The President of Brazil signs law to tax crypto assets held abroad
The President of Brazil, Luis Inácio Lula da Silva, has approved a new law that imposes taxes on crypto assets held abroad by Brazilian citizens. The law was signed on Dec. 12 and will take effect from Jan. 1, 2024.
New taxes apply to various assets held abroad
The new taxes not only target crypto assets but also include profits and dividends from investment funds, platforms, real estate, and trusts held overseas by Brazilian taxpayers. The Brazilian government aims to collect approximately $4 billion in new taxes in 2024.
Early-bird advantage for taxpayers
Those who begin paying the taxes in 2023 will have an advantage. They will pay an 8% levy on all income earned until 2023 in installments, with the first installment starting in December. From 2024 onwards, the tax rate will be set at 15%. Earnings up to $1,200 will be exempt from taxation.
Clarifications needed for certain aspects of the law
João Carlos Almada, controller at Brazilian stablecoin issuer Transfero, mentioned that there are areas of the law that require clarification. He specifically highlighted the need for compensation for losses similar to tax rules for stock assets. He believes that as regulation evolves in the country, further discussions on this topic will provide more transparency and credibility to the market.
Similar initiatives in other countries
Brazil is not alone in its approach to taxing overseas crypto holdings. In November, the Spanish Tax Administration Agency reminded its citizens about their obligations to declare crypto assets stored abroad. However, this requirement only applies to individuals with balance sheets exceeding $55,000 in digital assets.
Hot Take: Brazilian President approves law to tax crypto assets held abroad
The President of Brazil has signed a new law that imposes taxes on Brazilian citizens’ crypto assets held outside the country. This move aims to generate revenue for the government, with an estimated $4 billion in new taxes expected in 2024. Taxpayers who start paying the taxes in 2023 will benefit from an early-bird advantage, while earnings up to $1,200 will be exempt from taxation. However, there are aspects of the law that require clarification, according to industry experts. Brazil joins other countries such as Spain in targeting overseas crypto holdings for taxation.
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