full 30% withholding on FDAP income. The Receita Federal taxes worldwide income at up to 27.5%. Carnê-Leão payments are due monthly, not annually. BACEN requires separate reporting of all foreign assets. Every obligation runs on its own schedule, in its own jurisdiction, with its own penalty regime.

## What "no treaty" means in practice

No treaty creates five specific gaps that treaty countries never deal with:

### 1. No reduced withholding rates

When a US-source payment (dividends, interest, royalties, service fees) goes to a Brazilian resident, the default IRS withholding rate of 30% applies under [IRC Section 1441](https://www.law.cornell.edu/uscode/text/26/1441). Treaty countries negotiate that down to 15% on dividends, 10% on interest, 0-10% on royalties. Brazil gets none of these reductions. A Brazilian founder whose LLC receives royalty income from a US client pays the full 30%.

For effectively connected income (ECI), the 30% flat withholding doesn't apply. Instead, it's taxed at graduated rates (10-37%) on Form 1040-NR. But FDAP income that isn't ECI hits the full 30%.

### 2. No tie-breaker provisions

Tax treaties include a "tie-breaker" article that determines which country gets primary taxing rights when someone qualifies as a resident of both. Without a treaty, if a Brazilian founder spends enough time in the US to trigger the Substantial Presence Test (183 days over a three-year weighted period), both countries claim the founder as a full tax resident simultaneously. No mechanism to resolve it. Both the IRS and Receita Federal tax worldwide income, independently.

### 3. No mutual agreement procedure

Treaty countries provide a Mutual Agreement Procedure (MAP) where the two tax authorities negotiate to eliminate double taxation in specific cases. For Brazil-US situations, MAP doesn't exist. If both countries tax the same income, there's no bilateral forum to raise the issue. You're on your own.

### 4. No exchange of information agreement (tax treaty basis)

The US and Brazil don't have a treaty-based exchange of information, but they do swap financial account data through two channels:

- **FATCA IGA (Model 1):** Brazil signed a FATCA IGA with the US in 2014. Brazilian financial institutions report US account holders to the Receita Federal, which transmits to the IRS. In reverse, US institutions report Brazilian account holders to the IRS, which transmits to the Receita Federal.
- **CRS ([Common Reporting Standard](/blog/crs-reporting-china-sta-us-accounts-2026)):** Brazil adopted the OECD's CRS in 2017. The US has not. Brazilian institutions report to 100+ jurisdictions through CRS, but US institutions don't report to Brazil through CRS. Your US bank accounts are visible to the Receita Federal through FATCA, not CRS.

Bottom line: the Receita Federal sees your US financial accounts. The information flow exists. It just operates outside any treaty framework.

### 5. No foreign tax credit coordination

Treaty countries spell out how foreign tax credits are calculated and which taxes qualify. Without a treaty, Brazil's credit for US taxes paid runs entirely on domestic law (Lei 4.506/64, Article 6). No bilateral coordination on which taxes qualify, how to handle income category mismatches, or what to do with taxes one country imposes but the other doesn't recognize.

## Receita Federal worldwide income taxation

Brazil taxes residents on worldwide income. If you earn $8,000/month through a US LLC, you owe Brazilian income tax on that amount whether the money is distributed, sits in the US bank account, or gets reinvested. It's classified as foreign-source rendimentos and taxed at progressive IRPF rates.

### IRPF progressive rates (2026)

| Monthly income (BRL) | Rate | Deduction (BRL) |
|----------------------|------|-----------------|
| Up to R$2,259.20 | 0% | — |
| R$2,259.21 to R$2,826.65 | 7.5% | R$169.44 |
| R$2,826.66 to R$3,751.05 | 15% | R$381.44 |
| R$3,751.06 to R$4,664.68 | 22.5% | R$662.77 |
| Above R$4,664.68 | 27.5% | R$896.00 |

At $8,000 USD/month (roughly R$40,000 at 5.0 BRL/USD), you're in the 27.5% bracket. After the deduction, the effective rate on R$40,000/month of foreign-source income works out to about 25.3%.

### How US LLC income is classified

The Receita Federal classifies income earned through a foreign entity as foreign-source rendimentos tributáveis (taxable earnings). The classification questions that matter:

- **Single-member LLC (disregarded for IRS purposes):** The IRS treats the income as belonging directly to the owner. The Receita Federal's treatment depends on whether it views the LLC as transparent or as a separate foreign legal person. In practice, Brazilian tax authorities generally look through single-member structures and tax the income as personal foreign-source income.
- **Income type:** Service revenue, product sales, interest, dividends — each classifies differently on the IRPF return. Service revenue through a US LLC goes under rendimentos do trabalho recebidos do exterior (work income received from abroad).
- **Currency conversion:** Convert to BRL at the PTAX rate (published by the Banco Central) on the date of receipt or credit.

