Like other countries, Brazil is also adopting crypto and putting down regulations to let citizens use the decentralized currency and perform easy transactions. Recently, in October 2022, The oldest bank of Brazil, Banco do Brasil allowed citizens to pay their taxes in the form of crypto. With such measures being taken by the government and people warming up to crypto, it is crucial to understand the crypto tax in Brazil.
With a boom in popularity of crypto, Brazil is being seen as the main market among Latin American countries with 16 million people owning cryptocurrency, a 7.8% of the whole population. From January 2021 to November 2021, the locals traded USD 11.4 billion in stablecoins. This was thrice of the 2020 number. Tether (USDT) is the most popular stable coin among Brazilians, along with USDC, DAI AND TrueUSD.
Do you have to pay crypto tax in Brazil?
Yes, you have to pay taxes on crypto gains in Brazil. Crypto holders are required to show their virtual assets in income tax statements in the “Property and Rights” Section and tax is levied according to general movable goods.
When do you have to pay tax on crypto in Brazil?
Crypto gains are taxable if the gains received from selling them is more than BRL 35,000 per month. Less than that, no taxes are to be paid by the holders.
What crypto transactions are taxable in Brazil?
- Selling of crypto
- Buying of crypto
- Investments in crypto
- Exchange of virtual assets, even if not changed to legal tender, BRL.
- Conversion of virtual assets, even if not changed to legal tender, BRL
What are the Crypto Tax Rates in Brazil?
Crypto Tax rates vary between 10% to 22.5% in Brazil based on the profits:
| CAPITAL GAIN | PERCENTAGE LEVIED AS TAX |
|---|---|
| < BLR 5 MILLION | 15% |
| BLR 5 MILLION – BLR 10 MILLION | 17.5% |
| BLR 10 MILLION – BLR 30 MILLION | 20% |
| BLR 30 MILLION | 22.5% |
Brazil Income Tax Brackets (2023)
PERSONAL INCOME TAX RATES IN BRAZIL
| Up to (BRL) | Tax rate (%) | Deductible tax amount (BRL) |
|---|---|---|
| 1,903.98 | Exempt | 0 |
| 2,826.65 | 7.5 % | 142.80 |
| 3,751.05 | 15.0 % | 354.80 |
| 4,664.68 | 22.5 % | 636.13 |
| and above | 27.5 % | 869.36 |
CORPORATE INCOME TAX RATES IN BRAZIL
| Annual profit sharing (BRL) | Tax rate (%) | Deductible tax amount (BRL) |
|---|---|---|
| 0 to 6,677.55 | 0 | 0 |
| 6,677.56 to 9,922.28 | 7.5 % | 500.82 |
| 9,922.29 to 13,167.00 | 15.0 % | 1,244.99 |
| 13,167.01 to 16,380.38 | 22.5 % | 2,232.51 |
| Above 16,380.38 | 27.5 % | 3,051.53 |
Brazil Capital Gain Tax Rates (2023)
| Capital gain (BRL) | Tax rate |
| 0 – 5,000,000 | 15.0% |
| 5,000,001 – 30,000,000 | 17.5% |
| 30,000,001+ | 22.5% |
Else than these, sale of stocks is subject to a flat rate of 15% levied on the gains after selling.
How is Tax Calculated on Cryptocurrency in Brazil?
Crypto Tax in Brazil is not very straightforward to calculate. Selling price is simply the price at which the coin is sold. However, cost price is calculated using FIFO (First In First Out) or ACB (Average Costs Basis) method. This profit, that is the cost price less than the selling price, is then subject to taxation according to rates mentioned earlier in this article.
According to FIFO Method, you sell your oldest acquired coin first and cost is calculated according to the respective prices at which the coin was bought. Whereas, in ACB, time of buying doesnt matter and average cost is taken into account.
Let’s take an example,
Say you bought 2 BTC for BRL 60,000 in 2020 and 4 BTC for BRL 80,000 in 2021. Then you sold 3 BTC in 2022 for BRL 1,00,000:
- FIFO METHOD
You sell 2 BTC from 2020 and 1 BTC from 2021. So cost price is:
= 60,000 + (1/4)*80,000
= BRL 80,000
Profit = 1,00,000 – 80,000
= 20,000
Here, taxes are levied on BRL 20,000.
- ACB METHOD:
All coins are of the same denomination. Therefore, cost price for one coin:
= (60,000 + 80,000)/6
= BRL 23,333
So, cost price of two coins:
= BRL 69,999
Profit = 1,00,000 – 69,999
= 30,001
Here, taxes are levied on BRL 30,001.
Is there any Crypto Tax Free in Brazil?
When a transaction is less than BRL 35,000, no tax is levied on it.
Crypto Tax in Brazil – FAQs
Do you have to pay tax when you buy crypto in Brazil?
No, buying crypto by paying fiat is not taxed in Brazil. Although, if you are buying another cryptocurrency by selling a crypto you are currently holding, this transaction is taxed, according to a recent announcement by the Receita Federal.
Do you have to pay tax when you sell crypto in Brazil?
Yes, taxes are levied when you sell crypto. The profit you make from selling cryptocurrency is subject to taxes at varying rates from 15% to 22.5%.
Do you have to pay tax when transferring crypto in Brazil?
No, transferring cryptocurrency between wallets is not taxable. A transfer fee might be charged, but that is solely based on the provider/merchant being used.
Do you have to pay tax when spending crypto in Brazil?
Yes, spending crypto to pay for goods and services will be taxed as there is an exchange of crypto or it is being converted to fiat and then being exchanged.
Is swapping crypto taxable?
Yes, swapping one cryptocurrency for another is taxable in Brazil.
How much tax on crypto gains in Brazil?
CAPITAL GAIN PERCENTAGE LEVIED AS TAX < BLR 5 MILLION 15% BLR 5 MILLION – BLR 10 MILLION 17.5% BLR 10 MILLION – BLR 30 MILLION 20% > BLR 30 MILLION 22.5%
How do I avoid capital gains tax on crypto in US?
The Receita Federal is very likely to track down all your crypto transactions since regulations have been put down to prevent scams and frauds while making cryptocurrency more accessible to people. Therefore, it is very difficult and risky to try and avoid taxes on crypto. Few ways could be to sell the non profitable or non performing crypto and offset the loss by tax deductions.
Market Research Intern, Octaloop
Maitreyee takes a keen interest in financial technologies and their potential to transform lives at the grassroots. Put together with her penchant for Economic Research, she brings tonnes of academic and actionable insight into our products. Maitreyee is contributing at Binamite as a Market Research Intern, and when she's not doing that, you can find her exploring the city or buried in a book.