Tax information: going to Brazil
Welcome to the tax guide on going to Brazil, produced by Deloitte. Looking for tax information about leaving Brazil, Click here
This document has been prepared based on the legislation and practices of the country concerned as at 01 April 2009. Tax legislation and administrative practices may change, and this document is a summary of potential issues to consider. This document should not be used as a substitute for professional tax and immigration advice which should be sought for the country of arrival and departure in advance of moving in order to discuss your specific circumstances.
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Before/once you arriveQ. Do I need a work permit to work in Brazil?
A. Yes. A work visa must be obtained at the Brazilian consulate or embassy that has jurisdiction over the location from where you are coming. Requirements for obtaining the visa include a valid passport, a work contract with a Brazilian entity, proof of subsistence in Brazil usually in the form of a statement provided by the Brazilian employer, a police statement of no criminal record and a medical examination. All documents not in Portuguese may be required to be translated into Portuguese.
An expatriate working in Brazil must hold either a permanent or temporary visa; an expatriate who holds a temporary visa cannot change employers in Brazil without permission. On application, visas will be issued to the expatriate's dependent spouse and children when the expatriate's visa is issued. A number of conditions must be satisfied before the appropriate visa is issued.
Q. Should I complete any documentation upon arrival in Brazil?
A. Upon entering Brazil, you must obtain an identity card, the national register of foreigners or Registro Nacional de Estrangeiros (RNE), at the Federal Police. Also, a work book or Carteira de Trabalho (CT) is required from the Labor Department, and a tax identification card (CPF/CIC), from the Ministry of Finance.
Q.
Is it beneficial to open an offshore bank account compared to a Brazilian bank account?
A. Offshore accounts do not create tax efficiencies for residents of Brazil, although one may be useful from a home country tax perspective.
Non-residents of Brazil are subject to tax on Brazil-source income only and payments made in Brazil are usually considered Brazilian-sourced. Receipt of income into an offshore account is therefore tax efficient for non-residents of Brazil.
Find out more about our offshore bank accounts 
Q. What is the tax year?
A. For income tax purposes, the fiscal year is the calendar year. However, for an individual, the taxable period is the calendar month, not the year. An annual calendar year tax declaration also is required, and the tax rates are annualised to even out the fluctuations of monthly income.
Q. How will I be taxed in Brazil?
A. If you are a tax resident your worldwide income will be subject to personal income tax (at graduated rates to a maximum of 27.5%).
If you are non-resident, you are taxable only on income from Brazilian sources, at a rate of 25% at source (15% if unearned income). There is no tax on foreign income (i.e., income received abroad), or obligation to file an annual income tax return, until you become resident.
Q. How is tax residence determined?
A. A Brazilian national is always regarded as resident in Brazil unless he or she leaves the country permanently. If you are the holder of a permanent visa or a temporary work permit visa you will be regarded as a resident upon arrival in Brazil.
If you are not a Brazilian national and come to Brazil for any other reason you will be treated as resident for tax purposes if you stay physically in Brazil for more than 183 days (consecutive or not) in any 12-month period. In such circumstances your initial residence period will start on the day following the date you exceed the 183-day period.
Residence status, once acquired, continues for 12 months after final departure from Brazil unless a final departure tax return is filed and a tax clearance is obtained. This should be obtained when leaving Brazil to become a non-resident.
Q. Are there any regional or state taxes?
A. There are no regional income taxes imposed in Brazil.
Q. Can I file a joint tax return with my spouse?
A. No. Individuals should normally file their own tax returns.
Married couples may be taxed jointly on all income if one spouse normally has no income and is listed as a dependant on the other spouse's return. In all other cases, married couples are taxed separately.
Q. What rate of tax will I pay in Brazil?
A. Graduated rates apply to all income except certain Brazilian investment income, which is subject to a flat rate. The rates are the same for married and single individuals. The tax tables apply to tax withheld from wages as well as to tax paid on income not subject to withholding (i.e. on income received offshore).
