Monday, October 3

IRS clarifies exemption from cryptocurrency tax

The Federal Revenue Service of Brazil (RFB) clarified a doubt about the cryptocurrency tax, as published by the agency.

The consultation on the interpretation of the tax legislation is a mechanism offered as a service by the revenue to all Brazilian citizens who have doubts. In this way, inquiries can be made on a page of the federal autarchy, usually being sent to the General Taxation Coordination (Cosit).

When seeking an answer, interested parties should indicate which provisions of the legislation that raise doubts, as well as a detailed description of the case. In the case of cryptocurrencies in Brazil, one of the laws is normative instruction No. 1.888/2019, which obliges people and companies to declare their information to the control body.

Even after two years of its beginning, the doubt filed with the RFB shows that many Brazilians still do not know the details.

Internal Revenue Service clarifies doubts about cryptocurrency tax

This Thursday (23), the Internal Revenue Service of Brazil published on its page about the Cosit Consultation Solution No. 214, of December 20, 2021. Filed on its portal, the doubt asks the tax control agency for details with cryptocurrencies.

The question ended up being answered by Fernando Mombelli (General Coordinator), who explained more about the taxation of cryptocurrencies in Brazil. The question was about the exemption from income tax on operations and when this applied.

In response, the Federal Revenue Service of Brazil replied that the tax on cryptocurrencies is related to the capital gain obtained from the purchase and sale of these in the market. According to the autarchy, this occurs “even if the acquisition cryptocurrency is not previously converted into real or another fiat currency”.

In this case, “it is taxed by the income tax of the individual, subject to progressive rates, in accordance with the provisions of art. 21 of Law No. 8981, of January 20, 1995”.

Regarding the tax exemption for cryptocurrencies, the RFB’s general coordinator clarified that capital gains of R$ 35,000 or less than this amount should not pay taxes to the Brazilian state.

“The capital gain earned on the sale of cryptocurrencies whose total value of sales in one month, of all kinds of cryptoactives or virtual currencies, regardless of their name, is equal to or less than BRL 35,000, is exempt from income tax, 00 (thirty-five thousand reais).”

To answer the question of the Brazilian citizen, Fernando presented the legal provisions that the RFB uses to make these decisions, which can be checked in full by the page of the municipality.

It is important to remember that as the revenue only charges tax on capital gain, when a Brazilian has a loss in the purchase and sale transaction, this is also exempt from any taxation.

In a recent public hearing, an RFB tax auditor declared that operations with cryptocurrencies doubled in Brazil in 2021, with more taxes being paid by the population involved in this market.