Brazil's tax on worldwide Income

05/31/23 Do I have to file tax return in Brazil and also pay tax on my earnings from abroad (worldwide income)?

Thank you
-@dyantyi28

If you become a legal resident of Brazil, you'll fall under the requirement to file a tax return. How much of your income will be subject to tax is a discussion between you and your Brazilian accountant, and you should find one that you feel comfortable with well before next April, when tax returns are due.

If you tell the FP that you plan to live outside Brazil most of the time, they'll solve the problem for you by handing you back your application and telling you to refile when you DO intend to become an actual resident. Their assumption is that anyone who intends to spend less than six months a year in Brazil can accomplish all of their objectives on a tourist visa.

I am interested in learning more about taxation in Brasil. I am retired and my US taxable income is $0 after standard deductions. I have my savings deposited in NU bank and live off the juros. i am confused if i need to provide imposto de renda any info from USA. Any info appreciated

@dyantyi28

Hello,

Yes once you're a permanent resident you're also a tax resident of Brazil.  Your world wide income will be subject to tax.  If you don't plan to actually reside in Brazil you may want to hold off. As Abthree said, you likely want to discuss with a Brazilian tax professional.

This article provides a good overview:

https://www2.deloitte.com/br/en/pages/living-and-working/articles/income-taxation.html

Of course you should always seek the advice of a qualified professional regarding personal tax issues, but you are quite leaglly allowed to send your own money from your bank account outside Brazil to your bank account within Brazil, without these transferred funds being subject to tax as income. See @BRBC's post in another thread.

Some might say this may not follow the exact letter of the law, and I fully understand that, but how on earth are the Brazil authorities going to discover if these funds are indeed your own money that you have previously paid tax on, or income?

As I mentioned previously, I and many others have been following this method, since we all have savings elsewhere, without any problems, and I do submit an annual tax return through my accountant here in Brazil.

By way of illustration, imagine this scenario:  you have a bank account in the US with $6000 in it.

$1000 came from savings from previous employment, US tax paid.

$1000 came from a recent pension payment, US tax paid.

$1000 came from an inheritance, US tax paid.

$1000 came from the sale of an old car (you are about to move to Brazil), no US tax paid.

$1000 came from a cash payment for a bit of casual work you did recently, no US tax paid.

$1000 came from a small lottery win, US tax paid.

You are now in Brazil with a permanent visa and want to transfer $1000 to your own Brazil account from your own US account, to help with your living costs here.

If you cannot identify which $1000 from the $6000 that you are transferring, how can anyone else, let alone the tax authorities in Brazil...!

    @dyantyi28Hello,Yes once you're a permanent resident you're also a tax resident of Brazil.  Your world wide income will be subject to tax.  If you don't plan to actually reside in Brazil you may want to hold off. As Abthree said, you likely want to discuss with a Brazilian tax professional.This article provides a good overview:https://www2.deloitte.com/br/en/pages/living-and-working/articles/income-taxation.html-@BRBC

@BRBC - thanks for posting that deloitte link.  They do a great job of navigating through the labyrinth of tax regulations.  One thing I would like to point out, the key is whether or not you are considered a tax resident.  People get confused with definitions of residency.  My understanding is that there is no longer such a thing as a permanent resident with the new law.  Under the old law, you obtained a permanent visa and were explicitly considered a tax resident on day 1.  You can no longer obtain a permanent visa.  Now you obtain a temporary visa and get a CRNM that is also temporary but has an expiration date.  Tax residency is then determined for the folks in the new system using the rules set forth in the deloitte posting.

@Peter Itamaraca

One way they could know would be using the information from your residency application.  At least in my case they specifically required an apostilled proof of income.  If you are reporting less income than was represented in the application, that could raise a red flag.

This of course depends on what type of application you used and the justification for the residency.  What I am referring to is residency based upon retirement status and income. 

    @Peter Itamaraca
One way they could know would be using the information from your residency application.  At least in my case they specifically required an apostilled proof of income.  If you are reporting less income than was represented in the application, that could raise a red flag.
This of course depends on what type of application you used and the justification for the residency.  What I am referring to is residency based upon retirement status and income. 
   

    -@mikehunter

Yes that is a good point, but I doubt that, once the visa is granted, any financial info will be double-checked. They are very tolerant with the millions of Brazilians who avoid paying any tax at all, or very little, and are far more interested in the billions and billions that the wealthy and political classes salt away tax-free each year! Porbably not that interested in a foreigner's small pension... and the authorities here are nowhere near as vigilant as their counterparts in the US or Europe.

And you are also correct about the class of visa - for example the Investment Visa and the Golden Visa require no statement of earnings...

   
  One thing I would like to point out, the key is whether or not you are considered a tax resident.  People get confused with definitions of residency.  My understanding is that there is no longer such a thing as a permanent resident with the new law.  Under the old law, you obtained a permanent visa and were explicitly considered a tax resident on day 1.  You can no longer obtain a permanent visa.  Now you obtain a temporary visa and get a CRNM that is also temporary but has an expiration date.  Tax residency is then determined for the folks in the new system using the rules set forth in the deloitte posting.
   