## Since 2024: Lei 14.754 moved a founder-owned LLC onto an annual 15% regime

Everything below this section about monthly payments was the whole story until 31 December 2023. It is not the whole story now, and the change is the one most Brazilian founders have not heard about.

[Lei 14.754 of 12 December 2023](https://www.planalto.gov.br/ccivil_03/_ato2023-2026/2023/lei/l14754.htm) created a separate regime for income from capital held abroad, including "lucros e dividendos de entidades controladas" (art. 2). Article 2 §1 sets the rate: those amounts are taxed in the annual return "à alíquota de 15% (quinze por cento) sobre a parcela anual dos rendimentos, hipótese em que não será aplicada nenhuma dedução da base de cálculo". Article 5 then reaches the entity itself: profits of controlled entities abroad "serão tributados em 31 de dezembro de cada ano, na forma prevista no art. 2º". A single-member LLC is a controlled entity by definition (art. 5 §1: more than 50% of the capital or of the rights to its profits).

Which controlled entities fall under the annual regime is the question the law leaves to two tests in art. 5 §5: entities "localizadas em país ou em dependência com tributação favorecida ou sejam beneficiárias de regime fiscal privilegiado" (item I), or entities whose active income is below 60% of total income (item II). For a US LLC the second test looked like the operative one, which is how this site's own matrix cell described it until September 2026. It no longer is. On 15 April 2026 the Receita Federal published [Solução de Consulta Cosit nº 56/2026](https://normas.receita.fazenda.gov.br/sijut2consulta/consulta.action?orgaosSelecionados=Cosit&tiposAtosSelecionados=72&lblTiposAtosSelecionados=SC&numero_ato=56&ano_ato=2026&tipoData=2&optOrdem=relevancia), whose body states: "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." A US LLC owned by a Brazilian resident and disregarded for US tax is, on that reading, inside item I regardless of what it does for a living.

What the annual regime means in practice, from the statute:

- **Profit is computed from a balance sheet, not from bank credits.** Art. 5 §10 I: the controlled entity's profit is determined "em balanço anual", under IFRS or Brazilian standards at the taxpayer's choice, except that an entity in a privileged regime uses "os padrões contábeis brasileiros" (§10 I b). A Wyoming LLC that has never produced a balance sheet now needs one in Brazilian GAAP.
- **The tax falls on 31 December whether or not anything was distributed.** §10 III: profits are "computados na DAA, em 31 de dezembro do ano em que forem apurados no balanço, independentemente de qualquer deliberação acerca da sua distribuição". The "available to you" reasoning in the FAQ below belongs to the old regime.
- **A later distribution is not taxed twice.** §11: distributions of profits already taxed under §10 reduce the cost of the dividend receivable recorded in the return rather than entering income again.
- **Profits earned up to 31 December 2023 stay on the old track.** Art. 6 I: they are taxed "no momento da efetiva disponibilização", under the art. 2 rules, when paid, credited, delivered or remitted.

The alternative is the transparency election in art. 8: the individual may instead declare "os bens, direitos e obrigações detidos pela entidade controlada … como se fossem detidos diretamente pela pessoa física". The election is per entity, "irrevogável e irretratável durante todo o prazo em que a pessoa física detiver aquela entidade" (§1 II), and for an LLC acquired from 2024 onward it has to be made "na primeira DAA após a aquisição" (§3). Under it, income is taxed "em conformidade com a natureza da renda" (§2 IV), which on the face of the text puts an operating LLC's service income back on the progressive scale and the monthly payment described below. Which of the two regimes produces less tax depends on the LLC's profit level and expense structure, and no published Receita guidance works the solo-founder case through. What is settled is that the choice exists, that it is made once, and that the window for making it closes with the first annual return after the LLC is formed.

## The Carnê-Leão trap

This is where Brazilian founders got blindsided for years, and where a founder who receives foreign income directly, or who has elected transparency for the LLC, still does.

Carnê-Leão is Brazil's monthly tax payment for foreign-source income received by an individual: Upwork payouts to a personal account, direct client payments, salary from abroad, LLC profits earned up to 31 December 2023 when they are eventually paid out, and the LLC's income where the art. 8 transparency election has been made. For profits a founder-owned LLC earns from 2024 onward without that election, the annual regime in the previous section replaces it. Where it applies, it applies to every month you receive the income. Payment is due by the last business day of the following month. If you're expecting to settle everything at annual filing time, you're already behind. By the time the IRPF declaration is due, twelve months of unpaid installments have been accruing interest and penalties independently.

