MP changes taxation of real estate funds and Fiagros – 09/04/2023 – What tax is this

FIIs (Real Estate Investment Funds) and Fiagros (Investment Funds in Agro-industrial Productive Chains) are also affected by provisional measure 1,184, which changes the taxation of investments in investment funds in the country.

According to Diogo Olm Ferreira, tax specialist at VBSO Advogados, the MP restricts the hypotheses of exemption of income obtained by individuals in investments in these funds.

Currently, earnings distributed by a FII or Fiagro with more than 50 shareholders and with shares traded on the Stock Exchange are exempt from Individual Income Tax. The MP now requires the existence of at least 500 quota holders for this exemption to apply.

In this case, the change is not immediate. If the MP is approved without modifications, the new taxation rules will only take effect in 2024.

“Although they are not achieved by the new periodic taxation rules, the MP proposes changes for the taxation of FIIs and Fiagros, again with a potential increase in the tax burden”, says the tax specialist.

Luciana Pantoroto, CFP financial planner for Planejar, says that, under the current rule, it is enough for the shares to be admitted to trading on the stock exchange or over the counter for these earnings to be exempt. The MP also amends this section of the law, providing that the shares must be effectively traded in these markets for the exemption to be granted.

“This change should affect funds that, despite being registered on the Stock Exchange, are not effectively traded. Generally, they are made up of families or small groups of investors”, he says.

A survey by Quantum Finance, a solutions and information company for the capital market, shows 139 FIIs and Fiagros, listed and not listed on the Stock Exchange, which currently fall under the exemption rule (at least 50 shareholders), but which would lose the benefit due to new legislation, considering data for July 31 of this year. In total, there are 553 funds with less than 500 shareholders, therefore subject to income tax as of 2024.

The company also says that the 111 Real Estate Investment Funds that make up the IFIX index, B3’s reference for these investments, have more than 500 shareholders, therefore, they are not subject to change.

The MP’s main objective is to extend the periodic taxation rule for investments in investment funds in general, the “come quotas”, to income from closed-end funds.

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