- Brazil ends crypto tax exemptions and sets a flat 17.5% capital gains tax on all transactions, impacting small and large investors alike.
- New rules apply to both offshore holdings and self-custodied wallets, with a quarterly reporting requirement enforced nationwide.
- Legislative proposals seek to introduce Bitcoin into national reserves and allow cryptocurrency payroll for expatriates and foreign workers.
Brazil has officially imposed a flat 17.5% capital gains tax on all cryptocurrency transactions, ending a long-standing exemption for smaller investors. Provisional Measure 1303, which made the new law effective on June 12, liberalizes the existing system, which has been a tiered system with larger gains subject to higher taxes.
In the past, investors were able to get up to 35000 reais of crypto profits per month without paying taxes. Any additional gains were charged progressively at a rate between 15% to 22.5%. All gains, including small gains, are subject to the flat tax, which raises the tax burden on small traders. The new flat rate could, however, have some advantages for the high-volume traders who could be charged higher rates.
Rules Apply to Offshore and Self-Custody Holdings
The updated tax structure broadens its reach. It now includes digital assets held outside the country and those stored in self-custodied wallets. Investors must report gains quarterly. They can still offset losses, but only from the previous five quarters. From 2026, the loss-carryforward period will be shortened, reducing options for managing tax liabilities.
The new rules hold all taxpayers engaged in the transaction of digital assets to file their tax statements on a quarterly basis. This is in a bid to strengthen the control and boost tax collection. It is an indication of a larger plan to include the use of cryptocurrency in the financial regulation of the country.
Congress Reviews Bitcoin Reserve and Payroll Bills
While tax policies tighten, Brazil’s legislature is examining two crypto-related proposals. One would allow the government to allocate up to five percent of the national treasury to Bitcoin. If approved, it would mark Brazil as the first G20 country to use Bitcoin reserves through legislation.
Another proposal, PL 957/2025, suggests allowing employers to pay salaries in cryptocurrency. Domestic workers would still receive half their earnings in Brazilian reals, while foreign employees could be fully compensated in crypto. Employers would need to disclose all crypto payments and provide resources on digital asset use and fraud prevention.