### How Carnê-Leão works

1. You receive LLC income in January ($8,000 USD deposited to your Mercury account)
2. Convert to BRL at the PTAX rate on the date of receipt
3. Calculate IRPF tax using the progressive table
4. Pay via DARF code 0190 by the last business day of February
5. Repeat every month

Since 2024, the Receita Federal provides Carnê-Leão Web (through e-CAC) for calculating and generating DARF payment slips.

### Late payment consequences

| Consequence | Calculation |
|-------------|-------------|
| Daily penalty | 0.33% per day of delay |
| Maximum penalty | 20% of the tax due |
| Interest | SELIC rate (currently ~13.25% annualized) + 1% in the month of payment |
| Minimum late payment penalty | R$165.74 (adjusted periodically) |

The penalty structure is cumulative. Miss six months and you don't get one penalty — each month's missed payment accrues its own penalty and interest independently. At a 13.25% SELIC rate, interest alone adds about 1.1% per month to each unpaid installment.

### The common mistake

I've seen this pattern with founders from several countries: they treat LLC income the way they treat domestic employment income, expecting annual reconciliation. But employment income has tax withheld at source. Foreign-source income doesn't. That's the whole point of Carnê-Leão — there's no employer to withhold for you.

At R$40,000/month through a US LLC, skipping Carnê-Leão for a full year means roughly R$120,000 in unpaid tax. Add maximum penalties (20%) and a year of SELIC interest (~13.25%), and you're looking at about R$160,000. That's R$40,000 in penalties and interest on top of the tax itself.

## Foreign tax credit without a treaty

Here's the one piece of good news: Brazil allows a unilateral foreign tax credit under Lei 4.506/64, Article 6, and RIR/2018, Article 1001. You can offset US taxes paid against your Brazilian IRPF liability on the same income. The credit is capped at the lesser of: (a) tax actually paid to the US, or (b) Brazilian tax on the same income. This works whether or not a treaty exists because it's a domestic provision.

### How the credit works

1. You earn $100,000 USD through the LLC in a calendar year
2. The IRS taxes this as ECI on Form 1040-NR — assume ~$17,000 in US federal tax
3. The Receita Federal taxes the same income as foreign-source rendimentos — assume ~R$125,000 in IRPF (on R$500,000 at 27.5%)
4. You claim a foreign tax credit on the IRPF return for US tax paid
5. Credit is limited to Brazilian tax on the same income — max credit R$125,000
6. US tax of $17,000 (~R$85,000) is below the Brazilian tax, so the full amount qualifies

### Calculation mechanics

| Item | Amount |
|------|--------|
| US LLC income | $100,000 USD |
| Converted to BRL (at 5.0 PTAX rate) | R$500,000 |
| US federal tax paid (Form 1040-NR) | $17,000 USD (~R$85,000) |
| Brazilian IRPF on R$500,000 foreign income | ~R$125,000 |
| Foreign tax credit (lesser of US tax or Brazilian tax) | R$85,000 |
| Net Brazilian IRPF after credit | ~R$40,000 |
| **Total combined tax (US + Brazil net)** | **~R$125,000 (~$25,000 USD)** |
| **Effective combined rate** | **~25%** |

This is the clean scenario: US tax is lower than Brazilian tax on the same income, so the full US tax is creditable. The combined rate approximates the higher of the two rates (Brazil's 27.5% marginal), which is how the credit system is supposed to work.

### When the credit does not fully offset

It breaks down in several situations:

- **US state taxes:** If you're in a state with income tax (California at up to 13.3%), the combined US federal + state tax can exceed the Brazilian tax on the same income. The excess is not creditable. It's gone.
- **Different income categories:** Brazil separates income by type (trabalho, capital, etc.). A US tax credit on service income can't offset Brazilian tax on capital gains from the same LLC.
- **Timing mismatches:** under the annual regime the Brazilian tax lands once, at 31 December, while US estimated tax is quarterly; under Carnê-Leão it is monthly. The annual IRPF return reconciles payments made on completely different schedules.
- **Currency fluctuation:** The PTAX rate when you pay US tax may differ from the PTAX rate when you received the income. Small mismatches, but they compound.

### Reciprocity requirement

Lei 4.506/64 has a reciprocity clause: the credit only works for taxes paid to countries that give equivalent treatment to Brazilian taxes. The US does allow credits for Brazilian taxes (IRC Section 901), so reciprocity is met. But the Receita Federal can challenge the credit if you can't document the US tax paid — keep your Form 1040-NR, payment receipts, and IRS transcripts.

## Bringing the money in: the classification decides the cost, and it is the founder's classification

Everything above is about what Brazil taxes. This section is about the separate question of what happens at the moment dollars become reais — a step with its own rules, its own cost, and a decision the founder owns rather than the bank.

