Brazil and currencies

Interest on Equity (JCP)

A Brazilian way for companies to pay their shareholders, similar to a dividend but counted as an interest expense.

Why does it matter?

Companies can deduct it from their taxable profit, so many large Brazilian companies use it alongside dividends.

How do I read it?

For shareholders, JCP and dividends are taxed differently, and these rules have changed over time. Payments by Brazilian companies to their shareholders in New York can include both.

Example

A Brazilian company can pay R$ 1 per share as JCP and count it as an expense, which lowers the tax on its profit, and still pay dividends on top.