As of March 15, 2023, Brazilian tax-residents need to send their tax-returns on the income earned in Brazil to the Brazilian tax authorities. This “adjustment” tax-return (“Declaração de imposto de renda de pessoa fisica” (DIRPF) in Portuguese) is mandatory and must be sent to the Brazilian tax authorities by May 31, 2023. This is called an “adjustment” tax-return because the individuals (expatriates in this case) have already paid income tax along the year. Indeed, the income tax is (i) either withheld on salary or (ii), in case of income coming from abroad, monthly paid through specific documentation (“declarações Carnê-leão”). In the framework of this annual “adjustment” tax-return, Brazilians tax-residents will summarize and adjust the payments to be made, after several deductions due to personal situation. Taxation on personal income in Brazil
The Brazilian income tax system takes into consideration both income and assets. Indeed, in addition to the income declaration, the tax-resident must also declare all his/her assets (real estate properties, bank accounts in Brazil and abroad). This declaration of assets is for information purpose only and the taxation will be calculated and paid only on the income part. Tax amount
Brazil applies a principle of worldwide taxation. Any income earned by a Brazilian tax-resident, in Brazil or abroad, is taxable in Brazil. Specific rules may apply for shares or real estate properties. Can we avoid double-taxation?
Brazilian legislation allows a compensation between the taxes paid abroad and the taxes to be paid in Brazil, if a bilateral agreement has been signed between both countries Brazil signed taxation bilateral agreement with 34 countries. These agreements provide that taxes paid abroad may be deducted from the amounts paid in Brazil. What is the income tax rate?
In Brazil, the income tax burden is lower than in most of the European countries. A progressive scale is applied, with a maximum rate of 27.5%. Several amounts may also be deducted in order to reduce the taxable income. As a summary, the tax return is mandatory if:
- You earned annual taxable income superior to R$ 28.559,70. - You earned nontaxable income or income exclusively withheld for an amount superior to R$ 40.000,00. - You earned capital gains from sales of assets or rights or from operations on financial markets ; - You owed on December 31, 2022, assets or rights, included unbuilt lands, for an amount equal or superior to R$ 300.000,00. - You became Brazilian tax-resident over the year 2022 and you were still tax-resident on December 31, 2022.