Brazil’s Crypto Tax Reporting: What You Need to Know Starting August 1

Brazil’s New Crypto Reporting Mandate

Starting August 1, Brazil is getting serious about cryptocurrency taxes. Citizens are now required to report their crypto transactions to the Federal Revenue Department (RFB) — yes, it’s time to bring out the calculators and the tax forms! This initiative stems from Normative Instruction 1,888, which was rolled out in May 2019. At this point, you might want to start practicing your “crypto jargon” because it’s about to become a regular part of your vocabulary!

Who Needs to Report?

Under this new regulation, the reporting net is cast wide. Whether you are an individual, a company, or a brokerage, if you have dabbled in the world of digital currencies, you are in the reporting club. And what’s included in this cheerful new obligation? Everything from buying and selling Bitcoin to receiving donations, bartering, or even making withdrawals must be reported!

What’s the Reporting Timeline?

Procrastinators beware! The RFB requires that you submit your reports by the end of the month following the transactions. So, if you were busy trading in August, your report is due by the last business day of September. Think of it as a monthly ritual where you check in with the government to assure them of all your crypto transactions.

Who’s exempt? Not quite!

The rules also make it clear that local exchanges must report every transaction regardless of its value. But don’t think you can evade the rules just because of your love for foreign exchanges or peer-to-peer transactions. If you cross the barrier of 30,000 Brazilian reais (around $7,800) in those transactions, you better be ready to report! This is the sort of reminder that even hardcore crypto enthusiasts can’t ignore.

Penalties for Non-Compliance: Ouch!

If you were thinking of skirting these new regulations, you might need to reconsider. Failure to report can lead to a penalty ranging from 100 to 500 Brazilian reais, which translates to about $25 to $130. Additionally, if you fail to report correctly, you might face a penalty of 1.5% to 3% on the amount that you didn’t disclose. Ouch! It turns out, the fun of trading can become rather costly if you forget to file.

The Motivation Behind the Measure

The Brazilian authorities are not just being nagging tax collectors. They believe that the crypto market has attracted more investors than the B3, which is Brazil’s second-oldest stock exchange, boasting around 800,000 customers. This new measure is primarily aimed at combating illicit practices such as money laundering and tax evasion. Additionally, some industry leaders have raised concerns about people using cryptocurrencies as a loophole for tax evasion.