Offshore holdings for betting operators: what Law 14,754/2023 changed about the real cost of keeping profit abroad

Executive summary

Until 2023, an offshore holding company owned by the shareholder of a Brazilian betting operation served two purposes: asset protection and indefinite deferral of Brazilian tax on profit accumulated abroad. Law No. 14,754/2023 ended the second. Since 1 January 2024, the profit of a controlled foreign entity is taxed on 31 December of each year at 15%, regardless of any distribution. Anyone who built a structure on the assumption of deferral is now paying tax on income never received. The practical conclusion is not to dismantle, but to resize: the structure remains defensible for what it delivers in regulatory risk segregation and corporate organisation — no longer for short-term cash savings.

Regulatory context

Law No. 14,754 of 12 December 2023 reorganised the taxation of foreign-source income earned by individuals resident in Brazil. The regime was regulated by RFB Normative Instruction No. 2,180 of 11 March 2024, and RFB Normative Instruction No. 2,299/2025 added foreign income to the criteria triggering mandatory filing from the 2026 tax year onward.

Three changes matter to anyone running a betting operation with Brazilian-resident individual shareholders.

The first is a single 15% rate on profits of controlled foreign entities and on financial investments held abroad, assessed separately from other income in the return.

The second, and the most consequential, is the timing of the charge. The taxable event occurs on 31 December on an accrual basis, with no dependence on any corporate resolution to distribute. Profit recorded in the controlled entity's accounts flows into the shareholder's return even if it remains entirely within the entity.

The third is scope. Not every foreign controlled entity falls within the regime. It captures entities located in jurisdictions with favoured taxation, or benefiting from a privileged tax regime, under articles 24 and 24-A of Law No. 9,430/1996; and, regardless of jurisdiction, those whose own active income is below 60% of total income. Own active income means income derived from the entity's own economic activity, excluding typically passive receipts.

Analysis

The 60% test is where most structures are decided

The jurisdictional criterion is the better known of the two and the easier to sidestep at the outset: simply avoid incorporating in a listed favoured-tax jurisdiction. The second criterion is the one that tends to catch Brazilian shareholders' structures, and it applies regardless of where the company sits.

A holding company that merely owns participations and invests cash earns essentially passive income. Even if incorporated in an ordinarily taxed jurisdiction, it falls within the regime through the active income test. The consequence is that jurisdiction alone rarely resolves the question — what determines treatment is the nature of the entity's revenue.

This repositions the discussion. The useful question is not "which jurisdiction", but "does this entity carry on its own economic activity, with verifiable substance, or is it a holding vehicle?".

Positioning comparison

The third row is the one that matters to betting operations with genuine international presence — and it is also the most demanding in terms of evidence. Substance is not a declaration: it is people, decisions taken locally, contracts, costs and accounting records consistent with the activity claimed.

What value remains in the structure

Strip out deferral and what remains is what was always hardest to replicate by other means.

Regulatory risk segregation comes first. An operation authorised by the Secretariat of Prizes and Betting answers to its own regime, with fitness requirements, systems certification and governance obligations. Holding the regulated licence, the intellectual property and the shareholders' personal wealth on the same balance sheet concentrates risks that bear no relation to one another.

Corporate organisation for investor entry or a liquidity event comes second. A well-designed holding structure reduces friction in negotiating equity, enables incentive plans, and separates operating assets from wealth reserves.

Geographic neutrality for multi-jurisdictional operations comes third, and it applies only to those who genuinely operate abroad — not to those who merely register an entity abroad.

Application to the sector

The Brazilian betting market now operates under authorisation from the SPA/MF, with centralised licensing assessed through SIGAP. The authorisation fee reaches up to BRL 30 million, is valid for five years, and covers up to three commercial brands. Operating results attract a 12% levy on GGR — the difference between total amounts collected in bets and prizes paid — in addition to ordinary corporate taxation.

Add the new regime on top: an individual shareholder holding an offshore company now pays 15% annually on that entity's profit, even without distribution. For a licensed group, total burden must be read across three layers — the GGR levy, taxation of the operation, and taxation of the shareholder — and the shareholder layer can no longer be postponed.

The most common error we see is treating the foreign holding as an accumulation account. Under the current regime, accumulating abroad creates an obligation to pay in Brazil, in reais, without any funds having arrived. An operation with pronounced seasonality — and betting is a seasonal sector — can face a significant mismatch between the tax due in December and the shareholder's available cash.

There is also a sector-specific point. Authorised operators face integrity and source-of-funds requirements. An opaque corporate structure, built without demonstrable purpose, tends to become a liability in dealings with the regulator, with financial institutions and with payment providers — precisely when the operation needs speed.

Risks and points of attention

Economic substance and business purpose. A structure whose only demonstrable function is to reduce tax is fragile. Article 116, sole paragraph, of the Brazilian Tax Code authorises disregarding acts carried out to conceal the occurrence of a taxable event, and its application remains contested — which means uncertainty, not safety. Every structure must stand on reasons that survive the removal of the tax argument.

Cash mismatch. Annual taxation without distribution requires shareholder liquidity planning. This is a budget item, not an accounting one.

Maintenance cost. A foreign entity generates recurring costs of administration, local accounting, audit where required, and advisory support. Below a certain threshold of assets or turnover, the cost consumes the benefit.

Transparency. With CRS and automatic exchange of information, the entity's existence is known. A structure designed on the premise of invisibility rests on an assumption that does not hold.

Regulatory change. The framework is recent and its interpretation is still consolidating. A structure that only works under one specific reading of the rule is an exposed structure.

References