Individuals are considered to be tax residents from the moment of arriving in Brazil if any of the following conditions are satisfied:
• They are involved in a local labor relationship.
• They hold a residence permit based on a statutory representative status.
• They hold a residence permit based on an investor status.
Other foreign nationals are taxed as nonresidents if they satisfy all the following conditions:
• They hold other types of temporary visas.
• They are not involved in a local labor relationship.
• They do not stay in Brazil for more than 183 days (consecutive or nonconsecutive) during any 12-month period.
A foreign national who remains in Brazil for longer than 183 days is subject to tax on his or her worldwide income at the progressive rates applicable to tax residents.
Before their departure from Brazil, tax residents should file the Departure Communication and the Departure Income Tax Return and obtain tax clearance to resolve their final liability for Brazilian income tax. Otherwise, these individuals may be considered resident for tax purposes, subject to Brazilian income tax on worldwide income during the 12-month period following departure. From the time the individual files under the departure process mentioned above, taxation as a nonresident applies to Brazilian-source income only.
Income subject to tax. The various types of income subject to tax are described below.
Employment income. Taxable employment income generally includes wages, salaries, and any other type of remuneration and benefits received by an employee from an employer. The treatment of employer-provided allowances varies, as described below.
Under Brazilian law, individuals are taxed under a cash-basis system. Payments from foreign sources, including bonuses or premiums related to services rendered, that are made before or after an assignment in Brazil (nontax resident period) are generally not taxable if received during a period when the individual is not a resident for tax purposes.
Reimbursements received by employees from employers for income tax liability are recognized as income on a cash basis. If employers make the income tax payments directly, the amounts paid are taxable to the employees.
Schooling allowances for an individual’s family members are considered indirect salary (a fringe benefit) and are taxed accordingly. For tax purposes, no distinction is made between amounts paid directly by the company or reimbursed by the company to an employee. Moving allowances are generally not taxable if paid by the employer.
Other allowances received by expatriates for work performed, including foreign service premiums and allowances for home leave, costs of living and housing, are subject to regular taxation.
However, under the Brazilian Labor Reform (Law #13,467/17), from 2017, the regular granting of meals, housing, clothing and allowances by an employer to the employee has a new interpretation. It is not considered as part of the individual’s compensation for labor law purposes, nor is it considered ordinary compensation for labor and social security charges purposes. In this sense, these amounts, although usually granted, are no longer included in the employment contract or constitute the basis of incidence of any labor charges (for example, payments to the Severance Pay Indemnity Fund [FGTS]; see next paragraph).
Employees are not taxed on obligatory monthly deposits equivalent to 8% of gross salaries that are paid by employers to the FGTS, which is administered by the government. The amounts deposited, plus interest, may be withdrawn tax-free by the employees under certain conditions, including retirement or dismissal without just cause.
In addition, an employee who is dismissed arbitrarily or without just cause is entitled to a tax-free indemnification from the employer equal to 40% of the employer’s deposits in the employee’s FGTS fund.
The Labor Reform introduced a significant change in the Consolidation of Labor Laws. The Labor Reform created the possibility of an employee and employer negotiating a dismissal by mutual agreement. In this case, the total indemnification decreases to 20% instead of the above-mentioned 40%, and the employee is also entitled to immediately withdraw 80% of the FGTS fund.
Self-employment income. Self-employed resident individuals are subject to tax on income from a trade, business or profession, in accordance with the ordinary progressive personal income tax table (see Rates).
Investment income. As of 1 January 2024, with the enactment of Law #14,754/2023 (originated from Law Project #4,173/2023), investments held abroad by individual tax residents in Brazil, such as financial investments in a broad concept, controlled companies, trusts and closed-end funds, will undergo changes in their form of taxation in Brazil. Investment income that falls under the scope this law will be taxed at a flat rate of 15%. This tax must be reported and paid annually through the individual Annual Income Tax Return (Declaração de Ajuste Anual), which is filed in the year following the receipt of the investment income. Although tax collection is annual, it is essential to calculate the tax due monthly throughout the calendar year for the purposes of the following:
• Reporting and calculating the tax due properly
• Financial planning for payment of the total tax due on an annual basis
In addition, under the new law, losses related to investments held abroad by an individual may be used to offset other gains if the losses are proven by suitable documentation and if the individual is a tax resident of Brazil. Local financial income and gains from fixed or variable interest financial investments are taxed exclusively at source. The rates vary from 15% to 22.5%, depending on the investment term. In general, financial institutions withhold the tax due and the earnings are credited net.
