Expatriates taking up employment in Brazil will be subject to taxation according to the types of visas at the entrance to the country because tax residency is related to the types of visas. Grant Thornton Brazil can assist expatriates and their employers in providing monitoring of the fiscal residence acquisition process and compliance regarding the Brazilian tax filing requirements.
Brazilian resident taxpayers must prepare and file an annual individual income tax return to the tax authorities no later than 30 April following the subsequent period of residency acquisition. The obligation to deliver the document is applicable for residents who earn more than BRL 28,559.70 annually, own properties in Brazil valued over BRL 300,000.00, operate in the Brazilian stock market with capital gain, or if over BRL 40,000.00 in exempt income from bank investments has been earned. All incomes received at source and incomes received abroad must be reported.
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Foreign citizens may enter the Brazil with or without visa (depending on nationality), and there is no nationality restriction. As a rule, foreign citizens, even if non-residents, can have a CPF card - a personal identification number for individuals. The registration can be done online at the Brazilian Tax Authorities website.
Foreign citizens holding a visa with a labour contract in Brazil are obligated to obtain a CTPS (work permit/carteira de trabalho). This is non-applicable for foreign citizens holding a visa without a labour contract in Brazil.
The Brazilian legislation provides different types of visas to foreign citizens that set the residence acquisition in the country, as described as below:
|Visa type||Residence acquisition|
|Without Visa / Tourist Visa||After 183 days in Brazil in a period of 1 year|
|Technical Visa||After 183 days in Brazil in a period of 1 year|
|Visa with Labor Contract/ Permanent Visa||The day of entry in the country|
|Mercosul Visa||The day of entry in the country|
Other types of visas are available, however they are not common for expatriates.
The Brazilian tax year is from 1 January to 31 December.
Brazilian residents and expatriates who have become Brazilian tax residents by residing in Brazil for 183 days or more, must file their annual income tax return (DIR) before 30 April of the year following the calendar year. The Declaration of Brazilian Capital Located Abroad (CBE) must be filed before 5 April of the year following the calendar year.
The annual income tax return is applicable for all the residents, according to Tabela Progressiva (Brazilian tax table) (see income tax rates below). The return can be delivered in two different models. The complete one is beneficial for those who have dependents and deductible expenses. The other tax return type is the simplified type that allows the taxpayer to have 20% reduction on the sum of all taxable income received during the year which is limited to R$ 16.754,34. This type of return is common for single taxpayers with no deductible expenses and only one income source in Brazil.
Tax returns may result in refunds or additional payments. To receive the refund, it is necessary to have a personal Brazilian bank account. The additional payment can be done through a bank voucher.
The Declaration of Brazilian Capital Located Abroad (CBE) is applicable only if the individual owns assets abroadin amounts equal or greater than USD 100.000,00 by December 31st of the year residency was acquired.
Taxation occurs when all income is considered taxable in Brazil – whether it is sourced in Brazil or in other countries. The charge of taxation will be determined by an individual’s tax residency status.
Taxation in Brazil is based at source by the employer according to the below:
Sample income tax calculation – Tabela Progressiva
|Annual Calculation Bases in BRL||Tax rate %|
|Until R$ 22.847,76||exempt|
|R$ 22.847,77 to R$ 33.319,80||7.5|
|R$ 33.319,81 to R$ 45.012,60||15|
|R$ 45.012,61 to R$ 55.976,16||22.5|
|Up to R$ 55.976,16||27.5|
Taxation of individuals in Brazil is determined by their residency. Income is taxed at the source of their earnings. A person is a resident in Brazil for tax purposes if:
- they have permanent residence
- they are Brazilian citizen, serving at the capacity of consular, diplomat or at another similar function, outside the territory of Brazil
- they reside in Brazil for at least 183 days during a tax period, regardless of his/her nationality. The calculation of the residence period in Brazil includes all the days of physical presence, not only work days, but also holidays
- they are holding a work/permanent type visa.
