Brazil has enacted a law introducing taxes on crypto assets held abroad by Brazilian citizens. The law will enter into force on January 1, 2024. Under the new rules, Brazilian citizens will pay up to 15% of crypto profits to the state. The new taxes will not apply exclusively to crypto, but also to profits and dividends obtained by Brazilian taxpayers from investment funds, platforms, real estate, or trusts abroad.
The Brazilian government expects to collect approximately 20 billion reais (4 billion dollars) in new taxes in 2024. Those who begin paying the taxes in 2023 will benefit from an early-bird advantage: they will pay an 8% tax on all income earned up to 2023 in installments, with the first installment starting in December. Offshore gains up to 6,000 Brazilian reais (1,200 dollars) will be exempt from the tax.
Impact of the new law
The new law represents a significant development in crypto regulation in Brazil and is expected to bring more transparency and credibility to the market. However, certain aspects of the text require improvements, such as the compensation of the losses over the period, similar to tax rules for stock market assets. The taxation of digital asset income is not new to the country, but some details of the law may require clarification.
Brazil is not the only country monitoring its citizens’ offshore crypto holdings, in November the Spanish Tax Agency also reminded its citizens of their obligations to declare crypto stored abroad. However, this requirement applies only to individuals whose balances exceed the equivalent of 50,000 euros (around 55,000 dollars) in digital assets.
Conclusion
In conclusion, the new law in Brazil introduces taxes on crypto assets held abroad by Brazilian citizens, taking effect on January 1, 2024. Brazilian citizens will pay up to 15% of crypto profits to the state, and the Brazilian government expects to collect roughly 20 billion reais (4 billion dollars) in new taxes in 2024. Those who begin paying the taxes in 2023 will benefit from an early-bird advantage. Offshore gains up to 6,000 Brazilian reais (1,200 dollars) will be exempt from the tax. This new law is expected to bring more transparency and credibility to the market, though certain points of the text still need refinement.
