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Capital reduction: taking capital back out of a Brazilian company

Last verified: 2026-10-27 · Status: Changing

A capital reduction lets a foreign parent take back capital it no longer needs without selling or closing the company. The law allows it only for losses or excess capital, and a cash return waits for a creditor objection window of 90 days in a Ltda. and 60 days in an S.A. Capital returned at book value is not taxed, but capital built from profits capitalized in the last 5 years comes back as a dividend, which since 2026 bears 10 percent withholding when paid abroad.

USD figures use the Banco Central do Brasil PTAX selling rate of R$5.3346 per US dollar for 27 October 2026 (PTAX had moved from 5.0377 on 23 October to 5.5007 on 26 October). Conversions are for orientation only; the rate on the day of each FX contract will differ.

Key facts

Quorum to amend a Ltda.'s articles (including a capital reduction)	More than half of the capital Civil Code art. 1.076 II (Lei nº 14.451/2022), as of 2026-10-27 · in force
S.A. capital reduction with debentures outstanding	Prior approval by a majority of debenture holders Lei nº 6.404 art. 174 § 3, as of 2026-10-27 · in force
Window after capitalizing profits in which a capital return is treated as a dividend	5 yearsDL 1.598 art. 63 § 4, as of 2026-10-27 · in force
JUCESP fee for Ltda. minutes or amendment, 2026	273.55 BRLPortaria JUCESP nº 146/2025 item 2, as of 2026-10-27 · in force
JUCESP fee for S.A. minutes, 2026	583.98 BRLPortaria JUCESP nº 146/2025 item 3, as of 2026-10-27 · in force
Deadline to declare a return of capital made without an FX contract (US$100,000 or more)	30 daysResolução BCB nº 278 art. 36 VI, as of 2026-10-27 · in force

The rule

1. When a Ltda. may reduce capital. A Ltda. may reduce its capital by amending its articles in two cases only: after the capital is fully paid in, if it has irreparable losses; or if the capital is excessive for the company's purpose. A loss reduction lowers the nominal value of the quotas and takes effect when the minutes are registered at the Junta Comercial.Lei nº 10.406 of 10 January 2002 (Civil Code), Arts. 1.082 and 1.083, 2002-01-10 official text · verified 2026-10-27

2. Returning excess capital in a Ltda. The company returns part of the quota value to the partners (or releases unpaid installments) and lowers the nominal value of the quotas. Within 90 days of publication of the minutes approving it, an unsecured creditor holding a liquid claim dated before that publication may object. The reduction becomes effective only if no objection is filed in that period, or if payment of the debt or a court deposit is proved; only then are the minutes registered.
Cost to do it: Junta Comercial fee for the minutes: R$273.55 (about US$51) in São Paulo in 2026 (Portaria JUCESP nº 146/2025, item 2), plus the cost of publishing the minutes. The main cost is time: at least 90 days before the cash can lawfully leave.Lei nº 10.406 (Civil Code), Art. 1.084 caput and §§ 1 to 3, 2002-01-10 official text · verified 2026-10-27

3. Quorum in a Ltda. Amending the articles requires partners holding more than half of the capital, since Lei nº 14.451 of 21 September 2022 revoked the old three quarters rule.Lei nº 10.406 (Civil Code), art. 1.071 item V and art. 1.076 item II as worded by Lei nº 14.451 of 21 September 2022, Art. 1.071 V; art. 1.076 II, 2022-09-21 official text · verified 2026-10-27 · changed: Lei nº 14.451 of 21 September 2022 (in force 30 days after publication on 22 September 2022) cut the quorum for amending a Ltda.'s articles from three quarters of the capital to more than half.

4. Capital reduction in an S.A. The general meeting may reduce capital up to the amount of accumulated losses or if it considers the capital excessive; a management proposal needs the fiscal council's opinion if one is in operation. A reduction that returns money to shareholders takes effect only 60 days after publication of the minutes. During that period unsecured creditors with claims dated before publication may object by notice, copied to the Junta Comercial; after the period the minutes may be filed if nobody objected or the objecting creditor was paid or the amount deposited in court. If debentures are outstanding, a majority of debenture holders in a special meeting must approve first.
Cost to do it: Junta Comercial fee for S.A. minutes: R$583.98 (about US$109) in São Paulo in 2026 (Portaria JUCESP nº 146/2025, item 3), plus publication costs.Lei nº 6.404 of 15 December 1976 (Corporations Law), Arts. 173 and 174 caput and §§ 1 to 3, 1976-12-15 official text · verified 2026-10-27

5. Book or market value. Assets handed back to a partner or shareholder as a return of capital may be valued at book value or at market value. If the company uses market value, the excess over book value is a taxable capital gain of the company. For the receiving holder, the difference between market value and its book value (legal entity) or the value in its asset declaration (individual) is not taxed.Lei nº 9.249 of 26 December 1995, Art. 22 caput and §§ 1 to 4, 1995-12-26 official text · verified 2026-10-27

6. Capitalized profits come back as dividends. If, within 5 years after capitalizing profits or reserves, the company returns capital to its holders by a capital reduction (or in a liquidation as a distribution of net assets), the capital returned is treated as distributed profit or dividend, taxed under the legislation in force. Since 1 January 2026, profits or dividends remitted abroad bear 10 percent withholding income tax, with exceptions for profits up to 2025 approved by 31 December 2025 and paid on the original terms.Decreto-Lei nº 1.598 of 26 December 1977, art. 63 § 4; Lei nº 9.249, art. 10 §§ 4 and 5, added by Lei nº 15.270 of 26 November 2025, DL 1.598 art. 63 §§ 4 and 5; Lei nº 9.249 art. 10 §§ 4 and 5, 2025-11-26 official text · verified 2026-10-27 · changed: Lei nº 15.270 of 26 November 2025 introduced, from 1 January 2026, 10 percent withholding on profits and dividends sent abroad, which gives the five year deemed dividend rule of DL 1.598 art. 63 § 4 a real cost again.

