Inheritance and Gifts in Brazil and the UK: What Taxes May Apply?

Receiving an inheritance or gift in Brazil while living abroad can raise a number of questions. Is tax payable in Brazil? Who is responsible for paying it? Does transferring the money to another country trigger taxation? Can the country where the beneficiary resides also impose taxes?

These issues can become even more sensitive when the assets are received following the death of a family member. In addition to the personal matters involved, many heirs living outside Brazil need to deal, for the first time, with probate proceedings, Brazilian financial institutions, foreign exchange regulations and tax obligations.

It is therefore important to understand that the transfer of assets, any subsequent sale or liquidation of those assets, and the eventual remittance of the proceeds abroad may constitute separate stages, each with its own tax consequences.

In this article, we explain the main points relating to the receipt of inheritances and gifts in Brazil by individuals residing abroad, as well as transactions involving foreign elements, including a specific analysis for those residing in the United Kingdom.

1. Is there a tax on inheritances and gifts in Brazil?

Yes.

The main Brazilian tax applicable to the transfer of assets by inheritance or gift is the ITCMD (Imposto sobre Transmissão Causa Mortis e Doação – Tax on Transfers Causa Mortis and Gifts).

Depending on the state, this tax may also be referred to by other acronyms, such as ITCD, ICD or ITD.

In general, ITCMD may apply in situations such as:

• gifts;

• intestate succession;

• testamentary succession; and

• other causa mortis transfers provided for under Brazilian legislation.

  
  

2. What is ITCMD?

ITCMD is a tax imposed by the Brazilian states and the Federal District. This means that its regulation and collection are not uniform throughout Brazil.

Therefore, when receiving an inheritance or gift, it is not sufficient to consider federal legislation alone. It is necessary to identify which state or the Federal District has jurisdiction to impose the tax and to review the relevant local legislation.

3. Is the ITCMD rate the same in every state?

No.

The rates and assessment rules may vary depending on the relevant state or the Federal District. The maximum ITCMD rate currently permitted can be as high as 8%.

In addition to the rate, other aspects may vary, including procedures, exemptions, the tax base, documentation requirements and deadlines.

Each transaction must therefore be analysed in accordance with the legislation of the relevant state.

4. What happens when the inheritance or gift involves individuals or assets abroad?

For many years, the taxation of inheritances and gifts involving foreign elements was the subject of controversy in Brazil.

In Extraordinary Appeal No. 851,108 (Theme 825), the Brazilian Federal Supreme Court (STF) held that the states and the Federal District could not impose ITCMD in such circumstances without the supplementary law required under Article 155, paragraph 1, III, of the Brazilian Federal Constitution.

Subsequently, Supplementary Law No. 227 of 2026 established general rules governing these international transfers, as well as criteria for determining the ITCMD taxable event and which state or the Federal District has jurisdiction to impose the tax.

In general:

• for real estate located in Brazil, jurisdiction lies with the state or the Federal District where the property is located;

• for assets and circumstances involving individuals or property abroad, jurisdiction depends on the nature of the asset and the residence or domicile of the parties.

  
  

Important: even following Supplementary Law No. 227/2026, it remains necessary to review the specific legislation of the relevant state or the Federal District, including applicable rates, exemptions and procedures.

5. What if an individual residing in Brazil wishes to make a gift to someone living abroad?

When an individual residing in Brazil wishes to gift funds to someone residing abroad, the remittance will normally need to be processed through a financial or foreign exchange institution.

Depending on the transaction and the amount involved, documents may be required to evidence:

• the source of the funds;

• the nature of the transfer;

• the gift instrument;

• payment of ITCMD, where applicable;

• the beneficiary's tax residence; and

• the tax treatment adopted for the transaction.

  
  

It is precisely at this stage that another relevant issue may arise: the potential application of Brazilian Withholding Income Tax (IRRF) where the beneficiary is not resident in Brazil.

6. Can the Receita Federal do Brasil impose Income Tax on an inheritance or gift received by a non-resident?

This is one of the most important and controversial issues for Brazilians living abroad.

