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2016 Brazilian
IAS Folio
Country:
Brazil

Introduction: International assignees working in Brazil


Step 1: Understanding Individual basic tax principles 04
Step 2: What to do before arrival in Brazil 10 
Step 3: What should be done upon arrival in Brazil 12
Step 4: Understanding employment costs 14
Step 5: What should be done when leaving Brazil 18
Appendix A: Types of Visa – working in Brazil 20
Appendix B: Tax rates for 2014 21
Appendix C: Agreements and Treaties 22
Appendix D: Frequently asked questions 23

2016 Brazilian IAS Folio | PwC 1


Introduction:
International assignees
working in Brazil
The purpose of this folio is to offer other planning opportunities, as
a general background with respect well as key legislative information.
to income, social security and other International assignees need
tax implications of cross-border this kind of information to make
transfers. This folio is a “must read” crucial decisions regarding their
for any individual contemplating assignments. Our folio helps
assignees in avoiding tax related
or embarking on an international problems both before they arrive in
assignment from or to Brazil. In their assigned country and after they
addition to the “must know” tax return home.
information, our folio explores
other issues of great relevance to If we can be of any further
expatriate employees, including assistance, please contact our PwC
matters related to employment and Brazil Team, as shown below:

PwC Brazil Partner PwC São Paulo PwC Campinas


Flavia Fernandes Carlos Rogerio Marisa Paleari
flavia.fernandes@pwc.com carlos.rogerio@pwc.com marisa.paleari@pwc.com
Fernanda Tassitano Lineu Pastana
fernanda.tassitano@pwc.com lineu.pastana@pwc.com

PwC São José dos Campos Larissa Cassel Reinaldo Medina


larissa.cassel@pwc.com reinaldo.medina@pwc.com
Tomaz Balthazar
tomaz.balthazar@pwc.com Fabiana Christians Renata Araújo
christians.fabiana@pwc.com renata.araujo@pwc.com
Rodrigo Gouvea
Graziele Daminelli
rodrigo.gouvea@pwc.com
graziele.daminelli@pwc.com
PwC Curitiba Daniela Nakano
Tomaz Balthazar daniela.nakano@pwc.com
tomaz.balthazar@pwc.com Carolina Fraga
carolina.fraga@pwc.com
Manoella Sade
manoella.sade@pwc.com Priscilla Rama
priscilla.rama@pwc.com
PwC Rio de Janeiro
Tomaz Balthazar
tomaz.balthazar@pwc.com
Ademicio Paulino
ademicio.paulino@pwc.com

2016 Brazilian IAS Folio | PwC 3


Step 1:
Understanding
Individual basic
tax principles

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The scope of Brazilian Determination of residence • Holders of temporary visas
without an employment
taxation 3. The following individuals contract with a Brazilian
1. The Brazilian taxation system are considered residents for entity, after completing
is based on the Federal Brazilian tax purposes: 183 days of actual
Constitution enacted in 1988. • Brazilian citizens living in physical presence in Brazil
Personal income tax and social Brazil; (consecutive or not) within
contributions are collected only any given period of twelve
by the Federal Government. • Brazilian residents living months.
There is no State or Municipal abroad for the first twelve
months subsequent to their 4. On the other hand, the following
tax on an individual’s income.
departure, in cases where no individuals are considered non-
Capital gains are taxable when
communication is delivered residents for tax purposes:
assets or rights are sold, but
there are certain exemptions and to the • Brazilians living overseas, as
reductions, depending on the tax authorities; of the date of departure (if the
selling price, length of time the • Naturalized foreign nationals Exit Procedures are followed
asset was held and if the asset living in Brazil; accordingly);
was purchased abroad while
under a non-resident status. • Foreign nationals with • After 12 months of departure
permanent visas, as of the (if the Exit Procedures are not
2. As a general rule, income tax date of entry to Brazil with followed appropriately); and
is payable by all Brazilian tax such visa; • Foreign nationals holding
residents on their worldwide
• Holders of temporary visas to temporary visas without an
income. Non-resident individuals
work under an employment employment contract with a
are subject to Brazilian tax only
relationship with a Brazilian Brazilian entity during their
with respect to their Brazilian
company or act as a doctor first 183 days (consecutive
sourced income. Please note
under the “Mais Médicos” or not) of actual physical
that source is determined
Program, as from the date of presence in Brazil, within a
by the location of the payer.
arrival. period of 12 months.
However, in certain instances,
the Brazilian income tax burden • Nationals from Mercosul
may be reduced for individuals States (Argentina, Paraguay Methods of calculating tax
who are assigned to countries and Uruguay), as well as 5. Different rules apply to taxing
which have a ratified tax treaty from Bolivia, Chile, Peru the income of an individual,
with Brazil. and Colombia, who claim depending on his/her
temporary residence on the residence status.
Note that income from an effectively date the work relationship
connected Brazilian source will be is established or on the date 6. Income tax is payable on the
taxed in accordance with local rules. permanent residence is individual’s worldwide income,
achieved. Although Ecuador on a cash basis, regardless of
is a signatory country, the whether or not the income is
residence agreement is not remitted to Brazil. Earnings
applicable yet; and from employment, including
fringe benefits, capital, pensions,
and rentals are considered
taxable income.

