Brazil: The importance of tax regularity for expatriates

published on 26 February 2024 | reading time approx. 1 minute

Currently, we live in an extremely globalized era marked by the expansion of corporate operations. As a result, the movement of professionals has become a common practice among countries.

Upon arrival in Brazil, the expatriate must maintain fiscal regularity, ensure compliance with tax laws, and be up to date with the tax returns to be submitted to the tax authority to avoid fines and preserve financial reputation. See below who is subject to tax obligations:

Who must pay the monthly Carnê-Leão tax?
Expatriates who are residents of Brazil and earn income outside Brazil are subject to mandatory monthly tax payments.

The tax calculation will be based on income from foreign sources such as salaries, pensions, rents, interest payments, and changes in capital such as the purchase and sale of goods, cars, high-value objects and real estate.

Who must file an annual income tax return?
As a rule, residents in Brazil are obliged to declare their income tax every year. And for tax purposes, foreign citizens who stayed in Brazil for more than 183 days in 2023 are considered residents.

There are also other visas, such as the work visa, which makes the foreigner a Brazilian tax resident the moment they enter the country.

What can be deducted in the annual Brazilian income tax return?
Some expenses may be deductible from the income tax base, such as: health insurance, alimony, social security, or private pension contributions (paid to Brazil), education and expenses for dependents.

In addition, income tax paid in a foreign country with which Brazil has an international agreement, treaty or convention allowing offsetting may reduce the amount of tax due in Brazil, provided it is not offset or refunded abroad, following reciprocal treatment.

Penalty for late submission of the annual income tax return?
The fine for late filing of the return is applied when the taxpayer who is obliged to file it submits it after the legal deadline.

The fine is 1 percent per month, calculated on the amount of income tax due, even if you have already paid the tax. The amount of the fine can vary from a minimum of 165,74 BRL to a maximum of 20 percent of the income tax due.