Brazil Passes Bill to Tax Overseas Crypto Earnings

Last week, Brazil’s House of Representatives approved Bill 4173/23, which establishes tax rates for individuals with cryptocurrency earnings.

Specifically, the tax applies to those who hold these digital assets in foreign accounts. Now, the Senate will examine the bill for potential changes.

Deputy Merlong Solano first proposed the bill. After that, the National Congress Joint Committee approved it in August.

Currently, the bill focuses on upfront taxation for select funds, including popular digital currencies like Bitcoin.

Why is this important?

Many Brazilians trade cryptocurrencies on foreign platforms such as Binance, Coinbase, and Bybit.

According to available data, these foreign exchanges handle most of the trading activity in Brazil.

Another point to consider is the Legal Framework for Cryptocurrencies.

Enacted in June, this regulation states that all crypto service providers in Brazil must register and set up headquarters in the country.

However, this will only take effect after the Central Bank provides further guidelines.

Now, let’s talk about the market. Since the beginning of the year, Bitcoin’s value soared by over 105%, as per CoinMarketCap.

Other cryptocurrencies have also done well. For example, Solana saw a rise of 215% within the same period.

The bill outlines the following tax structure for earnings from cryptocurrencies held abroad:

• If you earn up to R$ 6,000 annually, you pay no tax.
• For earnings between R$ 6,001 and R$ 50,000, a 15% tax applies.
• Any earnings above R$ 50,001 get a 22.5% tax rate.

Interestingly, the bill doesn’t separate cryptocurrencies from other types of overseas investments.

Deputy Solano argues that this approach ensures fair taxation. He believes that Brazilians who invest at home should not pay more taxes than those who invest abroad.

Lastly, some experts have reservations. They argue that this bill changes earlier tax rules the Federal Revenue Service set.

They also mention that the new rates create an uneven tax landscape based on the location of the investment.

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