Advice Brazil Tax System

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You must pay a progressive tax to the Receita Federal, Brazil's federal taxing body if you get income there. Property sales in Brazil that result in capital gains are also taxed. Even if you pay taxes in Brazil, you can still owe taxes in your former country of residence and be required to file a return there. You are strongly advised to speak with a professional familiar with international taxation if you have income in Brazil because taxation can get incredibly complex very fast, especially when various taxing agencies are involved

Income tax​

If you are a resident of Brazil and have a regular source of income, you are required to pay income taxes on that income on a progressive basis. The taxes owed in Brazil may be lessened if taxes on the earned income are paid in another nation with which Brazil has a tax treaty, even if you aren't deemed to be a legal resident in Brazil (for instance, if you're working on a project there temporarily).

If you are regarded as residing in Brazil, you can also be required to pay taxes on income derived from sources outside of Brazil, unless a double taxation agreement applies to such earnings.

What exactly qualifies you as a citizen of the country? You are deemed a legal resident if you have a permanent visa or a temporary visa and remain in the nation for more than 183 days during a 12-month period.

Income tax treaties​

Brazil has signed tax treaties with several countries to avoid double taxation, and additional treaties are in negotiation. What does this mean for you if you're from one of the countries on the list? You won't be taxed in both Brazil or your home country. Instead, you'll pay taxes only in Brazil.

The countries that already have an income tax treaty with Brazil include:

Austria, Argentina, Belgium, Canada, Chile, China, Czech Republic, Denmark, Ecuador, Finland, France, Hungary, India, Israel, Italy, Japan, Luxembourg, Mexico, Netherlands, Norway, Peru, Philippines, Portugal, Russia, Slovak Republic, South Africa, South Korea, Spain, Sweden, Trinidad & Tobago, Turkey, Ukraine, and Venezuela

These are the countries where treaties are in progress and you should keep an eye on if you're from one of them:

Singapore and Uruguay

There have been a few countries that have been added to the income tax treaty as of January 2022. They are as follows:

Switzerland and the United Arab Emirates

For those who are from the United States, the United Kingdom, or Germany, rest assured that you won't be double-taxed as well. There's a reciprocal tax treatment between these countries and Brazil, which means the taxes you pay in these countries will be offset by the income tax you pay in Brazil.

There's also the case of totalization agreements. This is where you won't be double-taxed on social security and public healthcare system payments.

Brazil has totalization agreements with the following countries:

Ibero-Americano Multilateral Agreement (Argentina, Brazil, Bolivia, Chile, Ecuador, El Salvador, Spain, Paraguay, and Uruguay), Mercosul or Southern Common Market Agreement (Argentina, Paraguay, Uruguay, and Brazil), Belgium, Canada, Cape Verde, Chile, France, Germany Greece, Italy, Japan, Luxembourg, Portugal, South Korea, Spain, Switzerland, Quebec, and the United States

There are also totalization agreements in progress. The countries are as follows:

Bulgaria, Israel, Mozambique, Portuguese Speaking Countries Multilateral Agreement (Angola, Cabo Verde, Guinea Bissau, Mozambique, Portugal, Sao Tome, and Principe), and East Timor

There are also a few countries in which the totalization agreement is under negotiation. They are:

China and India

Income tax rates in Brazil​

The maximum tax rate in Brazil is 27.5%. Effective taxable income may be reduced by insurance, medical treatment, or studies expenses.

You're now probably wondering what taxable income is in the first place. The most obvious would be the money paid to you by a Brazilian employer. However, there are other types of taxable income. They include investments made in Brazil and the income generated, any income you've generated from abroad (which includes things like interest, rent, dividends, and regular wages), and capital gains from your assets, both in Brazil and abroad.

