Brazil has enacted a law introducing taxes on crypto assets held abroad by Brazilian citizens. The law will come into force from 1ᵉʳ January 2024. Under the new taxes, Brazilian citizens will pay up to 15% of profits from crypto 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 plans to collect around 20 billion reals ($4 billion) in new taxes in 2024. Those who start paying 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. Foreign earnings of up to 6,000 Brazilian reals ($1,200) will be exempt from tax.
New crypto tax law in Brazil
Brazil has introduced a new law imposing taxes on crypto assets held abroad by Brazilian citizens. The law will come into force from 1ᵉʳ January 2024 and will apply to profits and dividends obtained by Brazilian taxpayers from investment funds, platforms, real estate or trusts abroad. The Brazilian government expects to collect around 20 billion reals ($4 billion) in new taxes in 2024. Those who start paying 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. Foreign earnings of up to 6,000 Brazilian reals ($1,200) will be exempt from tax.
Impact of the new law
The new law represents a significant development in crypto regulation in Brazil and should generate greater transparency and credibility in the market. However, some points of the text require improvement, such as the compensation of losses over time, something similar to the tax rules for stock market assets. Taxation of income from digital assets is not new to the country, but some aspects of the law may need clarification.
Brazil isn't the only country monitoring its citizens' overseas crypto holdings. In November, Spain's Tax Agency also reminded its citizens of their obligations to declare crypto stored abroad. However, this requirement only concerns individuals whose balance sheets exceed the equivalent of 50,000 euros (around $55,000) in digital assets.
Conclusion
In conclusion, the new law in Brazil introduces taxes on crypto assets held abroad by Brazilian citizens, and will come into force from 1ᵉʳ January 2024. Brazilian citizens will pay up to 15% of crypto profits to the state, and the Brazilian government expects to collect around 20 billion reals ($4 billion) in new taxes in 2024. Those who start paying taxes in 2023 will enjoy an early bird advantage. Foreign earnings of up to 6,000 Brazilian reals ($1,200) will be exempt from tax. This new law should generate greater transparency and credibility in the market, but some points of the text require improvement.