**The founder classifies the operation, not the bank.** [Lei 14.286/2021](https://www.planalto.gov.br/ccivil_03/_ato2019-2022/2021/lei/l14286.htm) art. 4 §2 puts it plainly: "É de responsabilidade do cliente a classificação da finalidade da operação no mercado de câmbio." The bank's duty under §3 is to give "orientação e suporte técnico" for getting that classification right. So the purpose code attached to an inbound remittance is an assertion the founder is answerable for, and the bank helping fill it in does not transfer that.

**What turns on it is the IOF rate.** Under [Decreto 6.306/2007](https://www.planalto.gov.br/ccivil_03/_ato2007-2010/2007/decreto/d6306.htm) art. 15-B I, the rate "nas operações de câmbio relativas ao ingresso no País de receitas de exportação de bens e serviços" is **zero**. An inflow that does not carry an export-revenue character falls back to the article's general reduced rate of 0.38%. On $96,000 a year the gap between those two classifications is about $365 — small against the 15% annual charge, and large enough that getting it wrong repeatedly is a real cost.

⚠️ **The non-zero IOF rates are contested and this article does not quote them as settled.** Art. 15-B has been rewritten twice in 2025 (Decreto 12.466/2025, then Decreto 12.499/2025), the later wording was suspended by Congress (Decreto Legislativo 176/2025), the 2014 wording was restored by that same legislative decree, and the dispute is before the Supreme Federal Court in ADC 96. The zero rate for export receipts in item I comes from Decreto 8.325/2014 and survives every layer. The rate on anything else is a question to put to the bank on the day of the transaction, not a figure to plan a year around.

**Export proceeds do not have to come home at all.** Lei 14.286 art. 26 rewrote art. 1º of Lei 11.371/2006 to read: "Fica facultada a manutenção, no exterior, dos recursos em moeda estrangeira relativos aos recebimentos de exportações brasileiras de mercadorias e de serviços para o exterior, realizadas por pessoas físicas ou jurídicas residentes, domiciliadas ou com sede no País." Individuals are inside that permission, not just companies. Holding service-export earnings offshore in USD is a permitted position under Brazilian law — which is a different question from whether the profit has already been taxed on 31 December under Lei 14.754, and it has.

**Foreign-currency accounts inside Brazil are a narrower matter.** Lei 14.286 art. 5 IX gives the Banco Central the power to "regulamentar as contas em moeda estrangeira no País, inclusive quanto aos requisitos e aos procedimentos para sua abertura e sua movimentação". The statute does not itself bar a resident individual from holding one; it hands the eligibility question to BCB regulation, and the categories that regulation admits are narrow. The practical shape for a solo founder is USD held abroad and reais held in Brazil, rather than USD held in a Brazilian account.

**From 1 October 2026 the eFX rules change, and the date has not arrived yet.** [Resolução BCB nº 561, de 30 de abril de 2026](https://www.legisweb.com.br/legislacao/?id=495246) (published in the DOU on 5 May 2026) amends Resolução BCB 277/2022. Its art. 4º states: "Esta Resolução entra em vigor em 1º de outubro de 2026." Two limits in it are worth knowing before that date rather than after:

| Change | Text | Limit |
|--------|------|-------|
| New art. 49 V | "transferência de recursos relacionados a investimento no mercado financeiro e no mercado de valores mobiliários, no país ou no exterior" | US$10,000 per operation |
| Amended art. 49 I b | acquisition through a digital payment solution where there is no integration with an e-commerce platform | US$10,000 |

The resolution also adds purpose codes to Anexo V, two of which a founder moving their own money will meet: **34162** for financial and capital-market operations, and **34124** for "Transferência entre conta no país e conta no exterior de mesma titularidade" — a transfer between accounts in Brazil and abroad held by the same person. That last code is the one a founder sweeping their own US balance into Brazil is likely to be offered, and it is not the export-revenue classification that carries the zero rate.

**Which raises the question this article cannot close.** Where clients pay the LLC and the LLC later pays the founder, the payer of record on the inbound remittance is the founder's own foreign entity rather than a foreign client. Whether that inflow still carries the "receitas de exportação de bens e serviços" character that art. 15-B I requires, or whether the LLC's interposition moves it into a same-holder transfer under code 34124, is not addressed in any Receita or BCB material located for this article. The structure indicates the two codes point at genuinely different facts; which one fits depends on what the payment is for, and that is a question for a Brazilian accountant with the contracts in front of them. What is worth knowing is that the question exists and that art. 4 §2 makes it the founder's to answer.