7. Central Bank record. A return of capital remitted through an FX contract is captured in SCE-IED automatically. A return of capital made without an FX contract (paid abroad or in reais in Brazil) of US$100,000 or more must be declared within 30 days.Resolução BCB nº 278 of 31 December 2022, as amended by Resolução BCB nº 410 of 11 September 2024, Art. 32 item II; art. 35 item II; art. 36 item VI, 2022-12-31 official text · verified 2026-10-27

8. No tax clearance needed to register. Registration of alterations of companies at any level of government takes place regardless of whether the company, its partners or managers are up to date with tax, social security or labor obligations, without prejudice to their liability. Older text in Lei nº 8.212 art. 47 I d still lists a debt clearance certificate for capital reductions, but the later Redesim rule governs registration.Lei nº 11.598 of 3 December 2007, art. 7-A, added by Lei Complementar nº 147 of 7 August 2014; Lei nº 8.212 of 24 July 1991, art. 47 item I d, Lei nº 11.598 art. 7-A; Lei nº 8.212 art. 47 I d, 2014-08-07 official text · verified 2026-10-27

Point	Ltda. (Civil Code)	S.A. (Lei nº 6.404)
Grounds	Irreparable losses after full payment, or excess capital (art. 1.082)	Losses up to accumulated losses, or excess capital (art. 173)
Approval	Partners holding more than half of the capital (arts. 1.071 V, 1.076 II)	General meeting; fiscal council opinion on management proposals if in operation (art. 173 § 1)
Creditor window when money goes back	90 days from publication (art. 1.084 § 1)	60 days from publication (art. 174)
Effect	After the window without objection, or after payment or court deposit; then registration (art. 1.084 §§ 2 and 3)	After 60 days; then filing (art. 174 § 2)
Debentures	Not applicable	Prior approval of a majority of debenture holders (art. 174 § 3)
JUCESP fee 2026	R$273.55 (about US$51)	R$583.98 (about US$109)

Ltda. and S.A. capital reductions compared (rules cited above).

Worked example

A Ltda. owned by a foreign parent has R$20,000,000 of capital and needs R$12,000,000. The partners holding more than half of the capital approve a reduction of R$8,000,000 (about US$1,499,644) for excess capital and publish the minutes. Ninety days pass without objection, the minutes are registered (R$273.55 at JUCESP) and the company remits R$8,000,000 through an FX contract, which SCE-IED captures automatically.
The five year trap: if R$3,000,000 of that capital came from profits capitalized in 2024, that part may be treated as a distributed dividend (DL 1.598 art. 63 § 4). Treated as a 2026 dividend to a foreign holder, withholding at 10 percent would be R$300,000 (about US$56,237) (Lei nº 9.249 art. 10 § 4), so the parent would receive R$7,700,000 (about US$1,443,407) instead of R$8,000,000.

Step by step

1. Check the ground: excess capital (cash goes back) or losses (only a book adjustment). A Ltda. can reduce for losses only once capital is fully paid (Civil Code art. 1.082).
2. Trace the capital: identify any part built from capitalized profits or reserves in the last 5 years (DL 1.598 art. 63 § 4) and the cost basis registered in SCE-IED for each holder.
3. Approve: Ltda. partners with more than half of the capital (Civil Code art. 1.076 II); S.A. general meeting with the fiscal council's opinion if one operates (Lei nº 6.404 art. 173 § 1), and a debenture holders' meeting if debentures are outstanding (art. 174 § 3).
4. Publish the minutes and wait: 90 days for a Ltda. (Civil Code art. 1.084 § 1), 60 days for an S.A. (Lei nº 6.404 art. 174). Pay or deposit in court the claim of any objecting creditor.
5. Register the minutes at the Junta Comercial (R$273.55 Ltda. or R$583.98 S.A. at JUCESP in 2026) and update the CNPJ data through Redesim.
6. Remit through an FX bank (captured in SCE-IED) or, if settled without FX, declare in SCE-IED within 30 days when US$100,000 or more (Resolução BCB nº 278 art. 36 VI).
Realistic timeline: about three to four months for a Ltda. and about two to three months for an S.A., driven by the creditor window.

Common traps

Paying out before the window closes. A Ltda. reduction for excess capital is not effective until 90 days pass without objection (Civil Code art. 1.084 § 2); money sent earlier is exposed to creditor claims.
Recent capitalizations. Capital built from profits capitalized in the last 5 years returns as a dividend for tax purposes (DL 1.598 art. 63 § 4), now with 10 percent withholding abroad (Lei nº 9.249 art. 10 § 4).
Market value distributions in kind. Handing over assets at market value creates a taxable gain in the company (Lei nº 9.249 art. 22 § 1); book value avoids that at the company level.
Loss reductions return no cash. A reduction to absorb losses only lowers the nominal value of the quotas (Civil Code art. 1.083); it is not an exit route on its own.
Forgetting debenture holders. An S.A. with debentures outstanding cannot complete a cash reduction without their prior approval (Lei nº 6.404 art. 174 § 3).

Sources

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