    -@mikehunter

This link spells it out a bit better.

https://www.oecd.org/tax/automatic-exchange/crs-implementation-and-assistance/tax-residency/Brazil-Tax-Residency.pdf

"An individual is considered a tax resident in Brazil if: (i) he moves to Brazil under a permanent visa (i.e. residence authorization for an indefinite period);  "

    By way of illustration, imagine this scenario:  you have a bank account in the US with $6000 in it.$1000 came from savings from previous employment, US tax paid.$1000 came from a recent pension payment, US tax paid.$1000 came from an inheritance, US tax paid.$1000 came from the sale of an old car (you are about to move to Brazil), no US tax paid.$1000 came from a cash payment for a bit of casual work you did recently, no US tax paid.$1000 came from a small lottery win, US tax paid.You are now in Brazil with a permanent visa and want to transfer $1000 to your own Brazil account from your own US account, to help with your living costs here.If you cannot identify which $1000 from the $6000 that you are transferring, how can anyone else, let alone the tax authorities in Brazil...!        -@Peter Itamaraca

Brazil taxes global income regardless of whether or not your transfer that money to Brazil.

If you have income and assets that existed prior to your becoming a tax resident, then it will not be 'retaxed' by Brazil.  If you work a job or make income in some way after becoming a tax resident then, that income is subject to taxation by Brazil.

To use the examples above:

• $1000 came from savings from previous employment, US tax paid.
• If the compensation was earned while you were a tax resident of Brazil, you owe Brazil tax on that income.  The US federal income tax can be used to offset the Brazilian income tax.
• $1000 came from a recent pension payment, US tax paid.
• If the compensation was earned while you were a tax resident of Brazil, you owe Brazil tax on that income.  The US federal income tax can be used to offset the Brazilian income tax.
• $1000 came from an inheritance, US tax paid.
• I'm not familiar with taxation of inheritance in Brazil, but if there is a tax it would likely follow the income examples above, again assuming the inheritance was received after becoming a tax resident of Brazil.
• $1000 came from the sale of an old car (you are about to move to Brazil), no US tax paid.
• Its very unlikely the sale of a car would result in a profit over your basis in the car, but lets say it did.  That would be capital gains, and would follow capital gains taxation.  If you sold below your basis, then no tax would be due in either country.
• $1000 came from a cash payment for a bit of casual work you did recently, no US tax paid.
• If the compensation was earned while you were a tax resident of Brazil, you owe Brazil tax on that income.  The US federal income tax can be used to offset the Brazilian income tax however in this example the work was 'under the table' so there would be no offsetting tax.
• $1000 came from a small lottery win, US tax paid.
• I'm not certain how lottery winnings are taxed in Brazil, but again Brazil taxes global income, so there would likely be tax due and its also likely the US tax would offset the Brazil tax.

I think part of what you're saying is 'how would they know'. Brazil may very well not know if you earn income abroad and don't report it.  I wouldn't suggest doing so, but to continue the discussion here's a couple of things that come to mind.  If you're transferring small amounts of money to Brazil they likely wont require documentation, but for larger transfers or many transfers in a calendar year that add up to a lot, you may be asked for 'source of wealth' documentation to show the origin of the funds.  That could reveal some inconsistency.  If you ever got audited by the tax authorities here, my strong suspicion is they'd ask for your foreign tax returns and look for reporting inconsistencies.

@BRBC Correct, the key term is ”Permanent Visa”, which doesn’t exist for new applicants. 

You may have a point..

That said, two other criteria which qualify one as a tax resident are staying in the country over 183 days in a 12 month period and residing in Brazil permanently.  So if you have a visa with an indeterminate length of stay, and you live here, then I believe you're a tax resident.

https://www.gov.br/receitafederal/pt-br/assuntos/meu-imposto-de-renda/preenchimento/dsdp/nao-residente

(Apologies in advance that I can't seem to find a better suited thread for this question)

I own a apartment in SP and will be moving to Brazil full time in the relatively near future...most likely on a retirement visa.

Will there be any hope of eventually navigating Brazilian tax filing on my own, perhaps after one go of it with an accountant? I've read about the carnê-leão requirements, etc. and am curious if I am going to be forever beholden to an accountant, especially given folks' reports here that the cost can be surprisingly high. 

For more context; I don't anticipate any Brazilian income (at least in the new term) but will have foreign based income to report.

Thank you!

02/18/24 Will there be any hope of eventually navigating Brazilian tax filing on my own, perhaps after one go of it with an accountant? I've read about the carnê-leão requirements, etc. and am curious if I am going to be forever beholden to an accountant, especially given folks' reports here that the cost can be surprisingly high. 

For more context; I don't anticipate any Brazilian income (at least in the new term) but will have foreign based income to report.

Thank you!
   