Expatriates who are Brazilian tax residents, are taxed on their worldwide income and gains (rent, interest, dividends). Income from abroad is subject to taxation - the payment of the tax is an employee obligation through the Carnê-Leão, a Monthly Income Tax Calculation on the worldwide income according the table below:
|Monthly calculation bases in BRL||Tax rate %|
|Until R$ 1.903,98||exempt|
|R$ 1.903,99 to R$ 2.826,65||7.5|
|R$ 2.826,66 to R$ 3.751,05||15|
|R$ 3.751,06 to R$ 4.664,68||22.5|
|Up to R$ 4.664,68||27.5|
According to the Brazilian general rules, using the expenses as a deduction on the tax return is only possible when it is delivered by the complete model. The expenses allowed are dependent exemptions, educational expenses, medical expenses, alimony, private pension, and social security for housemaid.
Benefits paid for the expatriate can be taxed according to the source. Therefore, housing, meal allowances, provision of a car and relocation allowances will come within the charge to Brazilian income tax in addition to the individual’s salary. However, if these benefits are treated as the compensation in kind, paid not in cash by the employer, such as food compensation, donation of vehicles, house appliances, etc., then the value of services in kind (goods or services) might be classified as a nontaxable expense of the employer for corporate income tax purposes and might not be taxed as a personal income.
No concessions or benefits are available for expatriates.
Foreign income taxes payed abroad may result in a relief for the Income Tax in Brazil, when in accordance with double taxation treaties signed by the Brazilian tax authorities.
According to the Brazilian income tax code, capital gains are taxed at the tax rate of 15% to 22.5%.
The sale of assets acquired before becoming a fiscal resident is exempt of this tax.
Gifts are considered an exempt income for the Income Tax Return with the limit of R$ 64.250,00 (to CY 2019) in São Paulo. Donations made over the limit are subject to the ITCMD – a tax on the donations received. This tax is determined by the state of residence and the tax rate is 4% (São Paulo for example) for gifts above of this amount mentioned above.
However, the tax rate varies from state to state, but the maximum tax rate is 8%.
Furthermore, this income must be reported on income tax returns in Brazil.
Investment income in Brazil is taxed by an exclusive tax rates and taxation are done at the source.
Income from investments from abroad is subject to monthly income tax calculation – carnê leão.
There are no other local taxes on income in Brazil.
There is no real estate tax in Brazil.
Employees are required to pay mandatory social security contributions on gross salary as follows:
|Salary Amount (R$)||Contribution rate %|
|R$ 1.751, 82 to R$ 2.919,72||9|
|R$ 2.919,72 to R$ 5.839,45||11|
Employers and employees contribute a percentage of the calculated monthly salary to a social security fund.
Social security contribution rates and amounts are subject to change every year – the above mentioned table is for 2019.
FGTS is a severance fund created to protect employees that are dismissed from companies in Brazil. This fund binds with the employment contract, and at the beginning of each month the employers contribute with 8% of the employee gross salary to the fund. There is no contribution in name of the employee.
The FGTS can be withdrawn by the worker in a couple of situations, the most common one is to use the money to buy/finance a house or when the employee leaves the country.
There are no specific rules or legislation in Brazil for the tax treatment of employer-provided stock options or RSU’s. There are subject to personal income tax through capital gain at the moment of exercising.
RSU taxation is dependent on grant or vest periods - by the time the RSU is vested to the employees, it must be reported on the Annual Income Tax Return as an income taxed by the Tabela Progessiva. RSUs must be also included as an asset in the tax return. If RSUs are sold with gain, they will be subject to capital gain calculation.
Before defining any type of taxation on stock options, it is critical for them to be reviewed by the Grant Thornton Brazil tax team – each company has different stock options that could have distinct impacts on taxation.
When leaving Brazil on a permanent basis, a tax resident is obliged to present a Departure Process. This process consists in the filing of two documents with the Brazilian Tax Authorities – Communication of Definitive Departure and the Departure Income Tax Return.
The Departure Tax Return process is concluded in the months of March/April – subsequent year of the departure.
The tax payer will no longer be linked to the Brazilian Tax Authorities and any income sourced in Brazil must follow the applicable nonresident tax rate.
The taxpayer number (CPF) is not cancelled, and normally, it can be used in case of investments in Brazil or future trips to the country.