The President of Brazil, Luis Inácio Lula da Silva, has signed a law introducing taxes on crypto assets held abroad by Brazilian citizens.
Lula signed the law on Dec. 12, which was then published the following day in the Diário Oficial da União, or the Official Diary of the Union. The law will come into force from Jan. 1, 2024.
The new taxes will not apply exclusively to crypto but also to profits and dividends gained by Brazilian taxpayers from investment funds, platforms, real estate or trusts abroad. The Brazilian government intends to collect around 20 billion reals ($4 billion) of new taxes in 2024.
Those who begin paying the taxes in 2023 are being offered an early-bird advantage: they’ll pay a levy of 8% on all income made up to 2023 in installments, with the first installment beginning in December. Starting in 2024, the tax rate will be set at 15%. Overseas earnings up to 6,000 Brazilian reais ($1,200) will be exempt from taxation.
Speaking to Cointelegraph, João Carlos Almada, controller at Brazilian stablecoin issuer Transfero, explained that the taxation of digital asset income is not new to the country. However, he said there are aspects of the law that could use some clarification:
“Some points in the text need improvement, for example, compensation for losses in the period, something similar to the tax rules for stock assets. I believe that with regulation evolving in the country, we will go through new discussions on this topic, aiming to provide even greater transparency to the market, thus generating more credibility.”
Brazil isn’t the only country eyeing the overseas crypto holdings of its citizens. In November, the Spanish Tax Administration Agency also reminded its citizens about their obligations to declare crypto stored overseas. However, that demand concerns only individuals with balance sheets exceeding the equivalent of 50,000 euros (around $55,000) in digital assets.
Additional reporting by Cassio Gusson