Brazil Update: Capital Gains Tax Developments and Adoption of the Hague Apostille Convention

Brazil Update: Capital Gains Tax Developments and Adoption of the Hague Apostille Convention

Two recent legal developments in Brazil are included in this Alert: a decision by the Brazilian Federal Revenue Service confirming that any increased capital gains rates approved by Congress in 2016 will not take effect until 2017, and Brazil's adoption of the Hague Apostille Convention, which will be effective as of August 2016 and should simplify the procedures for use of public documents issued by other member countries in Brazil.

MP 692—Increase in Capital Gains Tax

The Brazilian Federal Revenue Service has confirmed that, if passed into law by Congress in 2016, Medida Provisória 692/2015 ("MP 692")—a provisional measure issued by the Brazilian government in September 2015, proposing an increase in the income tax rates applicable to capital gains realized by certain taxpayers from a transfer or sale of assets or rights in Brazil—will not come into effect until January 2017. Pursuant to Brazilian law, any laws creating new taxes or increasing tax rates are effective only as of the start of the calendar year following their approval by the Brazilian Congress.

Our Alerts of October 2015 and December 2015 noted that the increased rates would likely not apply in 2016. However, the Brazilian government's decision to include in its 2016 budget the additional revenues that it expected to collect as a result of the increased tax rates created concerns with respect to the effective date of the proposed tax hikes. Please note that the Brazilian Congress has not yet voted on MP 692, and it still remains subject to Brazilian congressional approval.

Adoption of the Hague Apostille Convention

On December 2, 2015, Brazil took the final step to join the Hague Convention Abolishing the Requirement of Legalization for Foreign Public Documents (the "Apostille Convention"). Brazil will become a member of the Apostille Convention effective August 14, 2016, following the usual procedural steps established in the Apostille Convention, and upon execution of a Decree of Enactment by the President of Brazil.

Brazil's adoption of the Apostille Convention will simplify the procedures for use in Brazil of public documents issued in any of the 108 countries that have accepted the Apostille Convention. It will also eliminate the need for legalization by a Brazilian consulate of public documents issued in a member country (including corporate organizational documents, notary certificates, official documents, and powers of attorney, among others). In addition, once Brazil becomes a member of the Apostille Convention on August 14, 2016, public documents issued in Brazil will need to be authenticated only by Apostille to be used in any member country, without the need for further legalization.

The issuance of Apostilles by notary offices in Brazil will be made pursuant to a resolution to be issued by the Conselho Nacional de Justiça within the next few months.

A list of the countries party to the Apostille Convention may be found here.

Lawyer Contacts

For further information, please contact your principal Firm representative or one of the lawyers listed below. General email messages may be sent using our "Contact Us" form, which can be found at

S. Wade Angus
New York / São Paulo
+1.212.326.3755 / +55.11.3018.3914

Marcello Hallake
São Paulo / New York

Sanjiv K. Kapur
São Paulo

Luis Riesgo
São Paulo

Luiz Felipe Noronha of the New York Office assisted in the preparation of this Alert.

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