Traditionally, inheritances and gifts are transfers of assets associated with ITCMD, a tax imposed by the states and the Federal District.

However, there is also a debate regarding the application of Withholding Income Tax (IRRF) to certain transactions involving non-resident beneficiaries.

The controversy became particularly relevant following changes to the Income Tax regulations and administrative guidance issued by the Receita Federal in relation to payments and remittances made abroad.

7. What is the Receita Federal's currently published position on inheritances received by non-residents?

In its questions and answers guidance concerning the taxation of non-residents, the Receita Federal provides specific guidance on payments made to an heir who is not resident in Brazil for the acquisition of the right to the portion of an asset to which that heir was entitled as a result of an inheritance.

According to the published administrative position, IRRF applies when such a payment is made to an heir who is not resident in Brazil. The same guidance states that this tax would not apply if the heir were resident in Brazil.

As its legal basis, the guidance refers to the 2018 Brazilian Income Tax Regulations (RIR/2018) and COSIT Advance Tax Ruling No. 142, dated 21 September 2021.

There is an important distinction here.

The administrative guidance expressly refers to payment for the acquisition of the right to the portion of an asset to which the heir was entitled as a result of the inheritance. Care should therefore be taken before extending this interpretation into a general statement that any and every inheritance received by a non-resident is automatically subject to Income Tax.

8. Why is the application of IRRF controversial?

There are legal grounds for challenging the application of Income Tax to the mere transfer of assets resulting from an inheritance or gift.

One of the issues under debate is whether such a transfer actually constitutes taxable income or gain for Income Tax purposes, or whether it is a transfer of assets falling within the scope of ITCMD.

There is also a debate regarding the limits of the taxing powers of the Federal Government, the states and the Federal District.

From an administrative perspective, however, the Receita Federal maintains that IRRF applies to certain transactions involving non-resident beneficiaries.

This means that there is an important distinction between the administrative position adopted in practice by the tax authority and the legal debate concerning the very existence and limits of this taxation.

The matter should therefore be considered carefully in light of the specific characteristics of each transaction.

9. Does every inheritance received by a non-resident in Brazil therefore attract 15% Income Tax (IRRF)?

   
   

It would not be appropriate to reach this conclusion automatically.

There are administrative rulings issued by the Receita Federal concerning the taxation of payments and remittances to non-residents, including situations in which IRRF is stated to apply.

In the specific context of inheritance, the guidance issued by the Receita Federal refers to a payment made to a non-resident heir for the acquisition of the right to the portion of an asset to which the heir was entitled as a result of the inheritance.

At the same time, there are legal challenges to the application of Income Tax to the succession itself.

Therefore, before determining whether IRRF applies, it is necessary to consider:

• the legal nature of the transaction;

• whether the transaction involves only the transfer of the asset to the heir;

• whether there is an acquisition of inheritance rights;

• whether any asset will be sold;

• whether there will be a financial liquidation;

• whether a payment will be made to the beneficiary;

• whether the funds will subsequently be remitted abroad;

• where the beneficiary is tax resident; and

• which procedures will be required by financial institutions.

  
  

This analysis is particularly important before making an international remittance.

10. What about gifts made to non-residents?

Gifts made to individuals residing abroad also require careful consideration. The Receita Federal has issued administrative guidance concerning the tax treatment of amounts remitted abroad as gifts.

According to this position, amounts remitted as gifts to an individual or legal entity resident or domiciled abroad are subject to IRRF at a rate of 15%. The rate may rise to 25% where the beneficiary is located in a country or jurisdiction with favourable tax treatment.

In practice, a particularly relevant issue arises when the international remittance is made. When funds are transferred from Brazil to another country as a gift – for example, from parents to children residing abroad – Income Tax has been withheld by the institution responsible for the foreign exchange transaction, in addition to the IOF applicable to the remittance. Therefore, even though there is a legal debate regarding whether the tax should apply, the taxpayer may face the withholding of the tax when the transfer itself is made.

This should be taken into consideration before carrying out the transaction. Depending on the amount, the countries involved and the structure adopted, assessing the gift and subsequent remittance of the funds in advance may help avoid unexpected tax consequences and allow the available alternatives to be considered in light of the specific circumstances.

