A cryptocurrency is a new way of exchange that uses encrypted information to permit one person to use it to buy goods. It is a virtual money that does not exist in real world.
This kind of money is decentralized and it does not need a central banking system to function. The control works through a blockchain, that is a public transaction database.
In Brazil, there is no regulation over cryptocurrencies but, despite of that, some taxes must be paid when a transaction takes place. For example, if somebody buys cryptocurrencies, they must pay income tax, when the virtual coin is sold. In this case, the basis of the tax is the difference between the buying and the selling values, if it is positive. Brazilian income tax is in Constitution, article, 153 III and in Brazilian Tax Code, article 43.
Another important information is that if somebody decides to give cryptocurrencies as a birthday gift, for example, the donation tax must be paid too. It is a tax the is charged by the states, with different legislations.
This tax depends on the state that the donation happened, and the value of the bitcoin donated. Sometimes, it is probably tax exempt, but it depends on the value involved.
On the other hand, despite of the legislative gap, cryptocurrencies transactions must also be taxed by the financial transaction tax, when it is bought or sold, as seen in the article 63 of the Brazilian Tax Code.
As we can see, the cryptocurrency is an asset, a virtual asset, that must be taxed as real one in Brazil.
The information provided in this article is for general information purposes only. The information is not intended to be comprehensive or to include advice on which you may rely. You should always consult a suitably qualified professional on any specific matter.
Gabriel Quintanilha is based in Rio de Janeiro. Gabriel has been an attorney at law since 2006. He is also Professor of Tax Law at Fundação Getulio Vargas – FGV and IBMEC. Author of books and articles published in Brazil.
The Impact of the Advance Transfer Pricing Agreements on Voluntary Compliance Tax administrations are required to help minimize the tax risks that affect the reduction on tax revenues. On the other hand, any tax administration should seek to encourage taxpayers voluntary compliance.Read more