Brazil has officially ended its previous crypto tax exemption, implementing a flat 17.5% rate on all capital gains from digital assets. This change marks a significant shift in the country’s approach to cryptocurrency and taxation, affecting both retail investors and institutional players.
Under the new rules, which took effect starting June 12, all cryptocurrency gains—regardless of size—are subject to the same tax rate. Previously, small-scale traders earning up to approximately $6,300 per month in crypto profits were exempt from income tax, with progressive rates applying to larger volumes.
The Brazilian government introduced these measures through Provisional Measure 1303 as part of its broader strategy to boost revenue from financial markets and tighten crypto oversight. As part of this overhaul, gains exceeding 35,000 Brazilian reals (~$6,300) are now taxed at a flat 17.5%, removing previous exemptions and progressive rates.
Notably, the expands the tax base to include self-custody wallets and foreign-held crypto assets. Investors are required to assess their taxes quarterly and can offset losses from the past five quarters; however, this window will be tightened from 2026 onward.
A key aspect of this reform is its impact on high-net-worth individuals who previously paid higher rates on large transactions—many may now see reduced effective tax burdens due to the uniform flat rate. Conversely, smaller investors face increased taxation on their gains, aligning Brazil’s crypto taxation more closely with traditional financial markets.
In addition to crypto-specific changes, Brazil’s government extended tax obligations to fixed income instruments like Agribusiness and Real Estate Credit Letters (LCAs and LCIs), which will now incur a 5% tax on profits. Similarly, taxation on betting revenue has risen from 12% to 18%, reflecting an effort to broaden fiscal revenue streams.
The move came after backlash over earlier proposals to hike the Financial Transaction tax (IOF), which were ultimately shelved following opposition from market stakeholders and Congress. The signals Brazil’s intent to create a more unified and transparent approach toward digital assets and related financial instruments.
In March, lawmakers proposed allowing crypto payments for salaries—up to 50% for Brazilian employees—and full payments for foreign workers or contractors under specific conditions approved by the central bank. This indicates ongoing interest in integrating cryptocurrencies into Brazil’s broader economy and labor market. [TWITTER_EMBED: 1666932978576797184]
Overall, Brazil’s recent regulatory reforms underscore a significant evolution in its approach to crypto taxation and oversight, aligning with global trends toward clearer rules for digital assets. As enforcement begins, investors should review their holdings—including offshore accounts—and adapt their strategies accordingly.
These developments highlight the importance of staying informed about changing regulations in major markets like Brazil, especially as countries refine their stance on cryptocurrencies for taxation and compliance purposes.
