The Brazilian Capital Gain Tax

Capital gains are the profits earned when assets or rights are sold for an amount higher than the original purchase price. While Brazilian residents pay capital gain tax on the sale of property both in Brazil and abroad, non-residents are taxed only for properties they sell in Brazil.

The rules for calculating the capital gain tax are the same for residents and non-residents. However, certain exemptions and reductions apply to local taxpayers.

Before 2017, the tax rate was 15%. But now, the rate varies between 15% and 22.5% depending on the amount of the profit. The lowest rate applies to profits not exceeding BRL$5,000,000 while the highest rate applies to profits over BRL$30,000,000. Residents of a tax haven jurisdiction pay 25%.

The payment due date also varies. Brazilian residents have from the transaction date until the end of the next month to pay. On the other hand, individuals living outside Brazil must pay the tax on the date of the sale.

The seller is responsible for paying the capital gain tax. After all, he’s the one making the profit. Yet the law requires the buyer to withhold the tax if the seller isn’t a Brazilian resident. If the buyer is also a non-resident, then an attorney-in-fact must be appointed for this purpose.

Calculating and paying the Brazilian capital gain tax can be complicated. Having experienced counsel will not only help you navigate the process but also ensure that you’ve calculated and paid your taxes correctly.