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Overview of Tax Issues for Expats in Brazil

Submitted: April 2014

The Brazilian tax year runs from the 1 January to the 31 December.

Tax Residence

If you are working in Brazil for less than 183 days you will generally be considered non-resident and taxed on Brazilian-source income only. If you stay longer than 183 days you will generally be considered resident, and become liable for tax on your worldwide earnings. There are some circumstances where you may be considered resident even if you are in Brazil for less than 183 days in a year. For more details see: Taxation - Employment Taxation for Expats in Brazil.

Employment/Business Taxes

For resident, a withholding tax is deducted by your employer from your wages or salary. They will also deduct social security contributions. If you have more than one source of income, or are self-employed, you may have to calculate and pay tax monthly via the carnê-leão system. The marginal (highest) tax rate is 27.5%. You may have to fill in a tax return after the end of the year to claim allowable deductions, and calculate the final amount of tax payable. If you are self-employed, you will pay income tax based on the profits of your business after deduction of costs. For more details see: Taxation - Employment Taxation for Expats in Brazil.

If you come to Brazil to set up in business and start a company, you will be liable to corporation income tax on the profits from your trade or business. The general rate of corporation income tax is 15% for taxable income up to R$20,000 per month; income above R$20,000 a month is taxed at 25%. New companies must complete a complex registration process. Companies must pay tax on either a quarterly or annual basis, and may have to make quarterly or monthly payments of estimated tax. After the end of the year a tax return must be produced by the last working day of June in the year following the fiscal year in which the income was generated. For more details see: Taxation - Business Taxation for Expats in Brazil.

Other taxes

For individual residents and non-residents in Brazil, investment income in the form of interest from savings accounts is exempt from tax; other forms of interest are subject to tax at varying rates.

For residents and non-residents, dividend income from Brazilian sources is exempt from tax. Rental income from Brazilian property is subject to income tax. Taxable capital gains are taxed at a flat rate of 15%.

Any taxable income, which has not been subject to withholding tax, must be reported to the tax authority on a monthly basis, and the tax due must be paid at the same time. This is done via the carnê-leão system. For more details see: Taxation - Investment Taxation for Expats in Brazil.

Tax treaties

Brazil has signed tax treaties with over 30 countries worldwide. Withholding taxes rates on interest and royalties payments made to taxpayers in other countries which have tax treaties with Brazil in place (or non-residents in Brazil) can be reduced. The treaties also mean that the amount of withholding tax charged by the originating country can be reduced on money flowing into Brazil. The amount that can be charged under a treaty is often reduced to between 10% and 15%. Brazil charges a higher withholding tax rate of 25% on payments sent to certain countries (mainly tax havens). For more details see: Taxation – Tax Treaty Considerations for Expats in Brazil.

 

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