At this time of the year, all residents in Brazil—whether they are Brazilian nationals or not— must submit their revenue tax forms. Income tax returns are mandatory and must be sent to the Brazilian authorities between March 7 and April 30, 2019. After the joys of Carnival, the tax man cometh. It is called an “adjustment” tax return as individuals (expats, in this case) already pay income taxes throughout the year, either from their monthly salaries, or paid in regular installments (known as carnê-leão). Each Brazilian taxpayer fills out their return with a summary of their earnings, including specific deductions and arriving at final due payment.
Taxes on personal income in Brazil
The Brazilian income tax system accounts for both income and property. As well as submitting earnings, each tax resident must also declare all of their assets, including real estate and bank accounts in Brazil and abroad. This declaration of assets is for information purposes only, and due tax is only calculated in accordance with information provided on earnings.
Foreigners and expats may believe that these obligations do not apply to them. However, according to articles 2 and 6 of Brazil’s tax law (IN RFB n° 208/2002), foreigners are also subject to tax obligations in Brazil under the following conditions:
- As soon as they enter in Brazil with a permanent visa;
- If they enter Brazil with a temporary visa and have signed an employment contract;
- If they enter Brazil with a temporary visa but without any employment contract, in this case, if they stayed in Brazil more than 183 days, consecutively or not, over a period of 12 months.
Meanwhile, Brazilian nationals who do not reside in the country are not subject to income taxation in Brazil.
Any taxpayers intending to leave Brazil and settle abroad must first inform the tax authorities. Otherwise, they will remain a Brazilian resident for one year and will still have to pay income tax in this period.
The amount of taxes
Brazil applies the principle of worldwide taxation. Any income earned by a Brazilian taxpayer, in Brazil or abroad, is taxable in Brazil.
Specific rules may apply for stocks or real estate properties.
How to avoid double taxation
The Brazilian legislation allows for rebates on taxes paid abroad and taxes to be paid in Brazil, but only if a bilateral agreement has been signed with the country in question. Brazil has signed such agreements with 29 nations, stipulating that taxes paid abroad may be deducted from the amounts paid in Brazil.
What is the income tax rate?
In Brazil, the income tax burden is lower than in most European countries. An income bracket system is used, with highest earners paying 27.5 percent. There are also several deductions available to reduce an individual’s final taxable income.
In summary, filling out a tax return is mandatory if:
- You earned an annual taxable income greater than BRL 28,123.91.
- You earned a non-taxable income or withheld income of more than BRL 40,000.
- You earned capital gains from the sale of assets or rights or from financial transactions;
- You owned on December 31, 2018, assets or rights—included unbuilt land—valued equal or superior to BRL 300,000.
- You became a Brazilian tax resident during the year 2018 and you were still a tax resident on December 31, 2018.
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