The recent approval of taxation on dividends from 2026 has generated a wave of concern among Brazilian investors and entrepreneurs. With the new rule, which provides for a 10% levy on monthly amounts of more than R$50,000, many are starting to look for legitimate alternatives to optimize their tax burden. But are there already mechanisms in the system to reduce this impact? The answer seems to lie in tax avoidance – the legal practice of tax planning that uses loopholes in the legislation to minimize taxes.

Far from being a marginal strategy, tax avoidance is widely used by large corporations and understood by experts as a legitimate form of financial organization. The didactic example of the restaurant combo – where the tax rate can be significantly reduced by reclassifying items – perfectly illustrates how structuring operations can generate substantial savings within the law.

Faced with this new tax scenario, Brazilian publicly traded companies have already begun to make strategic moves. Early dividend distributions, such as the billions announced by Itaú, Vale and other large companies in 2023, reveal only the tip of the iceberg of a deeper corporate rearrangement. But these emergency measures may be giving way to more sophisticated and permanent solutions.

The real revolution may lie in the way companies structure their shareholder remuneration. In addition to traditional dividends and Interest on Equity (JCP), there are at least three other equally valid modalities: share bonuses, share buybacks on the market and private subscriptions. Each of these alternatives has different tax implications and may become more attractive in the post-2026 context.

An emblematic case that deserves attention is that of Auren Energia (formerly Eletrobras), which proposed the creation of a new class of redeemable preferred shares – true hybrid financial instruments that would allow value to be transferred to shareholders without characterizing a dividend distribution. This financial engineering, still being evaluated by B3, could set a transformative precedent for the entire market.

Detailed Analysis of the 5 Forms of Shareholder Remuneration Post-Tax Reform

The taxation of dividends from 2026 does not mean the end of profit distribution, but rather a strategic reassessment of how this value will reach shareholders. Smart companies already operate with a range of instruments, each with a different tax treatment. Mastering these nuances is essential for investors and entrepreneurs who want to make informed decisions.

1. Traditional Dividends: The Era of Direct Taxation

Dividends, hitherto sacred and exempt for individuals, will lose their privileged status. As of 2026, a tax rate of 10% will be levied on dividends in excess of R$50,000 per month. It is crucial to understand that this limit is not annual, but per month of receipt. This creates an asymmetry: those who receive dividends concentrated in a few months of the year may be more impacted than those who receive regular distributions.

Implication for Companies: The total effective tax burden on distributed profit can become prohibitive. Consider: the company has already paid Corporate Income Tax (IRPJ) and Social Contribution on Net Profit (CSLL) which, when added together, can reach 34%. On what is left over and distributed, the individual shareholder pays a further 10%. The total effective tax burden on the same profit can therefore be close to 40%. This scenario strongly encourages the search for alternatives.

2. Interest on Equity (JCP): The Consolidated Alternative (but with limits)

JCP is treated as a financial expense by the company, reducing the basis for calculating IRPJ and CSLL. For the shareholder, it is income taxed at source at 15% (with proposals to increase this to 17.5% or 20%). Apparently, it is more advantageous than the taxed dividend.

However, there are critical restrictions:

• Distribution Limit: The Corporate Law limits JCP to the lower of: 50% of the profit for the year OR the balance of retained earnings and profit reserves. In practice, regulated sectors (such as energy and sanitation) have even more restrictive limits imposed by their regulatory agencies.
• Advantage for the company: As an expense, JCP reduces the PJ’s taxable income, generating tax savings at the corporate level that can be passed on, in part, to the shareholder.
• Disadvantage for the Minority Shareholder: JCP is taxed at source for everyone, without distinction. While the controlling shareholder may have structures (holding companies) that recover part of this tax, the small investor in the stock market pays the full 15%.

3. Stock Bonus: The “Paper” Remuneration

Here, the company uses retained earnings or reserves to increase its share capital and distribute new shares, free of charge, to shareholders in proportion to their holdings. There is no cash outflow from the company.

Tax treatment: For the shareholder, the shares received as a bonus have zero acquisition cost. Tax will only be due on the future sale of these shares, when it will be levied on the capital gain (with exemption for monthly sales of up to R$20,000). It is a way of postponing tax and transforming income (dividends) into capital gains (sale of shares).

Point to note: The bonus proportionally dilutes the value of each share on the market (the share price falls ex-bonus), but the shareholder leaves with more shares and the same percentage stake in the company. The total value of their stake remains, but it is now “frozen” in shares, requiring a future sale to be monetized.

4. Share Buybacks and Cancellations: Indirect Valuation

In this strategy, the company uses its cash to buy its own shares on the open market and then cancel them.

Value Creation Mechanism:

1. Fewer shares in circulation increase the percentage holding of each remaining shareholder.
2. The company’s Earnings Per Share (EPS) increases, as the same total profit is divided by a smaller number of shares.
3. Increased EPS tends to put pressure on the share price in the medium to long term.
4. Shareholders monetize the benefit by selling part of their shares on the market (with an exemption of up to R$20,000/month in capital gains) or simply by following the appreciation of their assets.

Tax advantage: The buyback is not a distribution of profit, but an investment of the company’s cash. The shareholder only pays tax if and when he sells, transforming the potential taxation of income (dividend) into taxation of capital gain, with lower rates (15% on profit, above the exemption) and the possibility of exemption.

5. Discounted Private Subscription: The Exclusive Right

The company issues new shares for a capital increase, but offers pre-emptive rights to existing shareholders, usually at a price below market value. The shareholder can exercise the right (by buying more shares cheaply) or sell their right on the market (which has value).

Benefit: This is an indirect way of transferring value. The shareholder who exercises the right acquires equity (shares) below the market price, creating an immediate gain (not taxed on acquisition). Again, taxation will be postponed until the time of sale.