    -@thetravelfox

Welcome!  From what I've observed, the online software for filing is relatively straightforward, but naturally it and all of the instructions are in Portuguese,  so that will be a problem if your Portuguese is not up to the task.  The other challenge is the danger of overpaying.   With the regulations changing every year, I stick with an accountant for the security of knowing that I'm paying my fair share, and no more.

@abthree

100% agree! Just not worth the risk…

    (Apologies in advance that I can't seem to find a better suited thread for this question)
I own a apartment in SP and will be moving to Brazil full time in the relatively near future...most likely on a retirement visa.

Will there be any hope of eventually navigating Brazilian tax filing on my own, perhaps after one go of it with an accountant? I've read about the carnê-leão requirements, etc. and am curious if I am going to be forever beholden to an accountant, especially given folks' reports here that the cost can be surprisingly high. 

For more context; I don't anticipate any Brazilian income (at least in the new term) but will have foreign based income to report.

Thank you!
   

    -@thetravelfox

I had been paying an accountant to do the carne leao filings for me for over a year.  I finally ask him to prepare instructions for me to do it myself, and he did.  I have been dong it ever since.  It is very easy.  You may want to ask an accountant if they can write up instructions for you if you want to save cost over the long term.

02/18/24 I had been paying an accountant to do the carne leao filings for me for over a year.  I finally ask him to prepare instructions for me to do it myself, and he did.  I have been dong it ever since.  It is very easy.  You may want to ask an accountant if they can write up instructions for you if you want to save cost over the long term.
   

    -@BRBC

I agree that there's probably no need to have an accountant handle the monthly carnê-leão transaction.  I don't use carnê-leão, so it's never come up for me.  I don't think that I'd want to do my annual filing on my own, though.

For what its worth, I don't do my annual filing myself either.

    Hi All
I saw the following on the net and need some clarification please

“Residents of Brazil are taxed on their worldwide income, and non-residents are taxed exclusively at source on their Brazilian-sourced income”

I will be registering at the FP as a permanent resident shortly and I will not be earning any income in Brazil. All my income will be from abroad and I will also be spending most of my time outside of Brazil

Do I have to file tax return in Brazil and also pay tax on my earnings from abroad (worldwide income)?

Thank you
   

    -@dyantyi28

In Brazil you are taxed already through consumption.  As for your annual tax filings, they have to prove you are evading taxes.  The folks at the Receita Federal do not have that kind of information unless it is voluntarily given, or you living beyond your declared means. 

There is a reason why the store clerk asks as to whether you want the "Nota Fiscal Paulista on your CPF " ( for cash rebates bait money ).  And your answers should be no.  They would rather track your expenses. Voluntarily provided by you.

They are after big time cheats. Like that Chinaman who got jailed in Sao Paulo.

Don't drive expensive cars, do not buy expensive real estate, forget that beach side home, don't keep a mistress.That is how you get nailed.

Live frugally. 

        Hi AllI saw the following on the net and need some clarification please “Residents of Brazil are taxed on their worldwide income, and non-residents are taxed exclusively at source on their Brazilian-sourced income”I will be registering at the FP as a permanent resident shortly and I will not be earning any income in Brazil. All my income will be from abroad and I will also be spending most of my time outside of Brazil Do I have to file tax return in Brazil and also pay tax on my earnings from abroad (worldwide income)?Thank you        -@dyantyi28



In Brazil you are taxed already through consumption.  As for your annual tax filings, they have to prove you are evading taxes.  The folks at the Receita Federal do not have that kind of information unless it is voluntarily given, or you living beyond your declared means. 

There is a reason why the store clerk asks as to whether you want the "Nota Fiscal Paulista on your CPF " ( for cash rebates bait money ).  And your answers should be no.  They would rather track your expenses. Voluntarily provided by you.

They are after big time cheats. Like that Chinaman who got jailed in Sao Paulo.

Don't drive expensive cars, do not buy expensive real estate, forget that beach side home, don't keep a mistress.That is how you get nailed.

Live frugally. 
   

    -@sprealestatebroker

Wanna know something really strange? I absolutely agree with @sprealestatebroker for the first time this century!!!

@abthree and @BRBC - thank you for the answers on filing taxes.  i think i could manage the self-filing in Portuguese, but it sounds like the best route might be to use an accountant given changing rules, but ask for instructions on how to do carnê-leão over time. (I'm still trying to understand the lay of the land, but if I am receiving a monthly pension check from the US and a paycheck for some other US originating work, I'll need to do the monthly carnê-leão filing, right?)

  02/19/24  @abthree and @BRBC -  (I'm still trying to understand the lay of the land, but if I am receiving a monthly pension check from the US and a paycheck for some other US originating work, I'll need to do the monthly carnê-leão filing, right?)
   

    -@thetravelfox

You certainly can't go wrong with the carnê-leão route, so if it's convenient for you, it's a good idea.  But in Brazil, the context of a rule can matter as much as the words of the rule itself in isolation, so if you'd rather pay a different way, it's worth discussing options with your accountant.