Paying Taxes in Brazil as a Foreigner
You’ve unpacked your bags, started your new job, (or begun your days full of endless relaxation and pleasurable activities as a retiree), spend the evening hours perfecting your Portuguese, and then comes the thing we can never seem to escape no matter how far we go, taxes. Upon establishing residency in Brazil, you will most likely need to file within the Brazilian tax system. Brazilian taxes are relatively simple, and locals generally file their annual tax returns on their own. We have compiled some pertinent information to give you a basic understanding of the Brazilian tax system for those who have relocated.
This page intends to shed some light on your tax responsibilities as a foreigner in Brazil. Whether you’re working in a Brazilian company, a digital nomad or a retiree you need to be aware of Brazil tax requirements and regulations and how they may (or may not) apply to you.
Who Must Pay Taxes in Brazil?
It is important to understand who is considered a tax resident in Brazil, and therefore liable to pay taxes. In short, foreign nationals are taxed depending on the visa they hold.
Legal residents of Brazil for tax purposes include:
- An individual who resides permanently in the country more than 183 days per year in Brazil in any 12-month period.
- Naturalized Brazilian citizens
- Non-Brazilians who hold a permanent or temporary visa with a local employment contract, starting from the date of arrival
- Non-Brazilians who hold a temporary visa without a local employment contract, after completing 183 days (consecutive of cumulative) of physical residence in Brazil in any 12-month period.
If you do not fit any of the resident criteria above, you may qualify as a non‑resident of Brazil for tax purposes.
Foreign nationals who are tax-residents in Brazil must pay tax on income generated in Brazil and abroad, unless they are eligible for relief under a Double Taxation Treaty between Brazil and their home country.
Legal residents of Brazil are taxed on their worldwide income. Non-residents are taxed only at source on their Brazilian-sourced income. The source of income is governed by the place where the income payer is located, regardless of where the work is performed. For reference, non-resident taxpayers are taxed only on Brazilian-earned income at a flat rate of 25% - no deductions allowed. Rental income received from Brazilian property is taxed at 15%. Income received abroad by non-residents is tax-exempt.
When to File Taxes in Brazil
The tax year follows the calendar year ending on December 31st, and Brazilian tax returns are filed annually by April 30th. Taxes owed are due by April 30th, with an option to pay in monthly installments, subject to interest. Extensions are not permitted and are subject to penalty and interest. Foreign nationals who are not a tax-resident must pay tax only on income from Brazilian sources and are not required to file an annual tax return.
If you hold resident taxpayer status, then you are subject to pay income tax in Brazil on your worldwide income on a monthly cash basis. The process is called Carnê-Leão and it applies to income which was not subject to withholding tax by another local source. Typically, this refers to offshore income and rental income received from other individuals. This tax is also calculated based on a progressive tax table with the rates of 0 percent, 7.5 percent, 15 percent, 22.5 percent and 27.5 percent. The payment must be paid through the last business day of the following month.
How Much Tax Do You Pay in Brazil?
In Brazil all income tax is federal, no provisions exist for local, state, or provincial income taxes.
Tax brackets are dependent upon income. After determining if you are required to pay taxes, which is likely the case if you are moving for long term or work purposes, then you must correctly identify your tax bracket. Tax brackets range between 7.5% and 27.5% and are subject to change.
Resident and non-resident taxpayers are subject to Brazilian income tax upon the realization of capital gains (15% up to R$5 million; 17.5% between R$5 and 10 million; 20% between R$10 and 30 million; 22,5% over R$30 million). Tax owed must be paid by the last business day of the month following the receipt of the sales proceeds. Tax residents are subject to capital gains tax on the sale of worldwide assets. Non-residents are subject to capital gains tax only from the sale of assets that are in Brazil. The gain is calculated by deducting the acquisition cost from sales proceeds.
Some exemptions are allowed:
- Sale of foreign assets acquired while non-resident in Brazil
- Sale of Brazilian real estate for less than R$ 440,000.00 (conditions apply)
- Gain from the sale of foreign assets (including stocks) in which the total sale value does not exceed R$ 35.000,00 in any one month
- Gain from the sale of Brazilian stocks (some exclusions may apply) in which the total sale value does not exceed R$ 20.000,00 in any one month.
Tax on Investments in Brazil
Interest earned on savings accounts in Brazil is tax exempt. While interest earned on financial investments in Brazil is subject to tax ranging from 15% to 22.5%, withheld at source. The Brazilian financial institution is responsible to withhold the income tax on the amount of tax to be credited to the beneficiary, or taxpayer. Dividends received from local Brazilian companies are exempt from taxation. Interest on net equity is taxed solely at source at a 15% flat rate.
In real estate transactions, reduced rates apply based on the year of purchase and in compliance with very specific rules. An exemption of capital gain tax on the sale of residential property is possible if the seller purchases another residential property in Brazil within 180 days of the first sale.
Foreign losses cannot offset any other gain or income. Losses incurred from the sale of Brazilian stock may offset gains from the sale of Brazilian stock occurring within the same month or subsequent months. Unused Brazilian losses may carry forward to the following tax year.
The capital gain derived from the sale of foreign currency is taxed at 15% and carries a tax exemption if the total amount sold during a year does not exceed USD $5,000.00.
Get Help Paying Your Taxes in Brazil
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