Summary of Income Tax Declaration for Cryptocurrencies in Brazil

Here are the main points not to forget.
What are cryptocurrencies, according to the Federal Revenue Service?A cryptocurrency, according to the Federal Revenue Service, is the “digital representation of value denominated in its own unit of account, the price of which can be expressed in local or foreign sovereign currency, transacted electronically using cryptography and distributed ledger technologies, which can be used as a form of investment, instrument for transferring values ​​or accessing services, and which does not constitute legal tender”.
What are the tax obligations of investors?Cryptocurrency holders in Brazil have obligations to the Federal Revenue Service. They are:
Anyone who sold crypto assets below R$35,000 per month does not pay Income Tax, but must report the total earnings (if any) throughout the year in the “Exempt and Non-Taxable Income” form;
If monthly sales exceed R$35,000 and there is a profit, the investor must pay income tax and declare the profit on the “Capital Gains” form;
It is also necessary to inform the agency about monthly transactions that exceed R$30,000 (this rule only applies to those who operate outside of a national exchange);
Report the possession of digital currencies in the Income Tax return sent each year, if the total value of each digital asset exceeds R$5,000.
Who needs to pay cryptocurrency tax?Investors must pay tax on cryptocurrencies when they make a profit on trades that, in total, exceed the limit of R$35,000 in a single month, according to Federal Revenue rules.
“However, for income tax to occur from the perspective of individuals, it is necessary, first of all, that the cryptoassets be sold (term used to describe the sale). In practice, this means that the mere fluctuation in the price of the cryptoasset, without the effective realization of any gain by the holder, does not constitute an IR taxable event”
What are the Income Tax rates?There is a progressive tax schedule for cryptocurrencies, but this rule only applies to digital currencies traded on national exchanges.
YieldsAliquotas
Up to R$ 5 million 15%
Between R$5 million and R$10 million 17.5%
Between R$10 million and R$30 million 20%
Above R$ 30 million 22.5%
How to pay Income Tax?According to the Federal Revenue Service, tax collection on crypto earnings made in Brazil must be made by the last business day of the month following the transaction. In other words, João, who sold the cryptocurrencies in October, would have until November 30 to pay the tax on the profit of R$300,000, which would be 15%.
This payment is made through the Federal Revenue Collection Document (DARF), used to settle federal taxes. The DARF can be generated on Sicalcweb, an online system of the Federal Revenue Service. The code that must be entered is 4600, which refers to capital gains on the sale of assets.
What tax is charged for those who make international exchanges?In the case of profits from cryptocurrencies traded on international exchanges, the tax rules change. In this case, there is no exemption up to R$35,000. In other words, any profit earned is taxed at 15%.
Who should report transactions above R$30,000?Anyone who operates on an international brokerage firm or other platforms without a Brazilian domicile must report their cryptocurrency transactions to the IRS on a monthly basis, as long as the amounts exceed the limit of R$30,000 per month.
Operations carried out on a national exchange have already been declared as all monthly transactions involving crypto assets, regardless of the value, were mandatorily reported monthly to the agency by local brokers.
This declaration regarding monthly transactions above R$30,000 must be submitted on the Federal Revenue Service's e-CAC portal, in the “Collection and Inspection” and “Accessory Obligations” guides.
Who needs to declare cryptocurrencies?According to the IRS, digital currency investors only need to report the amount if the acquisition is equal to or greater than R$5,000 for each type of cryptocurrency.
It is necessary to inform the total acquisition cost of the cryptocurrencies, and not the current market value. Example: if the investor bought R$3,000 in BTC in January, another R$1,000 in July and another R$3,000 in November, the amount to be informed in the Income Tax return is R$7,000.
Where to declare cryptocurrencies?The Income Tax return must be made directly in the Federal Revenue program. Within this system, which can be downloaded from the federal agency's website, the taxpayer must declare digital currencies in the “Assets and Rights” tab, in “Group 08 – Cryptoassets”.
What if the person doesn't pay the tax or declare it?The Federal Revenue Service establishes penalties for individuals and companies that fail to comply with obligations related to the provision of information regarding crypto assets, whether due to omission, delay or presentation of inaccurate, incomplete or incorrect data. Fines vary according to the declarant's profile and the nature of the infraction.
In addition to administrative sanctions, the Federal Revenue Service may forward information to the MPF (Federal Public Prosecutor's Office) whenever it identifies evidence of crimes, such as money laundering or concealment of assets, so that the appropriate legal measures can be taken.