Here are the main points not to forget.
What are cryptocurrencies, according to the Federal Revenue Service?A cryptocurrency, according to the Federal Revenue Service, is 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, which can be used as a form of investment, instrument for transferring values or accessing services, and which does not constitute legal tender”.
What are the tax obligations of investors?Cryptocurrency holders in Brazil have obligations with the Federal Revenue Service. They are:Anyone who sold crypto assets for less than R$35,000 per month does not pay Income Tax, but must report the total earnings (if any) throughout the year in the “Exempt and Non-Taxable Income” form;If monthly sales exceed R$35,000 and there is a profit, the investor must pay IR and declare the profit in the “Capital Gains” form;It is also necessary to inform the agency about monthly transactions that exceed R$30,000 (this rule only applies to those who operate outside of a national exchange);Report the possession of digital currencies in the Income Tax return submitted every year, if the total value of each digital asset exceeds R$5,000.
Who needs to pay tax on cryptocurrencies? Investors must pay tax on cryptocurrencies when they make a profit on trades that, in total, exceed the limit of R$35,000 in a single month, according to the rules of the Federal Revenue Service. “However, for IR to be taxed from the perspective of individuals, it is necessary, first of all, that the cryptoassets be sold (term used to describe the sale). In practice, this means that the mere fluctuation in the price of the cryptoasset, without the effective realization of any eventual gain by the holder, does not constitute a taxable event for IR”
What are the income tax rates?There is a progressive tax table for cryptocurrencies, but this rule only applies to digital currencies traded on national exchanges.
YieldsAliquotas
Up to R$ 5 million 15%
Between R$5 million and R$10 million 17.5%
Between R$10 million and R$30 million 20%
Above R$ 30 million 22.5%
How to pay Income Tax?According to the Federal Revenue Service, tax collection on crypto earnings made in Brazil must be made by the last business day of the month following the transaction. In other words, João, who sold the cryptocurrencies in October, would have until November 30 to pay the tax on the profit of R$300,000, which would be 15%. This payment is made through the Federal Revenue Collection Document (DARF), used to settle federal taxes. The DARF can be generated on Sicalcweb, an online system of the Federal Revenue Service. The code that must be entered is 4600, referring to capital gains on the sale of assets.
What tax is applicable to those who trade on international exchanges? In the case of profits from cryptocurrencies traded on international exchanges, the tax rules change. In this case, there is no exemption up to R$35,000. In other words, any profit earned is taxed at 15%.
Who must report transactions above R$30,000? Those who operate on an international brokerage firm or other platforms without a Brazilian domicile must report their cryptocurrency transactions to the IRS on a monthly basis, as long as the amounts exceed the limit of R$30,000 per month. Transactions made on a national exchange have already been declared, as all monthly transactions involving crypto assets, regardless of the amount, were mandatorily reported monthly to the agency by local brokerage firms. This declaration on monthly transactions above R$30,000 must be submitted on the IRS e-CAC portal, in the “Collection and Inspection” and “Accessory Obligations” guides.
Who needs to declare cryptocurrencies?According to the IRS, digital currency investors only need to report the value if the acquisition is equal to or greater than R$5,000 for each type of cryptocurrency. It is necessary to report the total acquisition cost of the cryptocurrencies, and not the current market value. Example: if the investor bought R$3,000 in BTC in January, another R$1,000 in July and another R$3,000 in November, the amount to be reported in the Income Tax return is R$7,000.
Where to declare cryptocurrencies? The Income Tax declaration must be made directly in the Federal Revenue program. Within this system, which can be downloaded from the federal agency's website, the taxpayer must declare digital currencies in the “Assets and Rights” tab, in “Group 08 – Cryptoassets”.
What if the person does not pay the tax or declare? The Federal Revenue Service establishes penalties for individuals and companies that do not comply with the obligations related to the provision of information regarding crypto assets, whether by omission, delay or presentation of inaccurate, incomplete or incorrect data. The fines vary according to the declarant's profile and the nature of the infraction. In addition to administrative sanctions, the Federal Revenue Service may forward information to the MPF (Federal Public Prosecutor's Office) whenever it identifies evidence of crimes, such as money laundering or concealment of assets, so that the appropriate legal measures can be taken.
