If you are a legal resident of Brazil, you’ll need to file a tax return here. “Resident” here includes foreigners holding permanent visas, and also those holding temporary visas and a work contract. As a general rule, if you are a U.S. citizen residing in Brazil, you’ll still have to file a U.S. return.
Foreigners with tax residence in Brazil must pay tax on income generated in Brazil or elsewhere, unless it is exempted through a double taxation treaty. The United States and Brazil do not have one at this time, though Brazil and Canada do.
Ordinary income is taxed on a graduated scale. Low-income individuals pay no tax, and the maximum marginal tax rate currently is 27.5%. It’s best to consult an accountant in Brazil, but the following passive income sources must generally be reported:
- Interest payments and dividends from foreign sources
- Rents received
- Most investment income
- Income from business activities (except for dividends from Brazilian companies and interest income from savings accounts held in Brazil)
Returns must be filed by April 30 each year, and can generally be done via the Receita Federal website.
Real Estate Tax in Brazil
Capital gains are generally taxed at a flat 15%, but payment is due when the gain is realized, not the following April 30. There are some exemptions, such as the rollover of the gain from sale of your residence to buy a new residence within six months.
Note that when a property is sold in Brazil, Brazilian residents must pay capital gains in Brazil. Currently, non-residents would be required to pay taxes in their home country but not in Brazil. Some exemptions may be recognized in the United States (or other home country), but some may not, and laws change, so consult an accountant versed in international tax law.
More on Real Estate in Brazil
IPTU (Imposto Predial Territorial Urbano)
The more upscale the neighborhood, the higher the tax. IPTU will generally run between 1% to 2% annually. (Note that in Brazil tenants are generally expected to pay the IPTU, as well as any monthly condominium fees, but these often aren’t included in the quoted rent—so be sure to ask before signing any lease.)
Smaller companies are generally taxed at 15% of net profits from operations, regardless of the type of business. There is a supplemental tax of 10% on any portion of net profit which exceeds 20,000 reals a month. Additionally, there is a social security contribution of 9%.
Foreign-Exchange Transaction Tax
If you are moving large amounts of money into the country, please be aware that Brazil enforces a foreign-exchange transaction tax (IOF) of 0.38%.
*The issue of taxation is generally complex enough when discussing a single country. Involving another country obviously complicates matters. Everyone’s situation is a bit different, and tax regulations change. Accordingly, use the information in this section as a starting point, but seek the advice of a qualified tax planner before making important decisions or transferring assets.