Cryptocurrency trading and investments are rapidly gaining popularity in Brazil. Alongside this growth, the Federal Revenue Service (Receita Federal) has implemented strict tax obligations to ensure compliance and transparency. Below is a detailed guide to understanding and fulfilling your cryptocurrency-related tax responsibilities in Brazil.
---
What Are Cryptocurrencies According to the Federal Revenue Service?
The Federal Revenue Service defines cryptocurrency as the "digital representation of value denominated in its own unit of account, the price of which can be expressed in local or foreign sovereign currency, transacted electronically using cryptography and distributed ledger technologies. Cryptocurrencies can be used as a form of investment, an instrument for transferring value, or accessing services but do not constitute legal tender."
---
Tax Obligations for Cryptocurrency Holders
Brazilian cryptocurrency investors must adhere to specific obligations set by the Federal Revenue Service:
1. Sales Below R$35,000 Per Month:
No income tax is due.
Report total earnings, if any, in the “Exempt and Non-Taxable Income” section.
2. Sales Exceeding R$35,000 Per Month:
Income tax must be paid on any profit earned.
Declare the profit in the “Capital Gains” section.
3. Monthly Transactions Over R$30,000 (International Transactions):
Report such transactions to the Federal Revenue Service, especially if operating outside a national exchange.
4. Ownership Declaration:
Digital currencies worth more than R$5,000 must be reported in the Income Tax return under the “Assets and Rights” section.
---
Who Needs to Pay Cryptocurrency Tax?
Investors must pay taxes when profits exceed R$35,000 in total monthly sales. However, taxes are only triggered when the crypto asset is sold, meaning price fluctuations alone do not constitute a taxable event.
---
Income Tax Rates for Cryptocurrencies
The tax rates for cryptocurrency gains are progressive and apply as follows:
Up to R$5 million: 15%
R$5 million to R$10 million: 17.5%
R$10 million to R$30 million: 20%
Above R$30 million: 22.5%
This progressive tax schedule applies to digital currencies traded on national exchanges. For international exchanges, profits are taxed at a flat rate of 15%, with no exemptions.
---
How to Pay Cryptocurrency Income Tax
Taxes on crypto earnings must be paid by the last business day of the month following the transaction. For example, if you sold cryptocurrencies in October, the tax payment deadline would be November 30.
Steps to Pay:
1. Generate the Federal Revenue Collection Document (DARF) via the Sicalcweb system.
2. Use tax code 4600, which corresponds to capital gains on asset sales.
3. Complete payment within the specified timeline to avoid penalties.
---
Reporting Transactions Over R$30,000
For individuals using international exchanges or platforms without a Brazilian domicile, transactions exceeding R$30,000 per month must be reported on the Federal Revenue’s e-CAC portal. This includes:
Accessing the "Collection and Inspection" guide.
Submitting the declaration under "Accessory Obligations."
National exchanges automatically report all transactions to the agency, irrespective of value.
---
Declaration of Cryptocurrency Ownership
Cryptocurrency ownership must be reported if the total acquisition value exceeds R$5,000 for each type of asset. Report the acquisition cost, not the current market value. For instance, if you purchased R$3,000 in Bitcoin in January, R$1,000 in July, and R$3,000 in November, the declared amount would be R$7,000.
---
Where to Declare Cryptocurrencies
Declarations should be made via the Federal Revenue program. Within the system:
Navigate to the “Assets and Rights” tab.
Select “Group 08 – Cryptoassets.”
Provide accurate details about your holdings and transaction history.
---
Penalties for Non-Compliance
Failure to comply with cryptocurrency tax obligations may result in:
1. Fines:
Penalties vary depending on the nature and severity of the infraction, including omission or incorrect reporting.
2. Legal Consequences:
Information may be forwarded to the Federal Public Prosecutor’s Office (MPF) if evidence of money laundering or concealment of assets is detected.
---
Key Takeaways:
1. Stay Organized: Keep records of all crypto transactions and holdings.
2. Timely Payments: Use the DARF system to settle taxes before deadlines.
3. Avoid Penalties: Ensure accurate and complete declarations to comply with legal requirements.
By understanding and adhering to these guidelines, cryptocurrency investors in Brazil can navigate the tax landscape responsibly while avoiding legal repercussions.