The choice between these tools is not random. It depends on the company’s cash situation, the profile of the controlling shareholders (who are the most impacted by the new taxation and therefore the most encouraged to seek alternatives), and sector regulations. The movement observed in 2023/2024, of massive early distribution of dividends, is a transition strategy. The future belongs to companies that manage to structure permanent remuneration plans that blend these tools intelligently, minimizing the total tax cost for the company and its owners.

The Auren Energia Case: Financial Engineering That Could Rewrite the Rules of the Market

Auren Energia’s (formerly Eletrobras) proposal is not just an accounting maneuver, but a high-level financial experiment that tests the limits of Brazilian capital market regulation. It represents the convergence of advanced tax planning, financial product engineering and corporate governance strategy.

Anatomy of Strategy: Creating a New Hybrid Asset

Auren is proposing the creation of a new class of preferred shares, called “Redeemable Preferreds” or “Type C Preferreds”. This instrument is designed with unique characteristics that set it apart from any asset available on B3 today:

1. Economic Rights Equal to Ordinary Shares(ON): They receive dividends in the same proportion as ON shares, breaking the paradigm of traditional preferred shares (which normally have preference or a 10% increase in dividends).
2. Automatic convertibility: They are compulsorily convertible into ordinary shares (ON) at a ratio of 1:1, with a timetable that extends to 2031. This aligns the instrument with the company’s plan to migrate to the Novo Mercado, B3’s highest level of governance.
3. Guaranteed redeemability: They can be redeemed by the company at any time, at the market price of the corresponding ON share. This is the heart of tax engineering.

The Value Transfer Mechanism without Dividend

The magic (or the loophole, depending on your point of view) happens in the rescue operation. Let’s take the process apart step by step:

Traditional Scenario (Post-2026):

1. The company has R$1 billion in retained earnings to distribute.
2. Declares and pays out R$1 billion in dividends.
3. Individual shareholders receive the amount and pay 10% tax on the excess of R$50,000 per month.
4. Result: The company’s cash outflow is taxed at the top.

Auren Scenario (With Redeemable Shares):

1. The company has R$1 billion in retained earnings.
2. Instead of declaring dividends, it is making a bonus, distributing a specific number of “Type C Redeemable Preferred Shares” free of charge to shareholders. The book value of these new shares is backed by R$1 billion in reserves.
3. Immediately after the distribution, or at a future date at the shareholder’s discretion, the company announces the redemption of these preferred shares.
4. The company uses its cash (the same R$1 billion) to buy back these shares from shareholders, at the ON market price.
5. The shareholder receives the money from the sale/redemption of his shares.
6. Result: The final cash flow for the shareholder is identical to that of the dividend. However, in accounting and legal terms, it was not a distribution of profits, but a repurchase of capital instruments (redeemable shares). For the shareholder, the income is classified as a capital gain on the sale of shares, and not as income (dividends).

The Big Tax Question: Will this capital gain be taxed? Potentially, yes, but with one crucial difference: capital gains on shares are exempt for sales of up to R$20,000 per month and a flat rate of 15% on profits above that. More importantly, it is the shareholder who controls the timing of monetization (and therefore taxation) and can split redemptions to take advantage of the monthly exemption. This differs radically from the dividend, which is a taxable event at the single moment of payment by the company.

The Regulatory Challenge and the Conflict with B3

Auren’s strategy comes up against a fundamental obstacle: the Novo Mercado rules. To be listed in this elite segment, a company must only have ordinary shares (ending in 3) in circulation. Preferred shares (ending in 4, 5, 6, etc.) are forbidden.

Auren, which wants to migrate to the Novo Mercado, is proposing an instrument that is technically a “preferred share”, but with identical rights to ordinary shares and with a validity period (until conversion or redemption). In practice, the company is asking B3 to reinterpret or make the rules more flexible.

Possible outcomes:

1. Approval by B3: This would set a monumental precedent. Hundreds of other companies in the Novo Mercado (or aiming to join) could adopt the same structure, making the taxation of dividends in 2026 effectively innocuous for a large part of the market. This would generate enormous pressure from the government on B3.
2. Rejection by B3: Auren’s strategy would die, but it would signal to the market and the government that the attempt to “circumvent” the new taxation via capital engineering will not be tolerated. This could speed up the creation of new laws closing other loopholes.
3. Creation of a New Asset Category: B3 and CVM could be forced to create a new classification for instruments like this (e.g. “Capital Redemption Certificates”), with its own rules, which would trigger a new cycle of tax planning.

Market Implications: If Approved, Everything Changes

If Auren’s model is successful, the consequences would be profound:

• Practical End of Dividend Taxation for Large Shareholders: Controllers and large institutional investors would structure their holdings to always receive via “share redemption”, never again via dividends.
• Change in Minority Investor Behavior: The focus would no longer be on the “dividend yield” but on the “buyback/redemption potential” and the health of the company’s cash flow. Fundamentalist analysis would have to incorporate new metrics.
• Pressure on Cash-intensive Companies: Companies such as technology companies or those with capital-light models that accumulate cash would be pressured by shareholders to create similar structures to distribute value efficiently.
• Increased Complexity: The market would become more complex for the small investor, who would have to understand not only shares, but now also “redeemable shares”, their terms and conditions.

Auren’s move is more than a corporate strategy; it’s a stress test on the tax and regulatory system and the capital markets as a whole. Its outcome will say a lot about who really dictates the rules of the game in Brazil: the tax legislator or the financial ingenuity of the market.

Legal loophole or tax avoidance? How Companies Can Bypass Dividend Taxation in 2026 – FAQ