Brazil Ends Crypto Tax Break, Imposes 17.5% Flat Rate

Brazil has ended its tax exemption for small -scale cryptographic benefits, introducing a flat rate of 17.5% on all capital gains in digital assets. The new rule was announced as part of the provisional measure 1303 in the context of government pressure to increase revenues thanks to taxation on the financial markets.

So far, Brazilian residents who have sold up to 35,000 Brazilian reals (about $ 6,300) in crypto per month have been exempt from income tax. Beyond gains were gradually imposed, from 15% and reaching 22.5% for volumes greater than 30 million Brazilian real.

The new lump sum rate, which has entered into force from June 12, deletes all exemptions and also applies to all investors, regardless of the size of their transactions, according to a report by the local Portal of Bitcoin.

While small investors will now face higher tax charges, individuals could end up paying less. As part of the previous system, the major professions, those exceeding 5 million Brazilian reals, were imposed between 17.5% and 22.5%. With a uniform rate of 17.5% now in force, many large investors will see their effective tax rate drop.

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Brazil targets the self-leather and the crypto offshore

The provisional measure also widens the tax base. Cryptographic assets held in self-toilet portfolios and participations abroad are now included in the tax system.

According to the report, taxation will be assessed quarterly, investors authorized to compensate for the losses of the previous five quarters. However, from 2026, the window for the deduction of losses will be tightened.

The redesign extends beyond the crypto. Fixed income instruments, formerly exempt from income tax, such as agro-industry and mortgage letters (LCA and LCIS), as well as certificates of real estate claims and agro-industry (Cris et Cras), will now lead to a 5% tax on profits.

At the same time, the taxation on Paris revenues increased from 12% to 18%.

The Ministry of Finance introduced these changes after a long way on a previous attempt to increase the tax on financial transactions (IOF). This proposal was put aside after having faced strong opposition from the market and the congress.

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Brazil plans to allow Bitcoin salary payments

In March, Brazilian legislators presented a proposal that would allow employers to pay workers in part in cryptocurrencies like Bitcoin (BTC). Under the proposed rules, cryptographic payments cannot exceed 50% of the employee’s salary.

Complete Crypto payments would only be authorized for foreign workers or entrepreneurs and only under specific conditions set out by the Central Bank of Brazil. The bill prohibits fully paying wages in digital assets for standard employees.