Anti-Money Laundering Act And Properties located in the USA: Tax, Exchange and Succession Aspects in Brazil. Roberto Justo Samir Choaib

Transcription

1 And Properties located in the USA: Tax, Exchange and Succession Aspects in Brazil. Roberto Justo Samir Choaib October

2 Previous Regulations Applied to proceeds of specific crimes: I. Illegal traffic of narcotics or similar drugs; II. Terrorism; III. Terrorism and terrorist financing; IV. Smuggling or traffic of firearms, ammunitions or materials intended to the production of these items; V. Kidnapping for ransom; VI. Against the Public Administration, which includes requesting, on behalf of oneself or third parties, directly or indirectly, of any advantage as a condition or price for the performance of or failure to perform administrative actions; VII. Against the national financial system; VIII. Committed by criminal organizations; and IX. Committed by individuals against foreign governments. 2

3 New law: Applies to the proceeds of any crime or criminal offense (ex. Illegal numbers games), being extended to anyone who turn illegal assets into legal assets, purchases, receives, exchanges or stores assets originated from money laundering actions, or participate in money laundering groups or associations ("stooge"). Penalty (upheld): 3 to 10 years' imprisonment. 3

4 1. Expansion of the list of individuals and legal entities that must report uncommon financial transactions to the Council for Control of Financial Activities - COAF of the Brazilian Ministry of Finance. COAF operates jointly with administrative authorities in charge of enforcing the law. They are: the Central Bank of Brazil, the Brazilian Securities Commission (or CVM), the Superintendence of Private Insurance (or SUSEP), the Department of Supplementary Pension Plans (or SPC), and the Federal Board of Real Estate Brokers (or COFECI), each one monitoring their relevant areas. 2. Mandatory maintenance of client record data and history of transactions for a period of 5 years. (Article 10). e

5 New List Individuals and legal entities whose principal or ancillary activity involves, whether permanently or occasionally, cumulatively or not (Article 9): I. funding, intermediation and investment of third parties' funds in domestic or foreign currency; II. Purchase and sale of foreign currency or gold as a financial asset or FX instruments; (illegal dollar traders) III. custody, issuance, distribution, settlement, trading, intermediation or administration of securities. And (Article 9, sole paragraph): I. Stock exchanges, commodities and futures exchanges and trading systems of the organized over-the-counter market; II. Insurers, insurance brokers, and private pension and special savings entities; III. Administrators of accreditation cards or credit cards, and administrators of purchasing pools; 5

6 IV. Administrators or companies that use cards or any other electronic, magnetic or equivalent means to transfer funds; V. Leasing and factoring companies; VI. Companies that distribute funds, chattels, securities, merchandise, services or that grant discounts on their acquisition through raffles or similar methods; VII. Subsidiaries or representatives of foreign entities that engage in any of the above activities in Brazil, even if occasionally; VIII. Other entities whose activities depend on the authorization of a regulatory authority of the financial, exchange, capital or insurance markets; IX. National or foreign individuals or legal entities that operate in Brazil as agent, manager, attorney-in-fact, commissioner, or any other form of representation of the interests of foreign entities that engage in the activities referred to in this article; 6

7 X. Individuals or legal entities that engage in the promotion, purchase or sale of real estate property; XI. Individuals or legal entities that sell jewels, precious stones and metals, art objects and antiques; XII. Individuals or legal entities that trade luxury or valuable goods, or that intermediate the trading of these goods, or perform activities that require a large volume of funds in cash; XIII. Commercial and public registries; XIV. Individuals or legal entities that provide, even occasionally, advisory, consulting, accounting, audit or assistance services of any nature relating to: a) sale and purchase of property, commercial or industrial establishments or equity interest of any nature; b) management of funds, securities or other assets; c) opening or management of checking, savings, investment our securities accounts; d) creation, operation or management of companies of any nature, foundations, trusts or the like; e) financial, corporate or real estate transactions; and f) disposal or acquisition of rights to contracts relating to professional sports or artistic activities; 7

