Haddad wants to tax real estate and agribusiness funds; see what changes

Fixed income alternatives that had been gaining popularity among investors, Real Estate Investment Funds (FIIs) and Investment Funds in Agroindustrial Chains (Fiagros) may lose their main attraction: exemption from Income Tax on earnings.

Provisional Measure 1,303, issued last week by the government of Luiz Inácio Lula da Silva (PT), establishes taxation between 5% and 17.5%, depending on the type of investor.

The new tax is one of the measures announced by Finance Minister Fernando Haddad as compensation for the government's partial withdrawal of the increase in the Tax on Financial Transactions (IOF) . However, for the Income Tax to come into effect, Congressional approval is required.

Experts believe that the change could discourage long-term investment, affect retirement planning and make credit more expensive for key sectors of the economy, such as infrastructure, agribusiness and the real estate market.

"Although the justification is the fulfillment of fiscal targets and moderation in the increase of the IOF, the impact on investors' profitability is evident, reducing margins and demanding greater sophistication in portfolio allocation, especially with the end of progressivity in IR and the fixed weight on previously exempt assets", says the president of the National Center for the Prevention and Resolution of Tax Conflicts (Cenapret), Mary Elbe Queiroz.

What happened to taxation on income from FIIs and Fiagros?

Before MP 1,303, FIIs and Fiagros were exempt from IR on income (dividends) paid to individuals, as long as they met certain requirements:

• be traded on a stock exchange or organized over-the-counter market;
• have at least 50 shareholders (in the case of FIIs) or 100 shareholders (Fiagros); and
• respect concentration limits per investor.

This structure has consolidated funds as popular instruments for generating passive income and financial planning. Under the new rule, distributed income will be taxed at source at a general rate of 17.5%, applicable to dividends, amortizations and redemptions.

Rules for reduced taxation of 5%

Not everything is a loss for the individual investor. According to Rafael Bellas, product coordinator at InvestSmart XP, most FIIs and Fiagros will be able to count on a reduced rate of 5% on dividends, as long as they meet some criteria:

• have a minimum of 100 shareholders;
• its shares are traded exclusively on the stock exchange or organized market;
• no individual shareholder may hold more than 10% of the shares or receive more than 10% of the fund's income; and
• relatives up to the second degree count as a single group of shareholders, and the sum of the shares cannot exceed 30% of the total.

These conditions are intended to prevent misuse of the fund structure by large individual investors, but they increase operational complexity.

What changes in the purchase and sale of FIIs and Fiagros shares?

Despite the new taxation on income, the MP reduces the rate on capital gains on the sale of fund shares from 20% to 17.5%.

Bellas explains with an example: “If an investor buys a share for R$100 and sells it for R$110, the gain of R$10 was taxed at 20%, that is, R$2. Now, with the new rule, the tax will be R$1.75 — a marginal but significant reduction.”

When do the rules come into effect?

One of the premises of the MP is respect for the principle of annual taxation, according to which changes in income taxes only take effect in the year following their publication.

As a result, the new taxation comes into effect on January 1, 2026. Until then, issued and paid-in quotas will remain subject to the old rule.

According to an analysis by XP Investimentos, even if these shares are subsequently traded on secondary markets, they will maintain their original exemption.

“The proposal creates a differentiation between new and old quotas, which may result in new trading codes to distinguish tax treatment,” explains Marx Gonçalves, head of listed funds at XP.

Are FIIs and Fiagros still attractive to investors?

Even with the end of the exemption, experts argue that FIIs and Fiagros maintain some relative attractiveness. This is because most financial investments — including stocks, CDBs and traditional funds — will also be taxed at a rate of 17.5%.

According to Bellas, funds that meet the criteria for the reduced 5% rate will still have an advantage over products such as LCIs, LCAs, CRIs, CRAs and incentivized debentures, whose taxation is also definitive and favored.

Gonçalves, from XP, reinforces: “Even if approved without changes, we believe that the listed funds will remain competitive, as not only they, but also their alternatives, will have their profitability affected by the new tax burden.”

What are the effects of the change in FIIs and Fiagros for non-investors?

The effects of the provisional measure go beyond investors' pockets. Taxation of income may increase the cost of raising funds for companies that use these funds to finance projects. This directly affects sectors such as agribusiness , infrastructure and real estate, which depend on instruments such as these to enable projects and expand operations.

The increase in the cost of raising funds can, in turn, be passed on to the end consumer, making products and services more expensive and credit less accessible.

What could happen in Congress with the provisional measure that changes taxation?

Despite being in force, MP 1,303 will still be analyzed within 120 days by a joint committee of the National Congress, which can propose changes or even reject it.

The proposal is already facing resistance from sectors such as agribusiness, real estate and infrastructure, which feel directly affected. There is also political wear and tear. Paulo Gama, head of political analysis at XP, identifies a “fatigue with the increase in the tax burden” and growing pressure for spending cuts.

Joaquim Rolim Ferraz, partner at Juveniz Jr. Rolim Ferraz Advogados, sums up the criticism: “The MP represents a significant increase in the tax burden on investments, which could negatively impact taxpayers and discourage domestic savings.”