## BACEN CBE reporting

The CBE (Declaração de Capitais Brasileiros no Exterior) is a separate beast, administered by BACEN, not the Receita Federal. If your foreign assets total US$1,000,000 or more on 31 December, you file the annual CBE; the [Banco Central's CBE page](https://www.bcb.gov.br/estabilidadefinanceira/cbe) states the threshold as "US$ 1.000.000,00 (um milhão), ou equivalente em outras moedas, em 31 de dezembro de cada ano-base – CBE Anual", filed "de 15 de fevereiro a 5 de abril do ano subsequente". Earlier versions of this article gave US$100,000; that figure was wrong. Your LLC membership interest counts. So does the US bank account balance.

### Filing thresholds and frequency

| Total foreign assets | Filing frequency | Reference dates |
|---------------------|-----------------|-----------------|
| US$1,000,000 to US$100,000,000 | Annual (filed 15 February to 5 April) | December 31 |
| US$100,000,000 and above | Quarterly | March 31, June 30, September 30, December 31 |

The annual CBE deadline is generally April 5 of the following year (for the December 31 reference date).

### What counts as foreign assets

Foreign assets for CBE purposes:

- **Equity interests in foreign entities** — your LLC membership interest
- **Foreign bank accounts** — your Mercury, Relay, or other US bank balance
- **Foreign real estate** — rarely relevant for LLC-only founders
- **Securities held abroad** — stocks, bonds, or other instruments in US brokerage accounts
- **Other rights abroad** — IP registered in the US, receivables from US clients

LLC valued at $60,000 plus a $50,000 bank balance = $110,000 in foreign assets. You're above the threshold.

### Penalties for non-filing

| Violation | Penalty |
|-----------|---------|
| Late filing (up to 60 days) | 1% of the value of assets, up to R$25,000 |
| Late filing (over 60 days) | 5% of the value of assets, up to R$125,000 |
| Non-filing or false information | 10% of the value of assets, up to R$250,000 |

Note that penalties are calculated on total asset value, not tax owed. $200,000 in foreign assets plus a missed CBE filing = potential penalty up to R$250,000 (~$50,000 USD). And this is a BACEN administrative penalty, completely separate from any Receita Federal tax penalties.

## IRPF annual declaration

The IRPF annual declaration (Declaração de Ajuste Anual) is due by the last business day of April. For LLC owners, this is the reconciliation point: your Carnê-Leão payments get credited against the annual calculation, and you claim the foreign tax credit for US taxes paid.

### Where to report US LLC income

The IRPF declaration has specific schedules for foreign-source income and assets:

| Schedule | Purpose |
|----------|---------|
| **Rendimentos Tributáveis Recebidos de PF/Exterior** | Report monthly foreign-source income (the same amounts reported via Carnê-Leão) |
| **Imposto Pago/Retido — Carnê-Leão** | Report Carnê-Leão payments already made during the year |
| **Imposto Pago/Retido — Imposto pago no exterior** | Report foreign tax paid (US federal + state tax) and claim the credit |
| **Bens e Direitos — Código 32** | Report the LLC membership interest as a foreign asset (participation in foreign entity) |
| **Bens e Direitos — Código 62** | Report foreign bank account balances (the LLC's US bank account) |

### Reporting the LLC itself

Under Bens e Direitos, report the LLC membership interest using:

- **Grupo 03 — Participações Societárias**
- **Código 01 or 02** — controlling vs. minority interest
- **Discriminação field:** LLC name, EIN, state of formation, ownership percentage, acquisition date
- **Situação em 31/12:** Cost basis in BRL, converted at the PTAX rate on the date of your capital contribution

The US bank account goes separately under Grupo 06, Código 01 (Depósito bancário no exterior), with bank name, account number, country, and balance in BRL at the December 31 PTAX rate.

## Form 5472 and Receita Federal: dual reporting

The same transactions that trigger Brazilian reporting also trigger US filing. [Form 5472](/blog/what-happens-if-you-miss-form-5472-non-resident-llc) requires disclosure of all "reportable transactions" between the LLC and its foreign owner. Every capital contribution, distribution, loan, service fee, and payment between you and the LLC shows up on both Form 5472 (IRS) and the IRPF Bens e Direitos schedule (Receita Federal).

### Overlapping disclosure

| Transaction | US filing (Form 5472) | Brazil filing (IRPF) |
|-------------|----------------------|---------------------|
| Capital contribution to LLC | Part IV — Monetary contributions | Bens e Direitos — increase in cost basis |
| Distribution from LLC to founder | Part IV — Distributions | Rendimentos Tributáveis — foreign income |
| Founder provides services to LLC | Part IV — Compensation | Rendimentos — trabalho do exterior |
| LLC pays founder's personal expenses | Part IV — Other amounts | Rendimentos — income received |
| Loan from founder to LLC | Part IV — Loans | Bens e Direitos — créditos no exterior |

IRS penalty for a missing Form 5472: $25,000 per form, per year. Receita Federal penalties for incomplete IRPF reporting: fines of 75% of the tax due on unreported income, or 150% if they classify it as fraud under Lei 9.430/96, Article 44.

