Brazilian Income Tax Return for Individuals (DIRPF)

Brazilian Income Tax Return for Individuals (DIRPF) 

The deadline to file the Brazilian Individual Income Tax Return (DIRPF) referring to the year 2020 ends on April 30, 2021.  

To avoid potential issue in the future, taxpayers should pay attention to the new rules introduced by the tax authorities this year, as well as specific rules related to expatriates in Brazil and Brazilians with investments abroad. Below are some of the main points to be considered:

Expatriates in Brazil

Foreigners who qualify as tax residents in Brazil are also required to submit the DIRPF. This group includes, among others, those who arrived in Brazil in 2020 with a permanent visa, those who entered the country with a temporary work visa as part of an employment contract or who stayed for more than 184 days (consecutive or not) in Brazilian territory. Those individuals are also required to file the DIRPF by the end of April 2021. 

Bank accounts and financial investments abroad: how to declare and calculate the income tax due?

Brazilian Residents with bank accounts and financial investments abroad must pay attention to the specific rules applicable for the declaration of these assets in the country, thus avoiding risks of assessment by the Brazilian tax authorities.  

Among these rules, there is a requirement to control the currency exchange variation of foreign bank accounts, to verify the equity variation resulting from exchange rate fluctuations (which are not taxable in the case of current accounts). On the other hand, income (such as interest and dividends) from financial investments abroad and made available to individuals, are taxable in the month of their receipt, via the Carnê-Leão system, and must be included in the DIRPF regardless of whether the funds are repatriated to Brazil. 

Also, in connection with investments abroad, Brazilians who carried out the sale, liquidation and / or redemption of investments abroad must pay attention to the correct taxation of capital gains eventually earned. The applicable tax rates range from 15% to 22.5% and must be paid until the last day of the following month when the transaction occurred. Different rules also apply if the investment was made in local or foreign currency. 

Lastly, specific rules also apply to investments abroad acquired by individuals in the conditions of non-residents in Brazil.  

Investments abroad: Declaration of foreign assets and investments to the Central Bank

In addition to the DIRPF, Brazilians with investments outside the country should verify whether they also need to submit the Declaration of Brazilian Capitals Abroad (CBE) to the Central Bank.  

Individuals owning assets and investments abroad in amounts exceeding US $ 1 million on December 31, 2020 are required to file the CBE (new minimum limit established by the Central Bank as of 2020). The deadline for filing the declaration ends on April 5, 2021

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