Interview for Valor Investe
The Brazilian Federal Revenue Service (Receita Federal do Brasil) published today (the 8th) the Normative Instruction that regulates the taxation of supplementary private pension plans (of a pension nature), of the individual programmed retirement fund (FAPI), and of life insurance policies with a survival coverage clause. Normative Instruction RFB No. 2,209/2024, which determines how the law will be implemented, also defines the procedures to be adopted by beneficiaries and by supplementary pension entities.
Law No. 14,803, of January 10, 2024, amended Law No. 11,053/2004 to allow participants and assisted beneficiaries of supplementary pension plans to choose the taxation regime (progressive or regressive) at the time of obtaining the benefit or of the first withdrawal of the accumulated amounts.
Previously, the choice of the tax regime had to be made at the time of entering into the supplementary private pension plan. Migration was only possible from the progressive regime (on income) to the regressive one. But, in that case, the person was “penalized” and the investment period started to be calculated from the moment of the portability. It was not permitted to change from the regressive regime to the progressive one. Law No. 14,803 puts an end to this restriction and to the penalty and now allows the choice of taxation at the most appropriate moment, which may be upon receipt of the benefit or upon the request for the first withdrawal.
According to the Normative Instruction published today, participants who joined pension plans up to January 10, 2024, will undergo the change in taxation at the first withdrawal of the amounts.
Juliana Assolari, a tax attorney and partner at Lassori Advogados, explains that the choice of the tax regime for pension income has brought the possibility for the beneficiary to carry out more efficient planning, analyzing which taxation regime is more advantageous at the time of receiving the benefit or making the withdrawal, providing better chances of allocating one’s own resources.
Assolari assesses that this option is more suitable for those who make contributions with a short-term outlook and for those who are close to enjoying the retirement benefit.
The choice of the tax regime must be made individually by the participants with the supplementary pension entity or the insurance company. The law allows assisted beneficiaries or their legal representatives to make the choice when the plan participants do not indicate the regressive regime, but it is necessary to meet certain requirements for obtaining the benefit or making the withdrawal.
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