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Tax loss carryforward in Brazil

Last verified: 2026-10-25

Brazil lets companies carry forward IRPJ tax losses and negative CSLL bases with no time limit, but each year's offset is capped at 30% of adjusted profit. There is no carryback. Losses are forfeited on a combined change of control and change of business, and cannot be inherited in mergers.

The rule

1. Tax losses may be offset against adjusted profit up to a maximum of 30% of that adjusted profit. The law sets no expiry date.Law 9,065/1995, art. 15, 1995-06-20 official text
2. Negative CSLL bases may be offset in later years up to the same 30% limit.Law 9,065/1995, art. 16, 1995-06-20 official text
3. The 30% limit on reduction of adjusted profit has applied since 1 January 1995.Law 8,981/1995, art. 42, 1995-01-20 official text
4. Losses from the disposal of fixed assets, investments and intangibles may only be offset against profits of the same nature, subject to the 30% limit.Decree 9,580/2018 (RIR), based on Law 12,973/2014 art. 43, art. 581, 2018-11-22 official text
5. A company may not offset its own losses if, between the loss year and the offset, there was both a change of corporate control and a change of line of business.Decree-Law 2,341/1987; RIR, art. 32; RIR art. 584, 1987-06-29 official text
6. A successor in a merger, consolidation or spin off may not offset the losses of the predecessor; in a partial spin off the remaining company keeps its losses proportionally.Decree-Law 2,341/1987; RIR, art. 33; RIR art. 585, 1987-06-29 official text
7. Losses can only be used by companies that keep the books and documents proving them.Law 9,065/1995, art. 15, sole para., 1995-06-20 official text

Worked example

A company has BRL 50,000,000 of tax loss and negative CSLL base carried forward and BRL 10,000,000 of adjusted profit in 2026. It may offset BRL 3,000,000 (30%, about USD 595,510), leaving BRL 7,000,000 taxable. IRPJ 15% BRL 1,050,000, surcharge BRL 676,000, CSLL 9% BRL 630,000: total BRL 2,356,000 (about USD 467,674), versus BRL 3,376,000 without the offset. USD at the BCB PTAX selling rate of 23 October 2026, BRL 5.0377 per USD.

Step by step

  1. Keep the LALUR and LACS records reconciled each year.
  2. Before an acquisition, test both the change of control and the change of business conditions.
  3. Structure reorganizations so the loss company is the surviving entity where legitimate business reasons allow.
  4. Remember losses are only usable under actual profit; switching to presumed profit leaves them unused.

Common traps

  • Assuming the 30% cap is lifted on liquidation or merger.
  • Buying a loss company and changing its activity.
  • Offsetting capital losses against operating profits.

Sources

Related pages

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