Brazilian Voluntary Disclosure Program (commonly known as “RERCT”)

1. Presentation of Law 13.254/2016 and IN RFB 1627 (Special Regime for Regularization Exchange and Tax)

What is the purpose of the law?

Who should declare?

What are the benefits for those who adhere?

How to join the Voluntary Disclosure Program?

1. Presentation of Law 13.254/2016 (Special Regime for Regularization Exchange and Tax)

What is the purpose of the law? Regularization of non declared assets Offshore Assets, including bank accounts in Switzerland - not declared To legalize secret accounts and assetsWho should declare their secret assets? Residents or domiciled individuals in Brazil on December 31, 2014 Those who are not involved in criminal proceedings Politically Exposed Persons, governmental officials and clerks

1. Presentation of Law 13.254/2016 (Special Regime for Regularization Exchange and Tax)

What are the benefits for those who disclose their assets?

Amnesty from the crimes specified by Law;

Amnesty from fines and accrued interest payments Amnesty from underreporting of Brazilian capital abroad (Declaração de

Capitais Brasileiros no Exterior – DCBE)

- Tax evasion - Crimes against the tax order

1. Presentation of Law 13.254/2016 (Special Regime for Regularization Exchange and Tax)

How to join the Voluntary Disclosure Program?

Filling (”DERCAT") with the Receita Federal and pay the fine and tax (nominal rate of 30% and effective rate around 21% - depends on the currency fluctuation of the USD

Central Bank of Brazil will have access to information

2. International Outlook

2.1. International experience for Voluntary Disclosure Programs for clients living in USA, Italy, Germany and Canada (40%)

2.2. Automatic exchange of bank account information: New agreement between Switzerland and Brazil signed in November 2015

2. International Outlook2.2. G20 and the end of banking secrecy Global Transparency Forum (April 2009): G20 decreed the end of

banking secrecy August 2009: the end of bank secrecy laws in Switzerland 2015: many bilateral agreements with tax havens Brazilian Court Decision - STF RE 601.314/SP - bank secrecy

The End of Banking Secrecy

Amendment to the Mutual Administrative Assistance Agreement on Tax Affairs (2010) Forecast exchange of information by request, spontaneous and automatic First step in the automatic exchange of information (CRS = Common Reporting

Standards)

2. International Outlook2.3. Automatic exchange of information: US FATCA and CRS

US initiative to automatic exchange of bank information Brazil and the United States held the first exchange of information on

08.31.2015

USFATCA

OCDE Initiative for automatic exchange of information (from 2017) 9 jurisdictions have signed the Agreement for Automatic Exchange of Financial

Information (01/27/2016) 95 jurisdictions have committed to join - including Brazil (2018)

CommonReportingStandard

3. Uncertainties of Law 13.254/2016

3.1. Constitutionality of Law

3.2. Secrecy in the use of information in the context of Law

3. Uncertainties of the Law 13.254/20163.1. Constitutionality of the Law

Discussion

notes

Brazilian Federal Government (Not the States nor the Municipality)

Institution of Law Creates legal fiction – capital gains received in December 31

Exclusion of Politically Exposed Persons and Governmental Officers

Exclusion of criminals

3. Uncertainties of the Law 13.254/20163.2. Legal certainty of Law

Guaranteesfor the

declarant

Amnesty crimes specified in the Law

Legalization of the assets

The DERCAT can not be used as single sign or element in investigative or criminal procedure

The DERCAT can not be used to support administrative tax procedures

3. Uncertainties of Law 13.254/20163.3. Secrecy in the use of information in the context of Law

Protection of the information in DERCAT are equivalent to the protection of tax secrecy Restricted information to the Internal Revenue Service, the National

Monetary Council, Central Bank and other governmental entities involved

Article 10 Law 105/2001: a breach of confidentiality not authorized by law is a criminal offense (imprisonment from 1-4 years)

Article 325 of the Criminal Code: office holder that reveals or facilitates the disclosure of the confidential information commits a crime

Information protection

4. Participation to RERCT

4.1. Participation to RERCT

4.3. Consequences of joining

4.4. Data and events to declare

4. Participation to RERCT4.2. Other statements in the RERCT

Individual Legal Person

Annual Adjustment Statement of Rectification 2014 and subsequent years to include regularized resources.

Brazilian Capital Statement Presentation abroad in 2014 and later years.

Adjustments to the Bookkeeping of the legal entity in 2014 and subsequent years to include regularized resources

4. Participation to RERCT4.3. Consequences of adherence

Regularization of resources;

Amnesty for criminal and fiscal purposes;

Possibility to keep the assets abroad

4. Participation to RERCT4.4. Assets declaration and time to declare

Have been or be owner or resource holder in periods prior to 12/31/2014, although it does not have balance of funds or title to assets and rights.

Requirements

to declare

Main issuesEvents after 12/31/2014 are covered?How to deal with situations where there is no balance or property on

12/31/2014?

5. Specific situations5.2. Exchange variation after 12/31/2014

Law 13.254: ownership of assets, goods or rights in periods prior to 12/31/2014;

For valuation purposes of assets, property or rights to be settled, there must be conversion to the dollar and later to the real based on the quotation of 12/31/2014.

Generalrule

Repatriation of funds

Exchange rate changes after

31/12/2014 must be taxed at the time of

repatriation?

Dollar rate on 12/31/2014

Dollar rate on 04/27/2016

Exchange variation

R$ 2,66 R$ 3,55 R$ 0,89

5. Specific situations5.5. Estate and incidence of ITCMD

RERCT possibility for inheritance procedures (if it is open on 12/31/2014);

Assets located abroad in 2014, but the succession is only opened in 2015: it is possible to stabilize the goods?

Heritage

6. Decision-making processes and accession6.3. Calculations

Data ValuesAmount to be settled in dollars US$ 1.000.000,00

Amount to be regularized in real (quote 02/27/16 - R$ 3,55) R$ 3.550.000,00Amount to be regularized in real (quote 12/31/2014 - R$ 2,66) R$ 2.660.000,00

Income tax (15% of the amount to be regularized) R$ 399.000,00Fine (100% of income tax to be paid) R$ 399.000,00

Total payable (Income + Fine) R$ 798.000,00

Effective rate (approx.) 22,50%

Thank you!Caputo & Partners AG

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