• Brazil introduced a new law taxing overseas crypto assets for citizens, setting a 15% levy from 2024, aiming to generate $4 billion in taxes by then.
• The legislation sparks discussions on enhancing regulatory clarity in crypto taxation, while globally, countries like Spain are also tightening regulations on citizens’ overseas crypto holdings.

Brazil’s President, Luis Inácio Lula da Silva, has signed a bill imposing taxes on crypto assets held abroad by Brazilian citizens. The newly enacted law, signed on December 12 and officially published in the Diário Oficial da União on the following day, is slated to come into effect from January 1, 2024.

Implications of Brazil’s New Crypto Tax Legislation

Under the legislation, Brazilian taxpayers will face a tax rate of up to 15% on profits and dividends from various investments, including cryptocurrencies, held outside the country. This tax not only applies to crypto gains but also encompasses earnings from investment funds, real estate, and trusts held overseas.

The government aims to collect an estimated 20 billion reals ($4 billion) in taxes by 2024. Those initiating payments in 2023 receive an incentive by paying an 8% levy on all earnings accrued until 2023, with the first instalment due in December. Starting from 2024, the tax rate will stand at 15%, with overseas profits up to 6,000 Brazilian reais ($1,200) exempted from taxation.

Insights from Industry Experts

João Carlos Almada, the controller at Transfero, a Brazilian stablecoin issuer, highlighted that while taxation on digital assets is not entirely new in Brazil, certain elements of the law require clarification.

Almada mentioned the need for better definitions regarding aspects such as compensating for losses during the period, drawing parallels to tax regulations for stock assets. He anticipates ongoing regulatory evolution to stimulate discussions for increased market transparency, thus enhancing overall credibility.

Global Trend: International Scrutiny on Overseas Crypto Holdings

Brazil’s move follows a global trend as nations increasingly focus on regulating the overseas crypto holdings of their citizens. In November, the Spanish Tax Administration Agency directed attention to citizens’ obligations regarding declarations on cryptocurrencies held abroad. However, Spain’s requirement primarily targets individuals with assets exceeding 50,000 euros (approximately $55,000) in the digital asset realm.