IRS Definition of Cryptocurrencies

A cryptocurrency is defined as "a digital representation of value expressed in a unit of its own, the price of which can be converted into domestic or foreign currency. It is exchanged electronically via cryptography and distributed ledger technologies, used as an investment, a means of transferring value or accessing services, but without legal status."

Tax obligations for investors

Cryptocurrency holders in Brazil must meet the following requirements:

1. Exemption: If monthly sales of digital assets are less than R$35,000, no tax is due, but the income must be declared as “exempt and non-taxable income”.

2. Taxation: For monthly sales exceeding R$35,000 with profits, income tax (IR) applies and must be declared in the “Capital Gains” form.

3. International Transactions: Any transaction exceeding R$30,000 per month carried out outside a national exchange must be reported.

4. Annual declaration: Cryptocurrencies must be mentioned in the annual declaration if the value of each asset exceeds R$5,000.

When to pay tax on cryptocurrencies?

Tax is only due when profits are made after selling digital assets. Fluctuations in value without a transaction are not taxable.

Income tax rate

Cryptocurrency earnings are subject to a progressive scale:

Up to R$5 million: 15%

Between R$5 and R$10 million: 17.5%

Between R$10 and R$30 million: 20%

Beyond R$30 million: 22.5%

Payment Terms

Payment must be made before the end of the month following the transaction via the Federal Revenue Collection Document (DARF), generated on the Sicalcweb online system. The specific code for capital gains is 4600.

Rules for international trade

Profits made on international stock exchanges do not benefit from the exemption up to R$35,000. All profits are taxed at a rate of 15%.

Declaration of transactions over R$30,000

Transactions exceeding this threshold, carried out on international platforms or not registered in Brazil, must be declared monthly on the e-CAC portal, under the heading “Invoicing and inspection”.

Annual declaration of cryptocurrencies

Digital assets whose acquisition reaches or exceeds R$5,000 must be declared. The declaration must indicate the total acquisition cost, not the current market value.

Declaration in the federal system

Cryptocurrencies are reported in the “Assets and Rights” form under the category “Group 08 – Cryptoassets” in the Federal Revenue program.

Repercussions for non-compliance

Omissions or inaccuracies may result in fines and administrative sanctions. In the event of suspicion of fraud, such as money laundering, legal proceedings may be initiated.