Brazil to Revise Cryptocurrency Taxation Guidelines

Brazil is set to adjust how cryptocurrencies are taxed. A new bill focusing on individual investment taxation will propose changes to the treatment of crypto, aligning its taxation more closely with shares and capital instruments that have variable exchange rates.

Under the proposal expected to be presented to the National Congress soon, crypto investors would be required to pay 15% of their income from cryptocurrency transactions. Currently, gains from cryptocurrencies are treated as goods and are subject to capital gains tax, starting at 15% for transactions below 5 million reais ($990,000). Transactions exceeding 30 million reais (around $6 million) are taxed at 22.5%, with lower tax rates applying to transactions of intermediate volumes.

This taxation framework would also cover transactions involving non-fungible tokens (NFTs) and cryptocurrencies, conducted by investors who transact more than 35,000 reais (about $7,000) monthly across all registered platforms. This threshold exceeds the minimum limit for stocks, which is presently set at 20,000 reais (approximately $4,000).

However, it remains unclear whether the proposed bill will alter these thresholds, potentially exempting crypto investors from taxes on small cryptocurrency transactions. The implementation of these changes is anticipated by 2025, pending approval by Congress, with the legislation having been under development for over a year.

This revised tax structure is part of the enhanced scrutiny that the Brazilian government is now applying to the cryptocurrency sector. In February, the Brazilian crypto tax authority identified irregularities in over 25,000 cryptocurrency tax filings, utilizing a combination of traditional and artificial intelligence methods to detect these issues.