Brazil Ends Crypto Tax Breaks With Blanket 17.5% Tax
In a major change to its tax policy, Brazil has removed the long-standing tax exemption on small-scale crypto investors. Beginning June 12, gains of any amount from digital assets will be taxed at a fixed rate of 17.5% under Provisional Measure 1303.
Previously, individuals in Brazil selling as much as 35,000 Brazilian reals (about $6,300) on a monthly basis of crypto were free from income tax. Larger gains were subject to progressive taxation, from 15% to 22.5% on larger transactions. Thanks to new regulation, tax brackets are eliminated, and gains are equally taxed at the same rate level.
Impacts on Traders
The government aims to increase revenue from the financial sector via this measure. Now, smaller traders have to pay more taxes. On the other hand, the big traders who were paying much more earlier could benefit from it now.
The tax modification further broadened the scope of taxable items. Now, crypto held in self-custody wallets and on foreign platforms is included. The tax assessments will take place every three months, and investors can claim losses within five quarters. This deduction window is going to get tighter once again from 2026.
Other Financial Tax Changes
The shake-up in tax isn’t only for crypto. The taxes on some fixed-income assets will have an impact, which are currently tax-exempt. That is, their profitability will be taxed at 5%. These fixed-income assets include the likes of:
- LCIs
- LCAs
- CRIs
- CRAs
Also, the taxes on the revenues of online betting will increase from 12% to 18%.
Rejection of IOF Increase Proposal
After the government mistakenly raised the proposal of increasing Brazil’s IOF (Financial Transaction Tax), which majorly faced opposition in Congress and by financial agents, the proposal was discarded.
Salary Payments in Crypto Under Review
Brazil is looking for a law allowing people to receive part of their salary in cryptocurrency, including Bitcoin. According to the proposal, digital payments must not exceed more than 50% of an employee’s earnings, while full crypto compensation for foreign workers or contractors would be allowed under certain guidelines of the Central Bank of Brazil.
Conclusion: Crypto Regulation Tightens in Brazil
Brazil is showing its strength on crypto regulation and tax by changing things up quite a bit. The new bill seeks to bring more structure to Brazil’s crypto finance world.
