The New Tax Framework for “Digital Offshores” under Brazilian Law: Implications of Provisional Measure No. 1,303/2025

In recent years, Brazilian investors have increasingly sought international diversification through digital assets, such as cryptocurrencies, tokens, and blockchain-based instruments. Frequently, these investments were held abroad without the formal incorporation of a foreign legal entity, giving rise to what has become informally known as a “digital offshore” structure.

However, the landscape has changed significantly with the introduction of Provisional Measure No. 1,303/2025 ("MP 1,303/2025"). The measure establishes that any digital asset linked to investments, equity interests, or rights located abroad shall be treated as a foreign entity for Brazilian tax purposes — regardless of whether it is formally incorporated or legally recognized as a company under foreign law.

Legal and Tax Implications

The key provision of MP 1,303/2025 effectively eliminates the distinction between traditional offshore structures and informal digital holdings. As a result, such arrangements are now subject to the same tax treatment applicable to formally constituted foreign entities, including:

• Look-through taxation rules, whereby income earned by the foreign entity may be taxed in Brazil as if earned directly by the Brazilian resident taxpayer;

  
  

• Compliance with ancillary obligations, including reporting requirements to the Central Bank of Brazil (via the Brazilian Capitals Abroad — CBE declaration) and to the Federal Revenue Service (via the Individual Income Tax Return — DIRPF);

  
  

• Exposure to tax assessments, penalties, and potential double taxation, should the structure fail to meet the required legal and reporting standards.

Policy Rationale

The measure reflects the Brazilian government’s intent to curb tax avoidance through informal offshore arrangements, particularly in the digital economy. It also aims to level the playing field between investors using formal corporate vehicles and those relying on non-incorporated digital alternatives.

By recognizing de facto control or beneficial ownership over digital assets abroad as equivalent to holding a foreign entity, the legislation reinforces Brazil’s commitment to transparency, tax compliance, and international cooperation on fiscal matters.

How Should Investors Respond?

Given the complexity and potential retroactive effects of MP 1,303/2025, it is crucial for individuals and families with international investments — especially those involving digital assets — to:

• Reassess the structure and legal classification of their offshore holdings;

• Determine whether their digital assets now fall within the scope of the new tax treatment;

• Ensure compliance with all applicable reporting and tax obligations in both Brazil and the United States.

  
  

At E&G Financial Group LLC, we specialize in offshore structuring, international tax planning, and cross-border compliance. With offices in the U.S. and deep expertise in U.S.-Brazil tax matters, we assist clients in navigating the evolving legal landscape with tailored, secure, and compliant solutions.

Unsure how MP 1,303/2025 may affect your digital investments abroad?

Contact our team of professionals to ensure your global portfolio remains tax-efficient and fully compliant.