Corporate Obligations and Tax Uncertainties Regarding Dividends
With the beginning of the year, companies operating in Brazil enter an important period for fulfilling corporate obligations. During the first four months of the fiscal year, companies must review the financial statements from the previous year, approve management accounts, and decide on the allocation of profits earned.
As a general rule, the fiscal year of Brazilian companies coincides with the calendar year, ending on December 31. For this reason, the Annual General Meeting (AGM), in the case of joint-stock companies, or the Meeting of Members, in limited-liability companies, must be held by April 30 of the following year.
This obligation stems from Article 132 of the Brazilian Corporation Law (Law No. 6,404/76) and Article 1,078 of the Civil Code, which establish the need for an annual resolution on three essential points: approval of management accounts, review of the financial statements, and determination of the allocation of the fiscal year’s results.
Although the legislation does not impose a direct penalty for failing to comply with this obligation, the lack of formalization of these resolutions can create significant operational difficulties. In practice, the minutes approving the accounts are often required by financial institutions, investors, and business partners, and may also be requested in audits, corporate transactions, or participation in bidding processes.
Furthermore, the approval of the accounts carries important legal consequences for managers and officers. Once the financial statements and management accounts are approved, managers are generally released from liability for actions taken during the period, except in cases of error, fraud, or simulation.
Tax uncertainties regarding 2025 dividends
This year, however, these corporate obligations take on an additional layer of complexity. Decisions regarding the allocation of profits have become directly linked to an ongoing debate before the Brazilian Federal Supreme Court concerning the taxation of dividends distributed based on 2025 results.
Law No. 15,270, dated November 26, 2025, established that profits earned in 2025 could continue to be distributed without incurring income tax, even if paid only in subsequent years or up to 2028, depending on the company’s cash availability. However, the law conditioned this benefit on a specific requirement: formal approval of these dividend distributions should occur by December 31, 2025.
This requirement generated significant legal controversy. Practically speaking, the rule effectively requires companies to resolve on profit distribution even before the end of the fiscal year and the preparation of final financial statements, which contradicts standard corporate practice. Traditionally, profit allocation is discussed only in the following year, after the fiscal year-end accounting is completed and shareholders’ meetings or meetings of members are held.
Given these challenges, several industry representative organizations challenged the constitutionality of this rule before the Federal Supreme Court. The central argument is that the regulation created a requirement incompatible with corporate and accounting logic while also generating legal uncertainty for companies.
In these cases, Justice Kássio Nunes Marques initially granted a preliminary injunction extending the deadline for the approval of these resolutions, allowing the matter to be analyzed by the full bench. However, a final judgment on the matter has not yet been rendered and was recently interrupted.
As a result, a scenario of legal uncertainty persists regarding the application of these rules, especially in relation to profits earned in 2025 and the corporate resolutions that will be made throughout 2026.
This uncertainty makes it even more important for companies to carefully plan their corporate resolutions regarding profit allocation, considering not only traditional corporate aspects but also the potential tax impacts stemming from this ongoing debate before the Federal Supreme Court.
* * * * * * * *
For more information on the above or other matters, please contact Maristela SA Rossetti (mar@rraa.com.br) or Gilberto Rossetti (gmr@rraa.com.br).
This article is based on publicly available information and given for informational purposes only. It is not intended as legal advice or as a comprehensive analysis of the matters referred to herein.
