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The Brazilian IRS imposes some rules for those who buy and sell cryptocurrencies in Brazil. Check when – and how to declare not to be caught by the Lion

In May 2019, the Brazilian IRS issued a normative instruction obliging Brazilians to declare any type of operation carried out in crypto, such as purchase and sale, exchange, donation, transfer or withdrawal to exchange, for example.

As a rule, even if you don’t make a profit with cryptocurrencies, the investor needs to declare his assets whenever the value of each of them is equal to or greater than R$5,000. Taxes will be charged if the investment exceeds the monthly exemption limit of BRL 35,000.

Check, below, some tips from Victor Savioli, co-founder of Velotax – a company created to simplify the way of declaring income tax – on the declaration of cryptos:

1. Calculation
In the case of sales worth up to R$35,000, the investor is exempt from paying IR. Above this amount and profit, the tax levied is 15%. “It is not possible to offset losses with future profits”, explains Savioli.

2. Net earnings
If you have taxable income, the investor must use the GCAP (Inland Revenue Capital Gains program) to declare your capital gains/movables.

3. Assets and rights
Brazilians are required to declare purchases of crypto assets above R$5,000 for each asset. In a live, tax lawyer Daniel de Paiva Gomes, from the VDV Advogados office, explained what this means.

“In the Federal Revenue, assets are identified by codes. We have five codes: one specific to bitcoin; another for altcoins (ethereum, for example, would go here); the third code for stablecoins (those referenced in foreign currency); a specific code for NFTs; and another residual for other crypto assets”, he explains. 

Summing up
If the investor bought R$ 3,000 in bitcoin, he will not need to declare because he did not hit the R$5,000 trigger.

If you have BRL 3,000 in ether and BRL 7,000 in bitcoin, you will only have to declare bitcoin. Now, if you have BRL 5,000 in ether, you will need to declare both.

4. How to declare
When making the declaration, the taxpayer must access the “Assets and Rights” tab and inform the cost of acquiring the crypto-assets in reais, as well as the quantity – and where it is in custody.

The choice must be made in Option 8 – Cryptoassets, with the following codes:

• 01 – Bitcoin
• 02 – Altcoins
• 03 – Stablecoins
• 10 – NFTs
• 99 – Other cryptoassets

Update: The deadline for filing the IR has been extended until May 31. If you still have questions about how to make your own, click here to download our guide.