Net rental income and royalty income from Brazilian and foreign sources are generally included in taxable income and are taxed at the rates stated in Rates.
Brazilian dividends paid to nonresidents are exempt from withholding tax. Rental payments to nonresidents from Brazilian sources are subject to a 15% final withholding tax, and other payments to nonresidents from Brazilian sources are generally subject to a 25% final withholding tax, unless a lower double tax treaty rate applies. Financial investments should be analyzed on a case-by-case basis.
Taxation of employer-provided stock options. Employer-provided stock options are not subject to tax at the time of grant. The taxation of equity plans represents a gray area in Brazil. In general, stock options are taxable at the time of exercise. The difference between the market price and the strike price is considered a fringe benefit and is taxable as employment income at a maximum rate of 27.5%. For purposes of capital gains tax, when the employee sells the shares the cost basis is the market value of the shares at the time of exercise (the spread between the strike price and the market value has already been taxed as employment income). An important decision from the Superior Court of Justice was published in September 2024, indicating that only capital gains are due on stock options plans, provided certain criteria are met (case-by-case analysis is required). Under this scenario, for purposes of capital gain tax, when the employee sells the shares the cost basis is the exercise price paid at the time of exercise. From 1 January 2024, under Law #14,754/2023, a positive result from the sale of personal assets located outside Brazil is subject to tax at a flat rate of 15%, without exemptions. Positive foreign exchange variation computed on the gain is also subject to the 15% tax. Capital gains earned by individuals on the sale of stocks on the Brazilian market are exempt from tax if the sale proceeds are equal to or lower than BRL20,000 in the month in which the sale occurs.
Capital gains. Capital gains are defined as the difference between the sale price of an asset and its acquisition price.
Under Law #13,259/16, effective from 1 January 2017, gains realized on the sale of assets and rights of any nature (real estate, vehicles and shares) are subject to the following progressive tax rates.
If the sale price exceeds the abovementioned thresholds, the entire gain is taxed at the rates stated in the above capital gains table.
For the purpose of calculating and paying the monthly tax on net gains, the losses calculated on the market operations may be offset against the net gains realized in the same month or in subsequent months from other market operations.
C. Social security
Contributions. All individuals earning remuneration from a Brazilian source are subject to local social security tax, which is withheld by the payer. Contributions are levied on employees at rates ranging from 8% to 14%, according to the following progressive table, depending on the level of remuneration, with a maximum required monthly contribution of BRL908.85 (for 2024).
Employers’ contributions are calculated at approximately 26.8% to 28.8% of monthly employee’s gross compensation, without ceiling. These contributions consist of ordinary social security contributions (20%) plus a percentage from 1% to 3% corresponding to the risk of the activity to the health or safety of the employee and additional social security contributions known as “s” system contributions (approximately 5.8%).
Although Brazilian legislation establishes that a tax resident in Brazil is subject to the collection of tax on his or her global income, there is no express provision regarding social security and labor charges on employment-related income paid overseas (that is, the portion of split-payroll arrangements that is paid outside Brazil). Although the payment of Social Security and FGTS on the portion of the individual’s remuneration paid overseas is not expressly provided, Brazilian legislation also does not exclude the incidence of such charges. According to the Labor Reform, amounts paid, even if frequently, as fringe benefits, food allowances (not covered by its payment in cash), travel expenses, premiums and bonus allowances are not part of the employee’s ordinary compensation. Accordingly, the above payments might not constitute basis for the calculation of labor and social security charges.
The Greater Brazil Plan took effect in August 2011. This plan changed the pricing model of social security contributions in Brazil with respect to the part of the contribution levied by the employer. Under this plan, employers do not pay the ordinary social contribution at a rate of 20% of payroll. Instead, the social security contribution is calculated according to a flat rate applicable to the gross revenue of the company, which can vary from 1% to 2.5%, depending on the sector and the case. The reduction allowed by the Greater Brazil Plan applies only to the ordinary employer social security contribution of 20%. Law #14,973/2024 extends these actions until the end of 2024 for 17 sectors of the economy.
