O Income tax on profit distribution came to occupy the center of the strategic decisions of entrepreneurs, partners and managers after the enactment of the Law 15.270/25, which significantly altered the historical logic of exempting distributed profits in Brazil.
With the new rule, understanding how taxation works, who needs to pay and how to prepare has ceased to be just an accounting issue and has become an essential matter of estate and financial planning.
In this article CLM Controller Accounting explains clearly and in depth how income tax on profit distributions works, what the exemption limits are, who will be effectively impacted by the new legislation and what precautions should be taken to avoid tax risks and undue tax payments.
What is profit sharing and why has it always been exempt?
A distribution of profits occurs when the company passes on to its partners or shareholders the positive results obtained after the end of a period, usually monthly, quarterly or annually.
This amount represents the return on the capital invested in the business and not the remuneration for the work carried out by the partner.
Since 1995, Brazil has adopted a model that exempted profits from income tax and dividends distributed to individuals, requiring only that the company keep regular accounting records and correctly calculate the profit.
This system was created to avoid so-called double taxation, taking into account that the company had already been taxed as a legal entity through taxes such as IRPJ and CSLL.
What has changed with Law 15.270/25?
With the publication of Law 15.270/25, The scenario has changed significantly. The new legislation introduced income tax on the distribution of profits and dividends above R$ 50,000 per month, creating a new milestone in the Brazilian tax system.
Under the new rule, distributed profits continue to be exempt up to the limit defined in the legislation. However, when this limit is exceeded, the following taxes are levied Income tax at the rate of 10%.
This change did not abolish the exemption, but established an objective ceiling, targeting taxation at high-income earners, while preserving small business owners.
Tax outsourcing
The strategic solution for companies
Who has to pay income tax on profit distributions?
The new tax does not affect all entrepreneurs in the same way. The impact is mainly on the following situations:
- Partners of medium-sized and large companies that make large withdrawals;
- Companies that concentrate a large part of their profits in a single shareholder;
- High-income professionals who work as legal entities, such as doctors, lawyers, dentists, engineers, consultants and executives.
Entrepreneurs who distribute less than the annual exemption limit, especially owners of micro and small businesses, are still able to receive profits without the incidence of Income tax, as long as they meet the accounting requirements.
Does the rule apply to all tax regimes?
Yes. One of the most important points of the new legislation is that income tax on profit distributions applies to companies that fall under the following categories all tax regimes.
This includes Real Profit, Presumed Profit and Simples Nacional companies. In other words, the company's tax regime does not, in itself, rule out the application of the rule when the exemption limit is exceeded.
This scope significantly expands the number of companies that need to review their tax planning, even those that have historically operated with low fiscal complexity.
How is income tax calculated on profit distributions?
O calculating income tax on profit distributions requires attention to the monthly volume and the total distributed throughout the year to each member.
In practice, this is the case, as the new legislation has brought in two points that are worth highlighting:
Monthly exempt profit limit: Each shareholder in the same company can receive up to R$ 50,000 a month in profits distributed free of charge, reaching an annual amount of up to R$ 600,000.
High-income taxation: Even if the partner receives the monthly profits free of charge, if his annual income (including other types of income) exceeds R$ 600,000, he will be taxed on up to 10% in the annual income tax return.
Therefore, monitoring must be continuous, as distribution can take place monthly, quarterly or concentrated at the end of the year.
Lack of control can lead entrepreneurs to exceed the limit without realizing it, generating an unexpected financial impact.
How the taxation of profit distribution works in companies with several partners
A key aspect of the new rule is that the exemption limit is individual per partner.
In practice, this means that a company can distribute large amounts in profits, as long as this distribution is well divided among the shareholders.
Here's an example:
- Profit to be distributed: R$ 300 thousand
- Number of members: 6
- Profit distributed to each partner: R$ 50 thousand.
In this case, even though the company made a considerable profit, as each partner received an amount within the limit, there is no taxation.
Now look at this other case:
- Profit to be distributed: R$ 300 thousand
- Number of members: 3
- Profit distributed to each partner: R$ 100 thousand.
In this case, each partner would have R$ 10,000 in IR withheld (10% rate), meaning that R$ 30,000 would go into the public coffers.
In view of this, the reorganization of corporate structures will be one of the central points of the tax planning that will need to be drawn up from now on.
In family businesses, for example, it can be interesting to add more family members to the board of directors in order to avoid taxation on profits.
How CLM Controller Accounting can support your company
A CLM Controller Accounting operates strategically, offering specialized advice on taxation, tax planning and accounting governance.
Our team analyzes the impact of the new legislation, monitors the distribution of profits throughout the year, defines strategies to maintain the exemption whenever possible and ensures full compliance with tax regulations.
Do you want to understand how the new rule impacts your company and what strategies can legally reduce the tax burden?