11. How does any Income Tax withholding work?

An individual who has ceased to be tax resident in Brazil does not file the Brazilian Individual Income Tax Return (DIRPF) as a resident, given that they have already filed the Definitive Departure from Brazil Return.

Where a particular transaction is subject to IRRF, Brazilian legislation establishes responsibilities relating to withholding at source and, in certain circumstances, to the non-resident's representative.

The Brazilian Income Tax Regulations contain specific provisions governing these responsibilities.

In practice, this issue also arises when an international remittance is made.

Banks, foreign exchange providers and other financial institutions must comply with tax and foreign exchange regulations, as well as rules designed to prevent financial crime. They may therefore request documentation evidencing the source of the assets and the tax treatment adopted before releasing funds for transfer abroad.

Documents that may be requested include:

• the formal deed of distribution or probate documents;

• a deed or instrument of gift;

• evidence relating to ITCMD;

• documents relating to the sale of assets;

• evidence of any taxes paid;

• documents relating to tax residence; and

• evidence of the source of the funds.

It is therefore advisable to organise the relevant documentation and assess the applicable tax treatment before initiating the foreign exchange transaction.

12. I made a similar remittance in the past and this tax was not charged. What does this mean?

It does not necessarily mean that a new transaction will receive the same treatment.

Requirements may vary according to:

• the type of transaction;

• the amount involved;

• the documents provided;

• the financial institution;

• the legislation in force at the time of the transfer; and

• the nature of the funds being transferred.

  
  

In addition, the internal procedures of banks and foreign exchange institutions may change over time.

The fact that a previous remittance was completed with only IOF being charged, for example, is therefore not sufficient to determine the tax treatment of a new transaction.

13. What if the individual receiving an inheritance or gift in Brazil lives in the United Kingdom?

For UK tax residents, there is a second layer of analysis: UK tax rules.

It is important not to assume that, because a particular amount has or has not been taxed in Brazil, it will automatically receive the same treatment in the United Kingdom.

Brazil and the United Kingdom have separate tax systems. A transaction involving both countries should therefore be considered from both perspectives.

14. Does receiving an inheritance from Brazil automatically trigger Income Tax in the United Kingdom?

It is important to distinguish between receiving inherited assets and any income subsequently generated by those assets.

For example, consider a UK tax resident who inherits a property in Brazil.

Receiving the property is one stage.

If the property is subsequently rented out, the rental income constitutes a separate tax matter. Similarly, if the property is subsequently sold, any gain arising on the sale will also need to be considered separately.

The same principle may apply to investments.

An individual may inherit certain investments which subsequently generate interest, dividends or other income.

It is therefore important to distinguish between:

• the date of death;

• receipt of the inheritance;

• the applicable foreign exchange movements;

• any subsequent sale or disposal of the assets; and

• the transfer of funds to the United Kingdom.

15. What about Inheritance Tax in the United Kingdom?

    
    

Inheritance Tax (IHT) also needs to be considered separately.

The fact that an individual residing in the United Kingdom receives an inheritance originating in Brazil does not, in itself, mean that the beneficiary will automatically be required to pay IHT on the amount received, or that no IHT will be payable.

To assess whether UK tax applies, it is necessary to consider the circumstances of the succession, including the deceased's tax residence position, the location of the assets and the rules in force on the relevant date.

In addition, the UK system underwent an important change on 6 April 2025.

From that date, the rules used to determine when assets situated outside the United Kingdom may fall within the scope of Inheritance Tax began to take into account an individual's status as a long-term UK resident, replacing, for these purposes, a significant part of the previous system based on domicile and deemed domicile.

In general terms, the long-term UK residence analysis considers the deceased's history of UK tax residence, including the test relating to UK residence in at least 10 of the 20 tax years preceding the relevant event.

16. What if a gift is received by someone living in the United Kingdom?

Gifts must also be considered in accordance with the applicable UK rules.

Given that the Double Taxation Agreement between Brazil and the UK is not yet in force, where a transaction involves Brazil and the United Kingdom, the analysis should consider the tax consequences in both countries.

