Paying taxes for Digital Nomads in Brazil: what is it like and what taxes do digital nomads have to pay in Brazil?
Demand for Brazil by digital nomads has grown exponentially, especially during and after the COVID-19 pandemic.
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 any type of 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 worry about when acquiring a visa is "Imposto de Renda sobre Pessoa Física - (IRPF)".
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 2023):
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% |
According to the table above, if a taxpayer earns up to R$24,511.92 annually, they are exempt from income tax. However, this does not mean that you are exempt from submitting a tax return. It is necessary to submit the declaration to the Receita Federal do Brasil in order to determine the amount due to ensure the taxpayer's right to exemption.
Those who do not submit their income tax return to the Receita Federal commit a tax offense by failing to comply with an obligation imposed by law.
Another important tax to note is the "Imposto Predial e Territorial Urbano - IPTU". IPTU is the 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 by WhatsApp.
Digital Nomad Visa
The digital nomad visa has existed in Brazil since 2021 and 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 of at least US$18,000 (eighteen thousand dollars).
It is important to note that the Brazilian consular authority may require other documents.
Note: according to art. 2 of Normative Instruction no. 208/2002, once a digital nomad enters the country with a digital nomad visa, they will automatically be classified as a Tax Resident. This information will be communicated immediately to the Brazilian Federal Revenue Service.
Alert for Double Tax Residency
It's important to note that choosing to reside in Brazil, even temporarily, doesn't 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. As well as simply knowing about it, it is important to carry out a tax planning in order to avoid problems with both the tax authorities (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.