8 XV. Individuals or legal entities that engage in the promotion, intermediation, trading, commissioning or negotiation on the transfer of rights of athletes, artists or trade fairs, exhibitions or similar events; XVI. Companies engaged in transportation and safekeeping of valuables; XVII. Individuals or legal entities that trade valuable goods of rural or animal origin or intermediate the trading of such goods; and XVIII. Overseas dependencies of the entities referred to in this article through their headquarters in Brazil, regarding residents in the country. 8

9 Penalties: Warning; Fine of up to R$20 million (R$200, in the previous law); Disqualification of the persons subject to the obligations of the law from management activities in legal entities for up to 10 years; Revoking or suspension of the authorization for exercising activities or operation. 9

10 Leniency agreement: information to the authorities, at any time, aiming at identifying the authors of a crime, location of goods etc. (Article 1, paragraph 5). Possibility of constriction and early disposal of goods that are used in or result from criminal actions before any judgment, so as to avoid the depreciation of the goods seized (Article 4). Immediate dismissal of public servants accused of money laundering (Article 17-D) 10

11 Properties located in the USA: Tax, Exchange and Succession Aspects in Brazil 11

12 Purchase of Property in the USA Exchange Aspects Remittance of amounts abroad in order to purchase real estate property: Checking account in Brazil Checking account in Brazil Checking account abroad (Cash abroad, code: 63009) Checking account of the seller of the property abroad (Direct Investment Abroad, code: 68657) Checking account in Brazil Account of a Company Abroad (Equity interest, code: 68303) 12

13 Purchase of Property in the USA How to fill out the Income Tax Return: Individual Taxpayers: inform the amount of the property in US dollars and the corresponding amount in Brazilian Reais using the exchange rate to sell US dollars on the date of acquisition. Corporate Taxpayers abroad: inform the company, the capital in US dollars, and the corresponding amount in Brazilian Reais using the exchange rate to sell US dollars on the date of acquisition of the business. If the value of the assets located abroad, collectively or individually, exceeds US$100,000.00, filing of the annual income tax return with the Central Bank of Brazil will be mandatory. 13

14 Purchase of Property in the USA Income Tax on capital gains from the sale: On behalf of individuals 15% income tax on capital gains from the sale, offset against taxes due in the USA. On behalf of legal entities abroad 27.5% income tax on distributions + US tax. On behalf of legal entities in Brazil 34% on gains in Brazil and mandatory Real Profit. 14

15 Purchase of Property in the USA Succession Aspects The Brazilian Courts do not have jurisdiction over assets located outside Brazil. Thus, any assets located abroad must be subject to the specific procedures in force in the jurisdiction where they are located (Article 89, II of CPC + Article 8 of LICC). However, the assets must be included in the estate proceedings in Brazil, given that some judges may consider them when calculating the apportionment of assets (minority trend). 15

16 Purchase of Property in the USA Succession Aspects Include assets located abroad in probate proceedings in Brazil. Once in the possession of the court decision, indicate the heirs and submit any apportionment to the court of the jurisdiction in which the asset is located, which, except for conflicts of law, will make the apportionment according to the court decision. In the event that the Brazilian courts do not accept inclusion of assets located abroad, the supporting documents must be shown by heirs to the court of the jurisdiction in which the asset is located, which, except for conflicts of law, will authorize the apportionment according to the Brazilian law. 16

17 CHOAIB, PAIVA E JUSTO ADVOGADOS ASSOCIADOS Home Page: choaibpaiva@choaibpaiva.com.br São Paulo Rua Padre João Manuel, andar, Cerqueira César - São Paulo - CEP Phone: (+55 11) Rio de Janeiro Rua Visconde Pirajá, suite 503 Ipanema - Rio de Janeiro, RJ - CEP Phone: (+55 21) Miami 1401 Brickell Avenue, suite 520, Miami, FL USA Phone: +1 (305)