Brazil Introduces Simplified Taxation for Cryptocurrency Gains
The Brazilian finance ministry has streamlined the taxation process for cryptocurrency earnings by replacing a tiered tax system with a uniform flat rate. As of June 12, Provisional Measure 1303 is in effect, eliminating the previous exemption that allowed residents to sell up to R$35,000 (approximately $6,300) in cryptocurrency each month without incurring taxes. Now, all capital gains from digital currencies are subject to a 17.5% tax rate.
Uniform Taxation for All Cryptocurrency Investors
Local reports indicate that the new regulation abolishes previous exemptions and treats all crypto traders equally. Previously exempt small-scale sellers now face a 17.5% tax on all their gains. Meanwhile, larger investors who previously paid up to a 22.5% rate for transactions exceeding R$30 million in a month may now experience reduced taxes at the flat rate of 17.5%.
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Implications for Small-Scale Crypto Traders
According to Portal do Bitcoin, under the outdated tax rules, an individual selling R$30,000 worth of cryptocurrency within a month would not owe any tax. With the new flat rate, this individual would be liable for R$5,250 in taxes, representing a significant increase for casual traders and hobbyists.
This adjustment impacts retail traders most significantly, as even minimal profits from trading Bitcoin (BTC) or Ethereum (ETH) are now uniformly taxed. While smaller traders face higher tax bills, larger investors might benefit from the changes, especially those trading in massive volumes.
Quarterly Tax Reporting and Loss Management
The overhaul affects all crypto holdings, including those in self-custody wallets or based overseas, with gains now being reported quarterly. Investors are allowed to offset losses incurred in the past five quarters, but starting in January 2026, only more recent losses will be eligible for offsetting. This change necessitates meticulous record-keeping and strategic timing for traders.
Expansion to Other Assets and Betting Industries
This taxation update isn’t exclusive to cryptocurrencies. Fixed-income securities such as LCAs, LCIs, CRIs, and CRAs are now subject to a 5% profit tax. Meanwhile, betting operators face an increased tax rate from 12% to 18%. The finance ministry has not disclosed the expected revenue increase from these changes, but lawmakers aim for a more consistent revenue stream following failed attempts to increase the Financial Transaction Tax.
Additionally, a separate legislative proposal could allow employers to pay up to 50% of salaries in cryptocurrency. Full crypto compensation would be restricted to foreign employees or contractors, adhering to strict guidelines. Standard employees’ wages are to remain in fiat currency, although contractors could receive their entire compensation in cryptocurrency if agreed upon by both parties.
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