Brazil signs offshore crypto tax bill into law
Brazilian President Luiz Inacio Lula da Silva has signed a law introducing a tax on crypto assets held by Brazilian citizens abroad.
Lula signed the law on December 12, which was published the next day in the Diário Oficial da União, or Official Journal of the Union. The law will take effect on January 1, 2024.
The new taxes apply not only to crypto, but also to the profits and dividends Brazilian taxpayers receive from investment funds, platforms, real estate or foreign trusts. The Brazilian government plans to collect about 20 billion reals ($4 billion) in new taxes by 2024.
Related: IRS Lists 4 Crypto Crimes Among Top Issues in 2023
Those who start paying the tax in 2023 are getting an early-bird advantage: they will pay 8% tax on all income until 2023. The first payment will start in December. From 2024, the tax rate will be set at 15%. Foreign earnings up to 6,000 Brazilian reals ($1,200) are tax-free.
Speaking to Cointelegraph, João Carlos Almada, controller of Brazilian stablecoin issuer Transfero, explained that digital asset income tax is not new to the country. However, he said there are aspects of the law that could use some clarification:
“Some points in the article need to be revised, for example, compensation for losses in the period, something similar to the tax rules for stock assets. I believe that the evolving regulation in the country will lead to new discussions on this topic, aiming to give more transparency to the market, creating more credibility.”
Brazil is not the only country looking at its citizens' overseas crypto holdings. In November, Spain's Tax Administration Agency reminded its citizens of their obligation to declare crypto held abroad. But that requirement only applies to individuals with balances greater than 50,000 euros (around $55,000) in digital assets.
Additional reporting by Cassio Guson
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