Recently, a law establishing the Special Regime for Asset Revaluation and Regularization (REARP) was enacted. This new regime, among other provisions, allows taxpayers to update the value of certain assets, such as real estate and registered vehicles, to their market value, subject to a reduced Income Tax rate, significantly lower than the standard taxation applicable to capital gains. In addition, Law No. 15,265/2025 provides an opportunity to regularize assets and rights that were previously undeclared, upon payment of a special tax.

This program seeks to correct a distortion in the Brazilian tax system, since until now individuals were not allowed to update, in their Income Tax returns, the acquisition value of real estate and registered movable assets. As a result, the declared value remained far below market value, and upon sale, tax was levied on a largely artificial capital gain, generated merely by inflation and asset appreciation.

With REARP, the government allows taxpayers to update the asset value to market value and pay a reduced tax on this difference now. In return, the government anticipates revenue that would otherwise only be collected upon a future sale, an operation that many taxpayers avoided precisely due to high taxation.

The program also encourages tax compliance by offering a pathway for undeclared assets to be included in the Income Tax return, through the payment of tax and penalties, thereby voluntarily expanding the tax base.

Those who may benefit from this new regulation include: (i) individuals planning to sell real estate in the medium term; (ii) family holding companies; (iii) individuals holding assets abroad or assets with very low historical cost, among others.

Accordingly, the regulation establishes that the following may be subject to the regime: movable and immovable assets that were part of the taxpayer’s assets as of December 31, 2024; and assets owned by the taxpayer as of December 31, 2024 that have not yet been declared.

To adhere to the regime, the legislation requires the submission of an application containing the identification of the declarant and of the movable or immovable asset, as well as the value of the asset stated in the last Annual Income Tax Return or in the accounting records previously filed, and the updated value of the asset.

The tax will be calculated on the difference between the updated value and the historical declared value. The following rates apply:

Individuals: 4 percent Income Tax, when the asset has already been declared;
Legal entities: 4.8 percent Corporate Income Tax and 3.2 percent Social Contribution on Net Profit, when the asset has already been declared.

By way of comparison, when selling real estate or other assets, Income Tax on capital gains applies at progressive rates ranging from 15 percent to 22.5 percent, depending on the amount of profit. Therefore, standard taxation may be four to five times higher than the 4 percent rate under REARP, representing significant tax savings.

Payment may be made in a single installment or in up to 36 monthly and consecutive installments, provided that each installment is at least BRL 1,000. The single installment or the first installment must be paid by the last business day of the month in which the return is filed, to be regulated by the Brazilian Federal Revenue Service. The remaining installments will be adjusted by the SELIC rate, although early payment is allowed without adjustment.

Another important possibility is the regularization of assets and rights through REARP, which entails remission of certain past tax obligations, allowing the taxpayer to incorporate previously undeclared assets without retroactive charges of taxes, interest, or penalties. However, adherence does not eliminate taxation on the act of regularization itself, since the asset value is considered a patrimonial increase as of December 31, 2024 and is subject to Income Tax at a 15 percent rate, in addition to the applicable penalty. Thus, remission applies to the past, but the tax burden on the regularized entry of the asset remains.

The law also provides that, in cases involving assets subject to criminal proceedings, extinction of criminal liability may occur if full payment is made before publication of a conviction, depending on the legal classification, nature of the asset, lawful origin, and criminal analysis of the case.

It is important to note that if an asset updated under REARP is sold within five years for real estate or within two years for movable assets, counted from adherence to the program, the benefit is revoked. In such cases, the tax authorities will disregard the REARP update. Nevertheless, the tax paid under REARP may be offset against the tax due upon sale. This loss of benefit does not apply to transfers by inheritance or division of assets in divorce or dissolution of a stable union.

It is essential to evaluate each case individually to determine whether REARP will generate an effective tax benefit. For assets recorded as inventory, the regime generally does not produce savings, functioning merely as tax anticipation. For assets held as long-term property, however, revaluation may generate real tax benefits, making individual analysis indispensable.

In summary, Law No. 15,265/2025 opens a window of opportunity to align asset values with market reality at a significantly lower tax cost than under normal conditions. More than a simple cadastral update, REARP may serve as a strategic tool for asset organization. Therefore, careful analysis of the rules, projection of scenarios, and assessment under estate and succession planning perspectives are strongly recommended.

Dupont, Spiller e Fadanelli is available to clarify any questions and to conduct individual analyses to assess effective tax burden reduction.