The following annual tax rates apply in 2009:
|
from BRL
|
to BRL
|
rate
|
|
0.00
|
17,215,08
|
0.00%
|
|
17,215,08
|
25.800,00
|
7.50%
|
|
25.800,00
|
34.400,40
|
15,00%
|
|
34.400,40
|
42.984,00
|
22.50%
|
|
42.984,00
|
27.50%
|
Q. Can I claim a tax deduction for charitable contributions?
A. The full amount of qualified charitable contributions to approved Brazilian charities is allowed as a credit against tax liability, subject to a limit of 6% of the total tax liability.
Q. Are any other tax deductions available?
A. The following deductions are allowable for all resident individuals:
- Alimony and court-ordered child support.
- Certain pension payments to persons over age 65
- Expenses deductible in computing self-employment income
- Payments made to certain medical professionals and hospitals
- Education expenses (up to a limited annual amount of R$ 2,709)
- Employee’s social security contributions
Resident taxpayers are also entitled to a deduction for their dependents in computing monthly taxable income, and annual taxable. For 2009 this deduction is R$144 per dependent per month.
Alternatively, a standard deduction equivalent to 20% of taxable income and limited to a maximum of R$ 12,744 (for tax year 2009) is available.
Q. I will also be paying tax in my home country. Am I being taxed twice?
A. No. A foreign tax credit will usually be claimed on your home country tax return for Brazilian taxes paid on Brazil-source income. Alternatively Brazilian source income may be exempted on your home country return. The method used to mitigate double taxation will depend on your home country's tax legislation, and the nature of any tax agreement between Brazil and your home country.
Q. Do I need to file a Brazilian tax return?
A. All tax residents who earn in excess of a fixed amount per year must file a Brazilian Tax Return.
All tax residents holding assets and investments (including shares) in excess of US$ 100,000 located abroad must also present a specific declaration (the so called “Capitais Brasileiros no Exterior – CBE”) to the Brazilian Central Bank disclosing such assets and investments. Failures or omissions will be subject to heavy penalties. The due date for the declaration is the last working day of May of the year following the applicable tax year.
Q. When does it need to be filed?
A. Taxpayers must file income tax returns by the last working day of April of the year following the applicable tax year.
Q. Can the filing deadline be extended?
A. No.
Q. What is the procedure for paying tax?
A. Brazil has a system of monthly withholding from income. Payments must also be made by the taxpayer in respect of income not subject to withholding.
In general, individuals with income that is not subject to withholding (in the case of expatriates, this includes offshore compensation, interest, dividends, rents, etc., but not capital gains) are subject to a monthly payment of income tax (carnê leão) calculated at the monthly rates. The advance payment must be paid on or before the last working day of the month following the month when the income was received. Payments are made via voucher at any commercial bank. The advance payment is credited against the liability of the annual income tax.
Withholding and carnê leão are both calculated using the monthly tax rates on monthly taxable income (gross less allowances for dependents, social security, etc.). An individual may compute the tax on income subject to and not subject to withholding reduced by the tax actually withheld to arrive at additional total tax due. This computation method eliminates the duplication of the lower rates. If this method were not used, the underpayment would be due with the annual return.
When the annual return is filed, the liability is determined, and the balance due can be paid in one lump sum or divided into eight monthly payments. When the installment method is chosen, the first payment is without interest and the remaining seven payments are subject to interest at the monthly average rate of federal treasury bonds (SELIC).
Q. Will non-cash compensation be taxable (e.g. housing)?
A. Housing allowances or company-provided housing is taxable on the employee at graduated rates. Other benefits received by an employee from an employer, such as moving expenses, home leave, language lessons and use of a car may not be fully taxable if structured in certain ways.
Q.
I will be working in different countries while living in Brazil. Will all of my employment income be taxable in Brazil?
A. Residents of Brazil are subject to Brazilian income tax on worldwide income regardless of the source of that income. Working in different countries while tax resident of Brazil will normally not reduce tax liability in Brazil.
Non-residents are subject to income tax on Brazilian-source income only. It should be noted that in most cases, the source of payment is used to determine the source of income. Therefore payments made in Brazil will be considered to have a Brazilian source and payments made outside Brazil to have a foreign source, and so non-residents should arrange for payments of income to be structured efficiently.
