Tax information: Leaving 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 departQ. Should I complete any documentation prior to leaving Brazil?
A. When leaving Brazil, you should file a final departure tax return and obtain a tax clearance, up to the time of departure, together with prior years’ Brazilian returns (up to five years when possible). You should leave a power of attorney to facilitate the execution of these procedures in your absence.
Your tax identification number will be cancelled (assuming that you do not hold any assets in Brazil upon departure) and your Registro Nacional de Estrangeiros must be surrendered on departure if the visa has a direct link with your foreign assignment. If you have a permanent visa (without direct link with your foreign assignment), resident immigrant status can be maintained even though the tax clearance grants you non-resident tax status. In this case, the permanent visa can be maintained by visiting Brazil at least every two years. If you fail to file the final departure tax return and to obtain a tax clearance certificate, you will be treated as a resident of Brazil for the first 12 months after departure.
Q. Should I open an offshore bank account?
A. 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.
An offshore bank account may also be advisable from the perspective of the country that you are going to.
Q. Will I be regarded as not resident in Brazil during my period overseas?
A. A Brazilian national is always regarded as resident in Brazil unless he or she leaves the country permanently.
To be regarded as a non resident you must file a final departure tax return and obtain tax clearance at departure, otherwise your residence status continues for 12 months after your final departure from Brazil. Once you have filed a final departure tax return and obtained tax clearance, you are non-resident for tax purposes from that date.
Q. Will I still need to complete a Brazilian tax return after my departure?
A. Non-residents are not required to file a tax return, while individuals who remain resident must continue to do so.
Q. Will I have to pay Brazilian tax in respect of the employment income I will earn overseas?
A. This will depend upon your residence status. Resident taxpayers are taxed on worldwide income, although tax treaties may exempt foreign-source income.
Non-Resident taxpayers are taxable only on income from Brazilian sources, at a rate of 25% at source (15% if unearned income) although tax treaties may exempt Brazilian-source income.
Q. Will I have to pay tax in respect of Brazilian investment income earned while overseas?
A. Again, this will depend on your residence status. If you are a tax resident of Brazil you are liable to tax on your worldwide income.
Brazilian-source interest payments made to non-residents are generally subject to a withholding tax at 15-22.5%.
Brazilian-source dividends paid to non-residents are exempt from withholding tax.
Q. I plan to sell my Brazilian property while overseas. Are there any capital gains tax implications?
A. Gains from the sale of a unique real estate are exempt from Brazilian capital gains tax 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).
Also, gains from sale of real estate property if proceeds are reinvested in the purchase of another real estate property within 180 days are exempt from capital gain tax. However, such exemption only applies to tax residents.
You should also confirm whether any capital gains tax implications exist in the country that you are going to.
Q. I have a number of Brazilian company shares. Will I remain liable to Brazilian capital gains tax if I sell any of these while outside Brazil?
A. Non-resident individuals are generally subject to a flat rate of 15% on gains of properties located in Brazil.
Q. What Social Security contributions will I pay when abroad?
A. Brazil has entered into social security agreements with only a limited number of countries (Argentina, Cape Verde, Chile, Greece, Italy, Luxembourg, Portugal, Spain and Uruguay). You may be liable to social security in the country you are going to unless your destination is one of these agreement countries.