### The coordination challenge

The two reporting systems operate independently. The IRS doesn't verify Form 5472 against your IRPF, and the Receita Federal doesn't cross-reference Form 5472. But FATCA means the Receita Federal sees your US bank account balances and income. If what the bank reports doesn't match what you declared on the IRPF, that's a malha fina trigger.

## Practical scenarios

### Scenario 1: Brazilian SaaS founder ($8,000/month)

A developer in São Paulo runs a B2B SaaS product through a Wyoming LLC. US and international clients pay $8,000/month to the LLC's Mercury account. The founder works from Brazil with no US physical presence.

**US obligations:**

| Obligation | Detail |
|------------|--------|
| ECI determination | Services performed entirely in Brazil — debatable whether income is "effectively connected" to a US trade or business |
| Form 1040-NR | Filed annually; tax depends on ECI determination |
| Form 5472 + pro forma 1120 | Filed annually; reports all transactions with the foreign owner |
| US federal tax (if ECI) | ~$13,000/year at graduated rates on $96,000 |
| US federal tax (if not ECI) | Potentially $0 on service income (no FDAP character) |

**Brazilian obligations:**

| Obligation | Detail |
|------------|--------|
| Lei 14.754 annual regime | 15% on the LLC's profit for the year as computed in its balance sheet (Brazilian GAAP, since SC Cosit 56/2026 places the LLC in a privileged regime), entered in the DAA at 31 December regardless of distribution: on R$480,000 of profit, R$72,000 |
| IRPF annual (DAA) | The 15% line above, plus the LLC interest and US account under Bens e Direitos; no monthly Carnê-Leão on the LLC's profit unless the art. 8 transparency election was made |
| BACEN CBE | Not triggered at this size: the annual CBE starts at US$1,000,000 of foreign assets on 31 December |
| Foreign tax credit | Claim US tax paid against IRPF; limited to Brazilian tax on same income |

**Combined annual tax burden, re-modelled on the annual regime.** The pre-2024 progressive figures that stood here until September 2026 have been removed rather than relabelled. They were the only total in the table, and a "kept for comparison" note above a bolded effective rate does not stop that rate being read as the answer. Real amounts use the 5.0 BRL/USD assumption this article applies throughout.

| Item | If the profit is not ECI | If the profit is ECI |
|------|--------------------------|----------------------|
| LLC profit for the year | R$480,000 (~$96,000) | R$480,000 (~$96,000) |
| US federal tax | $0 | ~$13,000 |
| Brazilian tax under Lei 14.754 art. 2 §1 | 15% of R$480,000 = R$72,000 (~$14,400) | R$72,000 (~$14,400) |
| Deduction for tax paid abroad | Nothing to deduct | Unresolved — see below |
| **Total combined tax** | **~$14,400** | **~$14,400 to ~$27,400** |
| **Effective combined rate** | **15%** | **15% to ~29%** |

The right-hand column is a range rather than a figure, and the reason is structural rather than arithmetic. Art. 5 §15 does let the individual deduct income tax paid abroad, but item I scopes the deduction to tax that "seja devido no exterior **pela controlada**" — owed abroad *by the controlled entity*. A US single-member LLC that is disregarded for US tax pays no US entity-level income tax at all; where ECI exists, the tax is owed by the owner personally on Form 1040-NR. On the face of the text, §15 is written for an opaque entity paying its own tax, which is the one thing a disregarded LLC never does — and SC Cosit 56/2026 reaches its privileged-regime conclusion precisely *because* the LLC is transparent under US law. No published Receita guidance works that combination through. Until one does, the bottom line of this scenario is an open question rather than a number, and a Brazilian founder planning around the lower end is planning around an untested reading.

### Scenario 2: Freelancer on Upwork ($3,000/month)

A Brazilian designer in Florianópolis freelances through Upwork ($3,000/month) and invoices other clients through a New Mexico LLC ($3,000/month). Total: $6,000/month ($72,000/year).

The Upwork income may not flow through the LLC. The LLC-sourced income ($36,000/year) has different US tax treatment than the Upwork income ($36,000/year) paid directly to a personal account.

Since 2024 the Receita Federal does care about that distinction. The Upwork income received directly is foreign-source rendimentos on monthly Carnê-Leão at progressive rates; the LLC's profit is a controlled entity's profit under Lei 14.754, taxed at 15% once a year unless the founder elected transparency. The monthly figures below apply to the direct stream. One monthly payment covers all foreign-source income received that month.

| Monthly combined income | R$30,000 (at 5.0 BRL/USD) |
|------------------------|---------------------------|
| Monthly Carnê-Leão | ~R$5,600 (27.5% bracket after deduction) |
| Annual IRPF (before credits) | ~R$67,200 |

### Scenario 3: E-commerce ($15,000/month)

A Brazilian entrepreneur sells physical products to US customers through a Delaware LLC with a Shopify store. Revenue: $15,000/month, $9,000 in COGS and operating expenses. Net profit: $6,000/month.

