Understand how the payment of Income Tax works for expatriates in Brazil.
Foreigners residing in Brazil, as well as Brazilians living outside the country, must be aware of the rules related to the Income Tax of their country of origin and of the new tax residence.
Expatriates living in Brazil are required to file a tax return and pay taxes in the country.
Below, we answer some common questions on this subject.
In what situation is the foreign worker obliged to declare income tax in Brazil?
All people considered tax residents by the Federal Revenue must file the Income Tax Return in Brazil.
For the worker, the declaration becomes mandatory when establishing an employment relationship or permanent visa in the country. Also, for those who are in the country for more than 183 consecutive days in a year.
When should the expatriate declare the Income Tax in Brazil?
The mandatory declaration of income tax in Brazil depends on the type of visa that the migrant has, or even on his intention to establish or not reside in the country.
The individual who has a temporary visa with a work contract needs to perform the due accountability from the date of his arrival in the country.
For those who have a temporary visa without an employment contract, the income tax declaration is required if they stay in the country for a period longer than 183 days in a 12-month interval.
In this case, it is necessary to make a declaration in the IR of the income obtained on a worldwide basis, as well as goods and obligations acquired anywhere in the world.
What is and when “carnê-leão” must be paid?
The carnê-leão is a mandatory monthly payment of the IR made by the taxpayer who receives income that is paid by an individual or coming from abroad. It could be alimony payments, workers without a formal contract or receipt of rents.
The general rule is the following: anyone who receives from individuals without direct tax at source must use the carnê.
In this way, the booklet works as a document where the person registers their income received from these sources every month. Its declaration is mandatory for those who earn more than R$1,903.38 per month. Then, through the registration, the tax amount is calculated.
Is the tax rate applicable to Brazilians?
Yes. The rules are the same applied to Brazilians.
What are the fees and deductions?
Several countries in the world have higher rates than those used in Brazil. Here, the maximum percentage is 27.5%.
However, due to the small possibility of deducting expenses, migrants end up considering this high tax burden.
In addition, we have the consideration of health, education, security and other services. These, in other countries, tend to be much higher.
Capital Gain Tax Calculation
The calculation of the Income Tax on the capital gain of a non-resident in the country is levied at a rate of 15% to 22.5%, depending on the value of the gain.
Non-residents of countries with favored taxation, the so-called “tax havens”, are subject to the 25% rate.
What information must be declared?
The company responsible for preparing the declaration for expatriates must cover the following factors:
- Preparation and delivery within the deadline of the Annual Income Tax Return;
- Review of the Annual Declaration of Individuals;
- Annual Statement of Estate and Closing;
- Rural Land Tax Declaration, if applicable;
- Exit process from Brazil;
- Issuance of Clearance Certificates of Federal Debts and Taxes and Active Federal Debt;
- Obtaining the Certificate of Displacement;
- Issuance of the Tax Residence Certificate;
- Analysis of existing International Agreements;
- Calculation of Tax Equalization.
Foreigner in Brazil and exit obligations
Another issue that needs the expatriate’s attention to take the necessary measures is regarding the definitive departure from the country.
When the individual decides to leave the country, he/she must follow the necessary procedure to avoid being taxed anymore. This involves submitting to the IRS a document called the Definitive Departure from the Country.
It is a digital document available on the Federal Revenue website.
In addition, it is necessary to deliver the Definitive Exit Declaration to replace the Annual Adjustment Declaration. The deadline for submission is until the last business day of April of the calendar year following the departure or the representation of non-resident status.
After this process, calculations are carried out to analyze whether there are still taxes owed in the country so that the migrant is fully up to date with the Brazilian Tax Authorities.
We can help!
As you can see in this article, the tax obligations in force for professionals who come from other countries to work in Brazilian companies can be quite complex.
Because of this, the best way out is to count on the support of a specialized consulting company. In order to ensure compliance with all legal requirements, within the deadlines stipulated by regulatory bodies.