Brazilian President Luis Inácio Lula da Silva has approved a law imposing taxes on crypto assets held abroad by Brazilian citizens. The legislation, signed on December 12 and officially published on the following day in the Diário Oficial da União, will take effect from January 1, 2024.
Under the new regulations, Brazilian citizens will be required to pay the state up to 15% of their profits from crypto investments held outside the country. The scope of the taxes extends beyond cryptocurrencies and encompasses profits and dividends derived from investment funds, platforms, real estate, or trusts located abroad. The Brazilian government aims to collect approximately 20 billion reals ($4 billion) in new taxes in 2024.
For those who initiate tax payments in 2023, an early-bird advantage is offered, allowing them to pay an 8% levy on all income generated up to 2023 in installments, with the first installment beginning in December. Starting in 2024, the tax rate will be fixed at 15%, with overseas earnings up to 6,000 Brazilian reais ($1,200) exempt from taxation.
João Carlos Almada, the controller at Brazilian stablecoin issuer Transfero, noted that while the taxation of digital asset income is not new in the country, there are aspects of the law that could benefit from clarification, such as compensation for losses in the period. Almada believes that as regulations evolve, new discussions on these topics will arise to enhance transparency and credibility in the market.
Brazil joins other nations, including Spain, in scrutinizing the overseas crypto holdings of its citizens. In November, the Spanish Tax Administration Agency reminded individuals with balance sheets exceeding 50,000 euros (approximately $55,000) in digital assets about their obligation to declare crypto stored abroad.