Last 29th, Law 14.130 was enacted, creating the Fund for Investment in Agroindustrial Productive Chains (Fiagro) for investment in:
- rural properties;
- participation in companies that explore activities in the agroindustrial production chain;
- financial assets, credit securities or securities issued by individuals and legal entities that are part of the agribusiness production chain;
- agribusiness credit rights and securitization securities backed by agribusiness credit rights, including CRA and shares of FIDC and FIDC-NP that invest predominantly in such credit rights;
- real estate credit rights related to rural properties and securitization securities issued with backing in such credit rights, including CRA and quotas of FIDC and FIDC-NP that invest predominantly in such credit rights; and
- quotas of investment funds that invest predominantly in the above assets.
Fiagros may be open or closed.
The income and capital gains earned and distributed by the fund are subject to withholding income tax at a rate of 20%.
Capital gains and income earned on the sale or redemption of Fiagos shares are also subject to the incidence of Income Tax at the rate of 20%:
- at source in case of redemption;
- according to the capital gains rules or net gains earned on variable income transactions, in other cases.
There were proposals for tax exemptions, but they were vetoed in the final text.
Fiagro is subject to several provisions applicable to real estate investment funds (FII).
The new fund modality has not yet been regulated by the Securities and Exchange Commission, but it is likely that the regulation will be very similar to that of FIIs.
Law 14,130 is available at here.
Our Capital Markets team is available to discuss the matter and assist in the structuring of such funds.