Here's the current graduated income-tax scale (subject to change):

Annual income (Brazilian reals) rate applied

  • R$0 to R$22,847.76: 0%
  • R$22,847.77 to R$33,319.80: 7.5%
  • R$33,319.81 to R$45,912.60: 15%
  • R$45,012.61 to R$55,976.16: 22.5%
  • Over R$55,976.16: 27.5%
If you have capital gains, then here's the withholding tax rates scale:

  • Up to R$5 million: 15%
  • R$5 million to R$10 million: 17.5%
  • R$10 mililon to R$30 million: 20%
  • Over R$30 million: 22.5%
The above capital gains tax will apply to sales made in art, collectibles, vehicles, and real estate. The good news is, if you're a non-resident, this tax only applies to assets you sell in Brazil. Of course, there are always exceptions, so it's best to check with an accountant if you're ever unsure of things.

Good to know:

Non-resident expatriates (such as those who are in Brazil on a job contract basis with less than six months duration) are subject to a tax rate of 25%. If you're a resident of Brazil and you intend to travel for an extended time, you must provide a release document to avoid losing your residency status. However, you'll remain liable for taxes for a year.

Important:

If you earn income in Brazil, you must file your return to the Brazilian tax authorities no later than the end of April of each year.

How to file income taxes​

As we've just mentioned, you need to file your income taxes before the 30th of April every year. Not only do you need to file if you earned over R$22,847.76, but you also need to file if you own properties in the country and the total value is over R$300,000. You'll also need to file if you have a capital gain in the Brazilian stock market or if you have bank investments of over R$40,000 that are in exempt income. In addition to reporting your Brazilian income, you also need to report any that's coming in from other countries.

There's also something called the Declaration of Brazilian Capital Located Abroad (CBE). It may not apply to many people, but it's still important to know. If you have assets abroad valued at over $1,000,000 (USD), you'll need to fill out a CBE before the 31st of December of the year you became a resident. So for example, if you become a resident in early 2020, then you'll need to file a CBE by December 31, 2020.

There are two ways you can file your income taxes: complete or simplified.

The complete income tax return is more convoluted and will take more time. However, if you have dependents and deductible expenses, then this is the better form for you to fill out.

The simplified income tax return is, as its name suggests, simple. You'll get a 20% reduction on all taxable income from the year. The limit is R$16,754.34. It's ideal for those who are single, have just one income source in the country, and don't have deductible expenses. In other words, if you lead a simple life on your own, then use the simplified income tax return.

Income tax refunds​

In some cases, you'll receive a refund for income taxes. You'll need to have a personal Brazilian bank account to receive the refund; the government won't give you cash. So while it's possible to get by in Brazil without a bank account, if you're living in the country long term, it's highly recommended you get a bank account. Not only will it make your life easier, but it'll also make it possible to receive income tax refunds.

Additional payments​

In other cases, you'll owe the government extra money. If this happens to you, you can use a bank voucher to pay this amount. Make sure you do so before the deadline, as you'll have to pay a penalty if you miss it.

Other taxes​

Capital gains from sales of real estate are taxed at 15%, and gains from the sale of securities on a public stock exchange are taxed at 20%. Capital gains are expected to be paid at the moment the gain is realized (not the following April).

A local property tax, termed IPTU, must be paid by either the property owner or tenant. This tax is generally low by international standards, typically between 0.5% and 1.5% of the value of the property per annum. Depending on the locality, it may be paid annually or monthly. Note that long-term renters are generally expected to pay IPTU, and it isn't included in the quoted rental amount.

Value-Added Tax (VAT)​

In many countries, you'll have to pay value-added tax (VAT) on certain services and goods. State taxes are called ICMS. You'll need to pay special attention to VAT (ICMS) laws in Brazil if you're a freelancer, as it's your responsibility to charge clients and customers for the services and/or goods you provide.

For 2022, the values are as follows:

  • From the south and southeast Brazil to south and southeast Brazil: 12%
  • From north, northeast, and midwest Brazil to any Brazilian state: 12%
  • From the south and southeast Brazil to north, northeast, and midwest Brazil: 7%
For the last value, these areas include the state of Espirito Santo.

If you do business in São Paulo, then there's a special VAT rate here. The usual rate is 18%, although some certain products and services can be taxed as high as 25% or as low as 12%.

 
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