Brazilian President Luiz Inacio Lula da Silva has approved legislation aimed at taxing crypto assets held overseas by Brazilian citizens, signing the law on December 12. The enactment of this law was officially published in the Diário Oficial da União the following day, marking its scheduled implementation date set for January 1, 2024.
Under this new legislation, the tax applies not only to cryptocurrencies but also extends to profits and dividends earned by Brazilian taxpayers from overseas investment funds, platforms, real estate, or trusts. The Brazilian government anticipates imposing approximately 20 billion reais ($4 billion) in new taxes during 2024. Those individuals who begin paying taxes in 2023 will be eligible for an early-bird discount: they will face an 8% tax rate on all income earned before 2023, payable in installments with the first installment due in December. Subsequently, starting in 2024, the tax rate will be fixed at 15%. Moreover, foreign income up to BRL 6,000 (USD 1,200) will remain tax-exempt.
João Carlos Almada, the financial director of the Brazilian stablecoin issuer Transfero, highlighted in an interview that the taxation of digital asset income is not entirely unprecedented in the country. However, he pointed out certain aspects of the law that need further clarification, specifically regarding compensation for period losses and tax regulations akin to those governing stock assets. Almada expressed confidence that ongoing national regulatory developments will prompt additional discussions in pursuit of enhanced market transparency and credibility.
Brazil isn't the sole country expressing concern about its citizens' possession of cryptocurrencies abroad. In November, the Spanish tax administration similarly reminded its citizens of their obligation to declare cryptocurrencies held overseas. This requirement, however, pertains exclusively to individuals with digital assets exceeding €50,000 (approximately $55,000) on their balance sheets.
