Taxes in Brazil - A guide of how to pay
Taxes in Brazil - Brazil is infamous worldwide for having one of the most complicated and time-consuming tax codes in existence. So, if you have just moved to Brazil, or if you are visiting for an extended amount of time, you may be wondering just how to go about paying taxes since there are many different types you need to pay. If you’re confused, this article will describe the Brazilian tax system and the steps that you need to go through in order to pay your taxes. Please note that this article is intended for individuals who are planning to pay Brazilian taxes; there are many separate taxes on corporations which are not included in this article.
Residency - Taxes in Brazil
If you’re not a resident in Brazil, you can be considered a tax-resident in Brazil if you hold a permanent visa, or if you have a temporary visa with an employment agreement. Additionally, you will be considered a tax-resident if you remain in Brazil for more than 183 days in any year (or if it’s been less than a year since you stayed in Brazil for 183 days in a 12 month period). If you’re considered tax-resident in Brazil, Brazil requires you to pay tax on all income, as well as file an annual tax return each April. Additionally, even if you’re not a Brazil tax-resident, you are required to pay tax on all Brazilian income: 25% on earned income and 15% on unearned income.
Types of Brazilian Taxes
Here are the main types of tax that you will be required to pay as a Brazilian tax-resident:
- Individual Income Tax
- Social Security Tax
- Tax on Rental Income
- Capital Gains Tax
- Inheritance/Wealth Tax
Individual Income Tax - Taxes in Brazil
All Brazilian income is subject to taxation in addition to all income (whether or not it was earned in Brazil) made by Brazilian residents. In general things like salaries, perks, stocks and bonds, and incomes from trading shares are taxable. In order to see in more detail what you will be taxed on and what you can get deductions for, go to this site or this site.
Social Security Tax
In Brazil, all employees and employers, as well as the self-employed are required to contribute to the Brazilian social security system. Usually, the employee’s contribution is between 8% and 11% out of their monthly salary (except for the self-employed who have had a business for more than three years, who pay 20%), and employers pay 12%.
Rental Income Tax
All nonresidents who earn income from renting Brazilian properties must pay a rental income tax at a flat rate of 15% (levied on the gross rent), regardless of the income. The only exception to this is that nonresidents residing in low-tax territories, who are taxed at a rate of 25%.
Taxes in Brazil - Capital Gains Tax
The sale of real property by nonresidents is taxed at a rate of 15%, except for those who live in special low-tax territories, who are taxed at 25% instead.
The Brazilian inheritance tax or the ITCMD is a state tax, meaning that each Brazilian state is free to establish its own rate, as long as it is under the federal maximum of 8%. This can become a very complicated process, but this site provides a detailed explanation of how the inheritance tax works in Brazil.
Taxes in Brazil - How to Declare your Income Online and Pay Income Tax
Brazil’s income tax is run through its Ministry of Finance, so to pay your income tax, you must work through the Ministry of Finance. Most likely, the easiest way to fill out and file the forms for your income tax is to do it online. To do so, simply download the program ‘Programa Gerador da declaração’, created by the Ministry of Finance. The program will allow you to calculate your taxes, fill in the forms, and file your returns. In order to declare your income tax online, go to this site. Furthermore, since the Brazilian tax system can be rather confusing to navigate, this site provides a very clear overview of the process, as well as the deductions and exceptions to the rules stated in this article.
All declarations of income tax and payments must be made before 11:59 PM Brazil Time on April 30th of each year, or you will be subject to late fees. At this point, the government will not accept forms that are mailed or filed on diskette. For more information about late payment, go to this site, this is in Portuguese.
How to Pay Federal Taxes
Taxes in Brazil - In Brazil, the document you need to use to file federal revenues or taxes is called the DARF. This is the document that all individuals and corporations must use, unless they are opting to use the Simple DARF, which allows for the unification of taxes with the contributions of small businesses.
The DARF, as shown in the image below, contains many numbered areas for you to fill out your information. You should include (numbers correspond to the numbered areas on the DARF form):
- Your name and telephone number
- Date of occurrence, using DD / MM / YYYY
- Number of registrations in the People (CPF) or the National Register of Legal Entities (CNPJ)
- The code of the tax being paid, which can be found in the Tax Schedule on this site
- Fill in this field as required by the RFB
- The payment deadline in the format DD / MM / YYYY
- The total amount of tax that you are paying
- The value of the fine
- The value of the interest, when it is due
- Sum of fields 7 – 9
- Collecting agent’s authentification