Q. Will I pay Brazilian tax on investments and rental income generated in my home country?
A. Residents of Brazil are subject to tax on worldwide income, although foreign tax relief is available under tax treaties, when applicable, or unilaterally under Brazilian tax laws.
Foreign tax credits are allowed in Brazil in accordance with the terms of a specific treaty. Unilaterally, a resident in receipt of non-Brazilian-source income may credit the income tax paid to the foreign countries against the Brazilian income tax on such income, provided that the country taxing the income grants reciprocal relief to its residents for Brazilian tax on Brazilian-source income. A credit for foreign taxes cannot exceed the amount of Brazilian tax on that income.
It should be noted that mortgage interest is not deductible in calculating taxable rental income.
Q. Does Brazil have a Capital Gains Tax regime?
A. Capital gains of Brazilian residents are subject to a 15% tax. Gains from the sale of securities on a public stock exchange are subject to a tax rate of 15%. The tax is paid on a payment voucher at a bank in the same manner as tax on income not subject to withholding. Individuals are not entitled to relief for losses against other income, but are allowed, under certain limits, to net gains and losses from sales of securities on a Brazilian public stock exchange.
The following capital gains are exempt from tax:
- Gains from the sale of a unique real estate, provided that a similar sale has not taken place in the previous five years and the total value of the sale does not exceed a specified amount (R$ 440,000).
- Amounts received from the sale of assets with a sales price of less than R$ 35,000 per month.
- Amounts received from the sale of securities on a Brazilian public stock exchange with a sales price of less than R$20,000 per month.
- Assets sold during a period of Brazilian residence which was acquired during a non-resident period.
- Sale of real estate property if proceeds are reinvested in the purchase of another real estate property within 180 days.
Non-resident individuals are generally subject to a flat rate of 15% on gains of properties located in Brazil.
Note that tax treaties could affect the tax rates described above.
Q. What do I need to know about any other tax regime, e.g. Inheritance, Estate or Wealth tax?
A . VALUE ADDED TAX
Brazil imposes a tax on the circulation of merchandise and on transportation and communication services (ICMS), which is similar to value added taxes in other countries. A general rate of 18% applies (for in State circulation, for the State of São Paulo, for instance), with specific rates for a number of goods (for example, 25% for luxury goods).
MUNICIPAL/LOCAL TAX
Municipalities may levy a service tax on certain businesses, a real estate transfer tax (2% on transfers of real estate), and an annual urban real estate tax on property owners.
INHERITANCE/WEALTH TAX
Brazil does not impose any inheritance or wealth taxes. However, individual states may impose a death transfer and donation/gift tax. For example, the state of Sao Paulo imposes an inheritance and gift tax of 4%.
STAMP DUTY
Privately owned offices called Cartórios provide notorial types of services as well as registers of real estate deeds and recognizing signatures on many types of documents. These cartórios charge amounts according to the legislation in force which vary from a few cents for simple certified copies to thousands of Reais (R$) for real property deeds. Included in the fees charged for real property transfers by these cartórios are transfer taxes which vary from two to four percent of the declared value. Cartórios also register births, marriages and deaths. Expatriate assignees will almost certainly require the services of a cartório.
Q. Will I be required to pay Brazilian Social Security?
A. This will depend on the country you are coming from.
Brazil has entered into social security agreements with Argentina, Cape Verde, Chile, Greece, Italy, Luxembourg, Paraguay, Portugal, Spain and Uruguay. The treaties may provide an exemption of social security contributions in one of the countries for employees spending less than a specified period in the other country, as well as enable to qualify for benefits in the other countries.
Social security taxes are imposed on employees and employers. A rate of 8% to 11% is imposed on the employee's monthly salary, up to a maximum monthly wage base. Effective February 2009, the maximum monthly wage base was R$ 3,219 (employee's maximum monthly contribution is therefore R$ 354).
Q. Are social security contributions deductible for tax purposes?
A. Yes. The monthly contribution to the national social security system is deductible by an individual in computing monthly taxable income, and annual taxable income.
