Brazil Implements Sweeping Crypto Tax Reform with 17.5% Flat Rate

• Brazil eliminates crypto tax exemptions for traders, implementing a uniform 17.5% capital gains rate
• Self-custody wallets and offshore crypto holdings are now subject to Brazilian taxation requirements

Brazil has completely reformed its taxation of cryptocurrencies, removing the exemption of small traders and introducing a single rate of 17.5% on capital gains. The reform, which takes effect on June 12 via Provisional Measure 1303, is the latest initiative by the government to boost revenue generated by activities in the financial market.

In the past, crypto investors in Brazil were exempt from monthly sales of 35,000 Brazilian reals (about 6,300 dollars). Transactions that were above this threshold were subject to progressive taxation of 15 to 22.5 %, depending on the volume. The maximum rates were charged on trades that exceeded 30 million Brazilian reals.

Significant Transformations Alter the Crypto Investment Landscape

The new flat-rate regime does away with all the existing exemptions, and thus, investors in all sizes of transactions are affected equally. The small-scale traders are subjected to their initial compulsory taxation, and the high-net-worth investors can enjoy lower rates. Big deals that were earlier taxed at 17.5-22.5 % are now at the standardized 17.5 %.

The reform greatly widens the jurisdiction of taxation of crypto in Brazil to the non-traditional exchange-based trading. The domestic tax framework now includes self-custody wallet holding and offshore investments in cryptocurrencies. This growth closes the regulatory gaps that existed in the past, which were enabling some crypto activities to fall outside the Brazilian tax system.

The tax will be assessed every three months, and the investors will be allowed to offset losses in the last five quarters. But starting in 2026, the deduction period on losses will be reduced, which may impose higher taxation on unstable crypto portfolios.

The cryptocurrency transformations are part of the overall reforms in the financial markets. The tax-exempt fixed-income instruments, such as Agribusiness Credit Letters and Real Estate Receivables Certificates, are now subject to 5% profit tax. There was also an increase in the taxation of the betting revenue, which rose to 18 %.

These steps came after the government had shelved its plans to increase the Financial Transaction Tax due to stiff opposition by the markets and Congress. The other one is to attack particular asset classes instead of general transaction fees.

In the meantime, Brazilian legislators are still discussing the bill that will allow paying part of the salary in cryptocurrency, and Bitcoin payment should not exceed 50% of the salary. This suggestion represents the changing attitude of Brazil towards the introduction of cryptocurrencies into its financial system, which is aimed at finding the golden mean between innovation and control and the generation of income.

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