On the US side, this is clearly a US trade or business. The $72,000 net profit is ECI, taxed on Form 1040-NR at graduated rates (~$11,600 federal tax).

On the Brazilian side, the Receita Federal taxes the LLC's profit for the year under Lei 14.754: profit is what the LLC's annual balance sheet shows after cost of goods and operating expenses, prepared under Brazilian accounting standards, taxed at 15% at 31 December. The expense-deductibility puzzle that Carnê-Leão created for e-commerce founders is replaced by a bookkeeping obligation: an LLC with hundreds of Shopify transactions a month needs accounts that a Brazilian accountant can close.

This is also the highest-burden scenario for reporting. Hundreds of Shopify transactions per month, each potentially relevant to Form 5472 and IRPF reporting.

## Frequently asked questions

### Does the US-Brazil FATCA IGA substitute for a tax treaty?

No. FATCA is an information-exchange mechanism. It governs reporting of financial account information between the two countries but provides zero relief from double taxation. No reduced withholding, no tie-breaker rules, no mutual agreement procedure. Your US bank account information gets shared with the Receita Federal, but your tax obligations don't change.

### Can Carnê-Leão be avoided by not distributing LLC income?

For profits earned from 1 January 2024 the question no longer arises: under Lei 14.754 art. 5 §10 III the LLC's profit is taxed at 31 December "independentemente de qualquer deliberação acerca da sua distribuição". For profits earned up to 31 December 2023, art. 6 I taxes them when effectively made available (paid, credited, delivered or remitted), so leaving them inside the LLC defers the Brazilian tax on that older layer only.

### Is there a minimum threshold for Carnê-Leão?

Carnê-Leão applies to any month where foreign-source income exceeds R$2,259.20 (the first IRPF bracket). Below that, the tax rate is 0% and no payment is due. But you still report it on the annual IRPF declaration. There's no exemption from reporting itself.

### What happens if a Brazilian founder has been paying US tax but not filing Carnê-Leão?

For years up to 2023, you have been accumulating monthly Carnê-Leão debt: each missed month accrues its own penalty (0.33%/day up to 20%) and interest (SELIC + 1%). For 2024 onward the missing item is the annual 15% line in the DAA on the LLC's profit, with the DAA's own late-filing and late-payment consequences. Voluntary regularisation runs through e-CAC in both cases. The foreign tax credit for US taxes already paid reduces the net Brazilian liability on the annual return. But the penalties and interest are not creditable.

### Do Brazilian founders need both a Brazilian and a US tax advisor?

Two independent tax systems, no treaty coordination. The IRS wants Form 5472 with a pro forma 1120 every year, and Form 1040-NR in the years the founder is engaged in a US trade or business. The Receita Federal wants the annual 15% computation on a Brazilian-GAAP balance sheet, the DAA with the LLC and its accounts in Bens e Direitos, and Carnê-Leão for any foreign income received directly. BACEN wants the CBE above US$1 million. A single advisor who knows both can handle it; most know one.

## Key takeaways

- Brazil and the US have no income tax treaty. No reduced withholding, no tie-breaker provisions, no mutual agreement procedure. FATCA covers information exchange only.
- Since 1 January 2024, Lei 14.754 taxes the profit of a Brazilian resident's controlled entity abroad at 15% in the annual return, at 31 December, whether or not distributed, computed from the entity's balance sheet. SC Cosit 56/2026 places a US LLC that is transparent in the US and owned by a non-resident in a privileged regime, so the regime applies to a founder-owned LLC regardless of its activity mix.
- The alternative is the art. 8 transparency election: per entity, irrevocable, and for a new LLC made in the first DAA after formation; under it the LLC's income is taxed by its nature on the progressive scale.
- Carnê-Leão remains the monthly mechanism for foreign income an individual receives directly, for pre-2024 LLC profits when paid out, and for a transparent-elected LLC. Late payment: 0.33%/day penalty (up to 20%) plus SELIC interest.
- Brazil's unilateral foreign tax credit (Lei 4.506/64) offsets US taxes against IRPF, capped at the Brazilian tax on the same income. No treaty required.
- BACEN CBE annual reporting kicks in at US$1,000,000 in foreign assets on 31 December (quarterly from US$100,000,000). Your LLC membership interest and US bank balances both count toward it.
- [Form 5472](/blog/what-happens-if-you-miss-form-5472-non-resident-llc) and the IRPF Bens e Direitos schedule require disclosure of the same transactions — capital contributions, distributions, loans, payments.
- Combined effective rate: depends on whether the US taxes the income as ECI and on how Lei 14.754's deduction for tax paid abroad by the entity applies; the pre-2024 progressive-model figures in the scenarios above are kept for comparison and are not the current computation.

