What are dividends and interest on equity capital?

Under the Brazilian Corporate Law, every Brazilian publicly-held company must distribute to shareholders at least 25% of their net income in dividends. Depending on the company’s bylaws, this total may also be distributed through interest on equity capital.

Dividends are exempt from Income Tax, while interest on equity capital are taxed at 15% when the investor receives them. It does not matter when the investor bought the stock, if it has it within the deadline determined for the payment.

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