17. Does transferring inheritance money from Brazil to the United Kingdom itself trigger UK tax?

It is important not to confuse the bank transfer with the event that gave rise to the funds.

The source of the funds is fundamental in determining their tax treatment.

For example, £100,000 transferred from a Brazilian bank account to a UK bank account could represent:

• money received directly as an inheritance;

• proceeds from the sale of an inherited property;

• a gift;

• accumulated income;

• investment gains; or

• a combination of different amounts (mixed funds).

  
  

Although the amount transferred may be the same, the source of the funds may result in different tax consequences.

For this reason, particularly in the case of significant international transfers, it is advisable to retain sufficient documentation to demonstrate clearly the source of the assets.

18. Which documents should be retained?

Depending on the transaction, it may be important to retain:

• the formal deed of distribution;

• a deed or instrument of gift;

• probate documents;

• evidence of ITCMD payments, where applicable;

• documents relating to ownership of the assets;

• agreements and documents relating to any subsequent sale;

• bank statements;

• foreign exchange documents;

• evidence of international transfers; and

• documentation evidencing the parties' tax residence.

  
  

These documents may be important both in satisfying the requirements of financial institutions and in explaining the source of the funds to the Brazilian or UK tax authorities.

19. What should be considered before receiving or transferring an inheritance or gift abroad?

Transactions involving international inheritances and gifts require an integrated approach.

Before making a transfer, it is advisable to consider:

• where the deceased, donor and beneficiary are tax resident;

• where the assets are located;

• which state or the Federal District has jurisdiction for ITCMD purposes;

• which local legislation is in force;

• the legal nature of the transfer;

• whether any asset will be sold or liquidated;

• whether there will be a payment for the acquisition of inheritance rights;

• whether IRRF may be relevant;

• which documents will be required by the financial institution;

• which rules apply in the beneficiary's country of residence; and

• which documents should be retained to evidence the source of the funds.

For UK residents, the analysis should also take into account the UK rules currently in force and the changes introduced from 6 April 2025.

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Conclusion

Receiving an inheritance or gift in Brazil while residing abroad may involve tax and succession issues that go well beyond a straightforward transfer of funds.

Mosaico Tax has experience in international tax and succession planning, advising on matters involving heirs who are tax resident in different jurisdictions, including the United Kingdom, Brazil, the United States and France, among others. In these circumstances, each case requires an individual assessment, taking into account the rules applicable in each country and the specific features of the individual's or family's asset and succession arrangements.

In Brazil, it may be necessary to consider ITCMD, the applicable state legislation, the rules relating to non-residents and the controversy surrounding the potential application of IRRF.

On this last point, the Brazilian Federal Revenue Service currently provides administrative guidance indicating that IRRF applies in a specific situation involving a payment to a non-resident heir for the acquisition of the right to the portion of an asset to which they were entitled as a result of an inheritance. However, this guidance should not automatically be extended to conclude that every transfer of an inheritance to a non-resident is necessarily subject to Income Tax.

Furthermore, the transfer of the inheritance, any subsequent sale or liquidation of the assets, and the eventual remittance of the proceeds abroad may constitute separate events and should be analysed separately.

For individuals residing in the United Kingdom, the applicable UK rules must also be considered, distinguishing the receipt of the assets from any income and gains that may subsequently arise.

For these reasons, planning before the transfer, liquidation or international remittance may help avoid unexpected costs and operational difficulties.

The team of lawyers and accountants at Mosaico Tax assists individuals residing abroad with an integrated analysis of the tax and succession implications in Brazil and the United Kingdom, always taking into account the specific circumstances of each individual or family. Where necessary, we also work alongside other professionals involved in the planning process, including advisers in different jurisdictions, with a view to providing a coordinated approach to each case.

If you have received or expect to receive an inheritance or gift involving Brazil and another country, contact Mosaico Tax to book a consultation and assess the tax implications and obligations applicable to your circumstances.

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The information contained in this post is provided for informational purposes only and should not be construed as legal or tax advice. This blog does not establish an accountant/client or lawyer/client relationship and is not a substitute for personalised advice from a qualified professional.