## References

- [Lei nº 14.754, de 12 de dezembro de 2023 (Planalto)](https://www.planalto.gov.br/ccivil_03/_ato2023-2026/2023/lei/l14754.htm) — art. 2 §1 (15%), art. 4 and §§1-4 (credit scoped to Seção II, financial investments), art. 5 caput and §§1, 5, 10, 11, **§15 I-V (credit for tax "devido no exterior pela controlada")**, art. 6, art. 8
- [Lei nº 14.286, de 29 de dezembro de 2021 (Planalto)](https://www.planalto.gov.br/ccivil_03/_ato2019-2022/2021/lei/l14286.htm) — art. 4 §2 (the client classifies the purpose of the FX operation) and §3 (bank gives technical support), art. 5 IX (BCB regulates foreign-currency accounts in Brazil), art. 26 (rewrites Lei 11.371/2006 art. 1º: residents, including individuals, may keep service-export proceeds abroad)
- [Decreto nº 6.306, de 14 de dezembro de 2007 (Planalto)](https://www.planalto.gov.br/ccivil_03/_ato2007-2010/2007/decreto/d6306.htm) — art. 15-B I, zero IOF on the inflow of export-of-goods-and-services revenue (inserted by Decreto 8.325/2014); caput reduced rate 0.38%. The consolidated text carries the 2025 rewrites (Decreto 12.466/2025, Decreto 12.499/2025), the suspension and restoration by Decreto Legislativo 176/2025, and a reference to ADC 96 — the non-zero rates are live litigation and are not quoted here as settled
- [Resolução BCB nº 561, de 30 de abril de 2026](https://www.legisweb.com.br/legislacao/?id=495246) — amends Resolução BCB 277/2022; new art. 49 V (investment-related eFX transfers, US$10,000 per operation), amended art. 49 I b (US$10,000 without e-commerce platform integration), Anexo V purpose codes 34162 and 34124, art. 4º in force 1 October 2026. *Source note: read on LegisWeb, a legislation aggregator reproducing the DOU text of 5 May 2026; the Banco Central's own normative page returned no normative body when fetched on 2026-09-19.*
- [Solução de Consulta Cosit nº 56, de 15 de abril de 2026 (RFB normas)](https://normas.receita.fazenda.gov.br/sijut2consulta/consulta.action?orgaosSelecionados=Cosit&tiposAtosSelecionados=72&lblTiposAtosSelecionados=SC&numero_ato=56&ano_ato=2026&tipoData=2&optOrdem=relevancia) — US LLCs transparent under US law with non-resident members are a regime fiscal privilegiado under IN RFB 1.037/2010 art. 2 VII
- [Banco Central do Brasil — Capitais Brasileiros no Exterior (CBE)](https://www.bcb.gov.br/estabilidadefinanceira/cbe) — annual threshold US$1,000,000; quarterly US$100,000,000; filing window 15 February to 5 April

- [Receita Federal — Carnê-Leão Web](https://web.archive.org/web/2024*/https://www.gov.br/receitafederal/pt-br/assuntos/meu-imposto-de-renda/carne-leao)
- [Lei 4.506/64, Article 6 — Foreign Tax Credit](https://www.planalto.gov.br/ccivil_03/leis/l4506.htm)
- [Regulamento do Imposto sobre a Renda (RIR/2018)](https://www.planalto.gov.br/ccivil_03/_ato2015-2018/2018/decreto/d9580.htm)
- [BACEN — Declaração de Capitais Brasileiros no Exterior (CBE)](https://www.bcb.gov.br/estabilidadefinanceira/cbe)
- [Lei 9.430/96, Article 44 — Penalties for Unreported Income](https://www.planalto.gov.br/ccivil_03/leis/l9430.htm)
- [FATCA Intergovernmental Agreement — Brazil-US (2014)](https://home.treasury.gov/policy-issues/tax-policy/foreign-account-tax-compliance-act)
- [IRC Section 1441 — Withholding of Tax on Nonresident Aliens](https://www.law.cornell.edu/uscode/text/26/1441)
- [IRS Form 1040-NR — US Nonresident Alien Income Tax Return](https://www.irs.gov/forms-pubs/about-form-1040-nr)
- [IRS Form 5472 — Information Return of a 25% Foreign-Owned US Corporation](https://www.irs.gov/forms-pubs/about-form-5472)


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## Disclosure

*Mercury is a fintech company, not an FDIC-insured bank. Banking services provided through Choice Financial Group and Column N.A., Members FDIC.