Self-employed individuals’ contributions are calculated at a rate of 20% of base salary. The base salary is fixed by the government, and its value depends on when the self-employed individual
Chile Mexico
Trinidad
China Mainland Netherlands and Czech Republic
Denmark
Norway
Peru
Ecuador Philippines
Finland
Portugal
Tobago
Türkiye
Ukraine
Uruguay
France Russian Federation United Arab
Hungary
India
Singapore Emirates
Slovak
Israel Republic
Venezuela
In addition, the Brazilian Federal Revenue and Customs Secretariat recognizes that although Germany, the United Kingdom and the United States have not entered into formal tax treaties with Brazil, these countries waive reciprocal tax treatment for individuals who may be subject to double taxation. As a result, tax paid in one of the countries may be offset against the tax due in the other on the same earnings if all of the following requirements are satisfied:
• Same tax nature
• Same calculation basis
• Absence of a tax refund in the future
From a Brazilian perspective, even if the above requirements are met, foreign taxes may only be offset against the carnê-leão system (see Section D); it is not allowed to offset foreign income taxes against Brazilian payroll withholding taxation.
F. Visit visas (tourist or business purpose) and other types of visas
With the exceptions for nationals of countries that border Brazil and nationals of countries that do not require visas of Brazilians, foreign nationals must obtain valid entry visas to enter Brazil.
The visa is an individual document granted by the Brazilian consulate abroad, which provides expectation of entry into Brazil. After the visa holder enters the country, the Brazilian Federal Police defines the applicable immigration situation. The validity of the visa could be up to 10 years, with a maximum stay of 90 days per entry. It can be extended for an equal period, depending on the nationality.
The resident permit is granted by the Immigration Council, and it may have a temporary or indeterminate validity. Such authorization is ratified by the Federal Police at the moment of the visa registration.
The validity of the temporary visa is unrelated to the validity of the residence permit.
Visit visas. Visit visas are intended for visitors who will stay for a short period of time, with no intent to establish their residence in Brazil. This visa type is aimed at those who intend to enter Brazil for the following reasons:
• Tourism
• Informative, cultural, educational or recreational activities
• Family visits
• Participation in conferences, seminars, congresses or meetings
• Digital Nomad
• Nationals of Community of Portuguese Language Countries (CPLP)
• Immigrant who has completed undergraduate or stricto sensu postgraduate studies in Brazil and is in Brazil
Some temporary work permits may be renewable for an additional equivalent period.
To obtain temporary work permits for their expatriate employees, employers must apply for authorization from the Immigration Council. The process and documents required depend on whether the work permit is based on a service contract between a Brazilian company and a foreign company (temporary technical work permit based on Normative Resolution No. 03) or whether the work permit is for an expatriate employee of a Brazilian company under a local work contract (temporary work permit based on Normative Resolution No. 02), such as a service contract.
For a temporary technical work permit, the contractor in Brazil initiates the procedure by applying to the Immigration Council. If the application is approved, the authorization is forwarded through the Ministry of Foreign Affairs to a designated Brazilian consulate abroad, where the individual designated in the service contract requests the issuance of the visa in the passport.
To obtain a temporary residence permit for real estate investment, a foreigner must buy a real estate property located in an urban area, with a total value equal to or greater than BRL1 million. This can be achieved through either of the following:
• The acquisition of constructed real estate properties
• The acquisition of real estate properties under construction
The minimum investment value may be up to 30% lower when acquiring properties in the north and northeast regions of the country. The interested party may prove the real estate investment by acquiring more than one property as the owner, provided that the total value of all properties amounts to BRL1 million.
To obtain a temporary technical work permit under a service contract, the immigrant individual and the company must provide certain documents and information, including the technical service agreement between the companies.
To obtain a temporary work permit based on a labor contract with a Brazilian company, the individual must file proof of education and professional experience in addition to the passport. The employer in Brazil must also file certain documents with the Ministry of Justice and National Security, together with an employment contract.
The Digital Nomad Resolution was published on 9 September 2021. It regulates the concession of temporary visa and residence authorization to an immigrant with no employment relationship in Brazil, whose professional activity can be carried out remotely. This immigrant is known as a Digital Nomad.
A Digital Nomad is an immigrant who, remotely and using information and communication technologies, is able to carry out his or her work activities in Brazil, in favor of a foreign employer.
Fine and penalties. Penalties are imposed in case of violations of the immigration rules. Breaches committed by individuals face fines ranging from BRL100 to BRL10,000 per occurrence and those that are committed by a legal entity may range from BRL1,000 to BRL1 million per breach. In the case of recurrence, these penalties may be increased from one to five times and may reach BRL5 million.