Digital nomad in 2024: what are the advantages and disadvantages in terms of taxation in Brazil?
After the 2024 pandemic, the number of digital nomads grew and, with it, so did the demand for Brazil, mainly due to its tropical climate and paradisiacal beaches.
In response to this demand, Brazil created the digital nomad visa in 2021, through CNIG Normative Resolution No. 45. In addition to meeting the requirements to qualify for the visa, digital nomads will also need to pay attention to tax issues.
This concern is pertinent given that anyone who obtains a visa in Brazil is automatically considered a tax resident in Brazilian territory.
Before we get into the taxes themselves, we should briefly explain what Tax Residency is.
What is Tax Residency?
Tax residence is nothing more than the place where an individual carries out their vital economic activities. This place can be their fixed residence or their habitual residence.
Digital nomads do not have a fixed residence, but they do have a habitual residence. Therefore, the assertion that, because they have no fixed abode, they don't have to declare their taxes anywhere is false.
It doesn't matter if the digital nomad travels every 3 months, every month or every week. Anyone, anywhere in the world, will have a tax residence somewhere.
If you declare taxes for two countries at the same time, you will have double tax residence, i.e. you will be subject to declaring and paying taxes for two countries at the same time.
Taxes in Brazil
The main tax that digital nomads will need to pay attention to is"Imposto de Renda de Pessoas Físicas" (IRPF) - brazilian income tax.
All those considered to be tax residents in Brazil are obliged to declare their IRPF annually, between March and May. See the IRPF table below (updated until 2024):
Annual Income | Rates |
Up to R$ 24.511,92 | - |
From R$ 24.511,93 to R$ 33.919,80 | 7,5% |
From R$ 33.919,81 to R$ 45.012,60 | 15% |
From R$ 45.012,61 to R$ 55.976,16 | 22,5% |
Above R$ 55.976,16 | 27,5% |
Although there is an annual amount from which a taxpayer can be exempt from income tax, this does not mean that he or she is exempt from submitting a tax return. It is necessary to file a tax return with the Receita Federal in order to ascertain the amount owed and ensure the taxpayer's right to exemption.
Those who fail to submit their income tax return to the IRS are committing an infraction and could be punished with a fine or even criminal prosecution.
Another important tax to note is the Urban Property Tax (IPTU). IPTU is a tax levied annually on those who own urban property of any kind.
Many digital nomads may choose to rent a property during their stay in Brazil. Generally, property owners put clauses in the rental contract stipulating that tenants will be responsible for paying the IPTU.
Therefore, in addition to worrying about tax issues in your country of origin, it is essential to carry out tax planning before immigrating to Brazil.
If you are interested in hiring professional legal services related to tax planning in Brazil, we are a law firm specializing in the subject. To do so, please contact us by e-mail: thyanipuppio@gmail.com or via WhatsApp.
Digital Nomad Visa
The digital nomad visa in Brazil is regulated by CNIG Normative Resolution No. 45.
The requirements for acquiring the visa are:
a) Visa Application Receipt - RER;
b) Passport valid for six months or more and a copy of the identification page;
c) Passport photo less than six months old;
d) Apostilled birth or marriage certificate;
f) Negative criminal record certificate issued by the competent authority of each country of residence of the applicant in the last 12 months;
g) Proof of residence dated within the last 12 (twelve) months, such as a certificate of residence, issued by the Parish Council, or invoices, bills or other documents in the name of the interested party and in which the address appears; or a Residence Permit for CPLP Citizens;
h) Travel insurance/health insurance valid in Brazil or Certificate of Medical Assistance in Brazil (issued on the basis of the Social Security Agreement between Brazil and Portugal);
i) Declaration by the applicant attesting to their ability to carry out their professional activities remotely;
j) Employment contract proving employment with a foreign employer; and
k) Proof of means of subsistence, from a foreign source of payment, in a monthly amount equal to or greater than US$1,500 (one thousand five hundred dollars) or availability of bank funds in the amount of at least US$18,000 (eighteen thousand dollars).
NOTE: the Brazilian consular authority may require other documents.
Alert for Double Tax Residency
It is important to note that choosing to reside in Brazil does not mean that the digital nomad will no longer have ties with the tax authorities in their country of origin.
Therefore, the digital nomad may have dual tax residency and will need to declare and pay their taxes to two countries at the same time. In other words, the digital nomad will have to serve "two masters".
Most countries around the world, including Brazil, adopt the principle of universality of income. This means that taxpayers must declare all their income, regardless of its origin.
The mistake many people make is to only declare earnings from their country of origin to their country of origin, and earnings from Brazil only in Brazil. However, this is not just a mistake: it is a crime of tax evasion.
In addition to the risk of being held criminally liable for tax evasion, the taxpayer could be charged for the amounts evaded plus interest and monetary correction.
Hence the importance of knowing the legislation of the country to which you are immigrating, even temporarily. In addition to simply knowing about it, it is important to carry out tax planning in order to avoid any problems with the tax authorities of the countries (of origin and immigration).
If you are interested in hiring professional legal services related to tax planning, we are a law firm specializing in the subject. To do so, please contact us by e-mail: thyanipuppio@gmail.com or via WhatsApp.
