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Income tax (Tables) | 12 Months Ended
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Dec. 31, 2023
Major components of tax expense (income) [abstract] |
Summary of components of deferred tax assets and deferred tax liabilities | Deferred tax assets (DTA) and deferred tax liabilities (DTL) are comprised of the main following components:
| Balance Sheet |  | Net change in the year
| 2023 |  | 2022 |  | 2023 |  | 2022 |  | 2021
Tax losses carryforwards | 742,245 |  |  | 575,120 |  |  | 167,125 |  |  | 466,982 |  |  | 100,756 |
Goodwill on business combinations (i) | 35,823 |  |  | 6,376 |  |  | 29,447 |  |  | (6,053) |  |  | (10,409) |
Provisions for IFAs’ commissions | 90,075 |  |  | 71,986 |  |  | 18,089 |  |  | (4,988) |  |  | (17,570) |
Revaluations of financial assets at fair value | (166,281) |  |  | (214,456) |  |  | 48,175 |  |  | (388,197) |  |  | 190,520 |
Expected credit losses (ii) | 335,711 |  |  | 58,208 |  |  | 277,503 |  |  | 14,277 |  |  | 24,487 |
Profit sharing plan | 278,983 |  |  | 269,949 |  |  | 9,034 |  |  | 9,084 |  |  | 96,057 |
Net gain on hedge instruments | (22,704) |  |  | (11,169) |  |  | (11,535) |  |  | (39,292) |  |  | 7,137 |
Share-based compensation | 627,730 |  |  | 566,721 |  |  | 61,009 |  |  | 181,127 |  |  | 269,618 |
Other provisions | 96,189 |  |  | 178,104 |  |  | (81,915) |  |  | 23,764 |  |  | 86,845 |
Total | 2,017,771 |  |  | 1,500,839 |  |  | 516,932 |  |  | 256,704 |  |  | 747,441 |
Deferred tax assets | 2,104,128 |  |  | 1,611,882 |  |  |  |  |  |  |
Deferred tax liabilities | (86,357) |  |  | (111,043) |  |  |  |  |  |  |
(i)For Brazilian tax purposes, goodwill is amortized over 5 years on a straight-line basis when the entity acquired is sold or merged into the acquirer company. (ii)Include expected credit loss on accounts receivable, loan operations and other financial assets.
Summary of reconciliation of changes in net deferred tax | The changes in the net deferred tax were recognized as follows:
| 2023 |  | 2022 |  | 2021
At January, 1 | 1,500,839 |  |  | 1,244,135 |  |  | 496,694 |
Foreign exchange variations | (78,128) |  |  | 5,786 |  |  | (16,949) |
Business combination (Note 5(ii)) | 401,521 |  |  | — |  |  | — |
Charges to statement of income | 549,702 |  |  | 397,792 |  |  | 387,551 |
Tax relating to components of other comprehensive income | (356,163) |  |  | (146,874) |  |  | 376,839 |
At December, 31 | 2,017,771 |  |  | 1,500,839 |  |  | 1,244,135 |
Summary of income tax calculation | The following is a reconciliation of income tax expense to profit (loss) for the year, calculated by applying the combined Brazilian statutory rates at 34% for the year ended December 31:
| 2023 |  | 2022 |  | 2021
Income before taxes | 3,936,348 |  |  | 3,444,656 |  |  | 3,815,174 |
Combined tax rate in Brazil (a) | 34.00 | % |  | 34.00 | % |  | 34.00 | %
Tax expense at the combined rate | 1,338,359 |  |  | 1,171,183 |  |  | 1,297,159 |
Loss (income) from entities not subject to deferred taxation | — |  |  | 245 |  |  | 554 |
Effects from entities taxed at different rates | (43,572) |  |  | 62,596 |  |  | 146,377 |
Effects from entities taxed at different taxation regimes (b) | (1,174,605) |  |  | (1,343,757) |  |  | (1,128,400) |
Intercompany transactions with different taxation regimes | (68,673) |  |  | (46,674) |  |  | (79,055) |
Tax incentives | (17,835) |  |  | (5,346) |  |  | (21,036) |
Non-deductible expenses (non-taxable income) | (17,459) |  |  | 3,758 |  |  | 25,216 |
Effect from Social Contribution on net equity rate increase | — |  |  | 985 |  |  | — |
Others | 20,742 |  |  | 21,455 |  |  | (18,101) |
Total | 36,957 |  |  | (135,555) |  |  | 222,714 |
Current | 586,659 |  |  | 262,237 |  |  | 610,265 |
Deferred | (549,702) |  |  | (397,792) |  |  | (387,551) |
Total expense / (credit) | 36,957 |  |  | (135,555) |  |  | 222,714 |
(a)Considering that XP Inc. is domiciled in Cayman and there is no income tax in that jurisdiction, the combined tax rate of 34% demonstrated above is the current rate applied to XP Investimentos S.A. which is the holding company of all operating entities of XP Inc. in Brazil. (b)Certain eligible subsidiaries adopted the PPM tax regime and the effect of the presumed profit of subsidiaries represents the difference between the taxation based on this method and the amount that would be due based on the statutory rate applied to the taxable profit of the subsidiaries. Additionally, some entities and investment funds adopt different taxation regimes according to the applicable rules in their jurisdictions.
Summary of analysis of other comprehensive income by item | The tax (charge)/credit relating to components of other comprehensive income is as follows:
|  | Before tax |  | (Charge) / Credit |  | After tax
Foreign exchange variation of investees located abroad |  | 20,977 |  |  | — |  |  | 20,977 |
Gains (losses) on net investment hedge |  | (29,701) |  |  | 10,942 |  |  | (18,758) |
Changes in the fair value of financial assets at fair value |  | (914,914) |  |  | 365,897 |  |  | (549,017) |
As of December 31, 2021 |  | (923,637) |  |  | 376,839 |  |  | (546,798) |
Foreign exchange variation of investees located abroad |  | (19,645) |  |  | — |  |  | (19,645) |
Gains (losses) on net investment hedge |  | 26,154 |  |  | (8,902) |  |  | 17,252 |
Changes in the fair value of financial assets at fair value |  | 356,078 |  |  | (137,972) |  |  | 218,106 |
As of December 31, 2022 |  | 362,587 |  |  | (146,874) |  |  | 215,713 |
Foreign exchange variation of investees located abroad |  | (41,160) |  |  | — |  |  | (41,160) |
Gains (losses) on net investment hedge |  | 41,477 |  |  | (6,874) |  |  | 34,603 |
Changes in the fair value of financial assets at fair value |  | 905,670 |  |  | (349,289) |  |  | 556,381 |
As of December 31, 2023 |  | 905,987 |  |  | (356,163) |  |  | 549,824 |

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