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Generally you will be considered to be tax resident once you have stayed Brazil for more than 183 days during a calendar year. However you may be considered resident even though you have spent less than 183 days in the country during the year. If you hold a permanent visa you will be considered resident from the day you enter the country, this will also apply if you hold a temporary visa which is associated with a work contract concluded with a Brazilian company.
It is important to be aware of the terms of any tax treaty that exists between Brazil and your home country as this may well dictate how you are treated with regards to residency and tax. For more details see: Taxation – Tax Treaty Considerations for Expats in Brazil.
As a resident you will be taxable on your worldwide income and gains. If you remain non-resident you will only be taxed Brazilian source income.
Tax rates and allowances
The tax year runs from 1 January to 31 December.
As a resident, your Brazilian employer will withhold tax from your wages or salary on a monthly basis. They will also deduct social security contributions of 11%. After the end of the year, these deductions will be set against your overall tax liability when you fill in your tax return. You should be aware that if you are given allowances by your employer for things like education for your children, or help with housing expenditure, these will be taxable as well. The withholding tax will be calculated monthly based on the table below.
If you earn income on which no withholding tax has been charged, you will be responsible for calculating and paying the necessary tax on a monthly basis via the carnê-leão system.
If you are a non-resident, you will be subject to a flat withholding tax of 25% on employment income from Brazilian sources. There is also a rate of 15% to 22.5% applied to taxable investment income. If this is your only Brazilian-source income it is not necessary to complete at tax return.
The following table shows the 2014 progressive tax rates in Brazil for residents:
|Up to 21,453||0%|
|From 21,454 to 32,151||7.5%|
|From 32,152 to 42,869||15.0%|
|From 42,870 to 53,565||22.5%|
Tax returns for the year can be filed electronically; the staged process begins here with the return form (Programa Gerador da declaração) for the relevant year. The form must be filed before midnight on last business day in April of the following year. No extensions are granted. There are penalties for late or incorrect returns.
On you return form you can claim your deductions. You can do this in one of two ways:
You may have to do both calculations in order to work out which one suits you best. Your social security taxes (withheld at source) will probably make up the bulk of the deductions. You can also claim for such things as dependants, certain education expenses and some medical expenses.
Once you have calculated the tax owing, you must either pay at the same time as the return is filed, or pay in eight monthly instalments.
As a resident, you should be aware that part of the tax return form requires you to list all of your major assets and liabilities, both in Brazil and abroad. The cost and date of acquisition must be included. The list must include such things as jewellery and antiques, as well as property, transportation and financial investments. The purpose of this is so that the tax department can spot mismatches between your annual income and your increase in assets. So if you win a R$100 bet on a Milhar in a Jogo do Bicho,think twice before buying that Ferrari F12.
While not exactly tax-related, expats thinking of working in Brazil may be happy to know that Brazil offers 41 days of paid holiday in the working year (11 of which are public); the highest in the world.
It is important that you obtain tax clearance by filing a departure income tax return before leaving the country. If you do not you may find that you continue to be considered resident in Brazil for up to twelve months following your departure.
Sections in TAXATION IN BRAZIL:
» Overview of Tax Issues for Expats in Brazil
» Employment Taxation for Expats in Brazil
» Business Taxation for Expats in Brazil
» Investment Taxation for Expats in Brazil
» Tax Treaty Considerations for Expats in Brazil
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