Information obtained through a Freedom of Information request to Brazil’s Central Bank shows that authorities know of only a fraction of the wealth held in Luxembourg.
Reporters with the Open Lux investigation found 448 companies owned by 228 Brazilian residents, and an additional 129 Brazilian citizens. Together, the assets of these companies amount to at least 113 billion euros, as of the end of 2020.
The Central Bank, however, was aware of only 176 Brazilian residents owning companies in Luxembourg as of 2019.
There are many legitimate reasons to start a company in Luxembourg, but Brazilian law requires it to be declared to authorities, according to Flávio Rubinstein, a tax law professor at Fundação Getulio Vargas university.
“When duly reported and compliant with Brazilian law, offshore entities can be legally used for estate structuring, international tax planning and asset protection,” he said.
Another reason people choose Luxembourg is the easy access it offers to international finance and corporate transactions. But the country’s financial secrecy also makes it an attractive option for Brazilians looking to hide or protect assets from government authorities or law enforcement.
“Brazilian courts can order the seizure of overseas assets and funds,” said Rubinstein, but he added that getting help from other countries can be a long and difficult process.
“The enforcement of such orders usually involves lengthy and costly procedures, such as activating international cooperation agreements, and requesting the assistance of foreign officials and courts,” he said.