A Wealth Tax in Brazil: Insights into the Proposed Imposto sobre Grandes Fortunas (IGF)
On February 2, 2026, Brazilian lawmakers introduced a proposal that could reshape the fiscal landscape: the Imposto sobre Grandes Fortunas (IGF), or Wealth Tax. This proposed tax is significant for individuals with substantial assets in Brazil or those considering a change in tax residency. Below, we outline the essential details of this developing legislation.
Who Would Be Affected by the IGF?
The IGF would be applicable on an annual basis to individuals whose net worth exceeds R$10 million (approximately $1.9 million). The assessment of net worth is based on assets and rights held on January 1 of each year, accounting for any outstanding debts.
The proposal delineates three primary categories of taxpayers:
- Individuals domiciled in Brazil: Taxed on both domestic and foreign assets.
- Individuals living abroad: Taxed specifically on assets located within Brazil.
- Estates: Inherited wealth would also fall under the IGF's purview.
Valuation of Assets
Consistency in asset valuation is crucial for the implementation of the IGF. The proposal details specific methodologies for different asset types, including:
- Publicly traded shares: Valued at the closing price on the last business day of the year.
- Non-listed shares: Determined based on market value plus goodwill.
- Real estate: Measured using a legally established reference value.
- Jewelry and artwork: Subject to periodic professional appraisals.
- Other assets: Valued at their market worth as of January 1.
Tax Rates Structure
The IGF is designed to implement a progressive taxation structure:
- Net Worth R$ 10M – R$ 99.9M: 1% tax rate
- Net Worth R$ 100M – R$ 199.9M: 2% tax rate, with a R$ 1M deduction
- Net Worth Above R$ 200M: 3% tax rate, with a R$ 3M deduction
Deductions and Payment Deadlines
Taxpayers may deduct Brazilian Taxes paid the previous year, including ITR, IPVA, and IPTU. Payment of the IGF will be due by the last business day of April.
It is critical to note for U.S. taxpayers that, if enacted, the IGF will not qualify for foreign tax credits in the United States, as there is no corresponding federal tax in U.S. legislation.
Allocation of Revenue
Revenue generated from the IGF will be allocated to Brazil’s Poverty Eradication and Reduction Fund, which aims to reduce inequality and bolster social programs. This tax is set to become effective on January 1 of the year following its legislative approval.
What Lies Ahead?
The proposal, currently labeled PLP No. 5/2026, is still nascent and may face considerable amendments as it progresses through Congress. However, its introduction indicates a revived interest in taxing large fortunes. For individuals with significant assets in Brazil or contemplating alterations in their tax residency, this development necessitates a careful reassessment of estate and tax planning strategies.
At Solution Governance USA, we are committed to monitoring the progression of this proposal and will provide updates as new information becomes available.