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Income tax Investment income Capital gains
7. Resident taxpayers are 10. Investments maintained in 13. The capital gain tax is applicable
automatically subject to Brazil, for resident or non- on the sale of real estate,
withholding tax on their income resident taxpayers, are taxed vehicles and objects of art
derived from Brazilian sources separately from income derived and collectibles sold in Brazil
(entities located in Brazil, from employment. or abroad; on stocks sold in
whether or not the service is foreign markets, as well as on
performed in Brazil) at monthly interest income received from
progressive tax rates (see
Dividends investments located offshore.
Appendix B) of 7.5%, 15%, 11. Dividend income received Non-residents are only subject
22.5% and 27.5% and applicable from Brazilian companies to capital gains tax on the sale
standard deductions.  relating to profits derived from of assets located in Brazil. As
1996 onwards is tax exempt, from January, 2017 the capital
8. Income derived from non- provided the dividends arise gain calculated on the excess
Brazilian sources or from any from profits already taxed on a of the sale price over the cost
local individual payer, that corporate level. of the asset sold should be
is to say, when that income taxed according to progressive
would not have been subject Dividend income received from tax rates of 15%, 17,5%, 20%
to withholdings at source, investments made abroad is and 22,5%. However, for tax
the beneficiary must compute subject to mandatory monthly residents in Brazil, there are
and pay income tax through income tax payments (“carnê- certain exemptions applicable
the compulsory monthly tax leão”) – except in some specific that must be observed.
(“carnê-leão”), subject to the situations in which the tax treaty
same progressive tax rates above must be observed.
mentioned. Late payment shall Equity income 
generate penalties and interests 14. Stocks sold in Brazilian markets
accordingly.   Interest or in the over the counter market
12. Interest received from savings (OTC) are subject to equity
9. During the period of non-
accounts held in Brazil is tax income taxation. Gains on the
residence, Brazilian sourced
exempt. However, interest sale of stocks in the Brazilian
income is subject to the
received from any other stock exchange will be treated
withholding tax system at a flat
investments held in Brazil, as equity income and will be
tax rate of 25% (no deductions
such as investment funds, is taxed at a flat 15% rate, except
are allowed). Rental income
taxed exclusively at source for day-trade transactions which
received from a property located
(withholding). Interest received are taxed at 20%. There are also
in Brazil is taxed at 15% except
from investments abroad is also certain exemptions applicable
for individuals residents in a
subject to taxation in Brazil that must be observed.
country considered tax haven,
(capital gain tax).
by the Brazilian tax authorities,
who will be taxed at 25%.
Offshore income is tax exempt,
and there is no obligation to
complete and file a Brazilian
income tax return.

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Stock options Tax return Annual tax deductions
15. As a general rule, the income 18. A Brazilian resident must 21. The following deductions
tax on stock options is due by prepare an annual income tax are allowed in computing an
individual residents in Brazil return to adjust his/her liability individual’s annual taxable
only at the time of the sale of the on a given tax year, which income, supported by
shares, where the sale results in coincides with the calendar information such as the name
a capital gain, unless the bargain year. The return must be filed and taxpayer number of the
element has compensation up to the last business day of recipient of the payments:
nature. In this latter case April of the following year, and
income tax will also be due no extensions of time to file are • Dependents (a specific
upon exercise. In case there is allowed. amount per dependent is
a recharge of the costs of the established each year by
shares to the Brazilian entity, the 19. The purpose of the income tax the tax authorities). Any
corresponding amounts will be return is to adjust the amounts dependents aged 14 years
treated as employment income paid during the year and to old or more must hold a CPF
and, hence, subject to taxation assess the annual tax liability. number to be considered as
at source (withholding).   In that return, information a dependent for Brazilian
on all income received and all income tax purposes;
income taxes paid or withheld
Double taxation relief • Medical expenses, in Brazil
during the year must be
or abroad (there are certain
16. As far as taxes on income reported, along with specific
expenses that are not
derived from foreign sources allowed deductions.
deductible);
are concerned, Brazil has
double taxation agreements • Tuition expenses, in Brazil
Married Persons or abroad, limited to a
with several countries to avoid
income being taxed in both 20. When both spouses have certain specific amount
countries (see Appendix C).  income, an election may be established each year by the
made to file separate tax tax authorities (applicable to
17. Brazil will also grant reciprocal returns and pay tax separately, the taxpayer and dependents
tax treatment, within or to have a joint assessment per year);
established limits, to certain so that their income can
• Alimony payments, in Brazil
countries that allow foreign tax be aggregated in the tax
or abroad, provided that the
credit. The tax authorities have calculation.
divorce decree is ratified by
officially recognized the United
the Superior Court of Justice
States of America, the United
in Brazil;
Kingdom and Germany as
countries with which reciprocal • Brazilian official social
tax treatment is allowed. security contributions;
• Payments to private pension
plans (if the entity is located
in Brazil) made by the
beneficiary and for his/her
dependents, limited to 12%
of gross taxable income.
Given the different types of
such pensions in Brazil, each
case needs to be individually
analyzed.

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Some deductions such as Standard Deduction Payment of tax
dependents, alimony for
dependents and Brazilian official 22. In lieu of the above itemized 24. An individual’s tax liability is
social security contributions are deductions, taxpayers may also generally payable on a cash-
allowed on a monthly basis. take the benefit of a standard basis system. Individuals are
annual deduction (20% of required to pay taxes monthly, as
The taxpayer may also deduct, gross taxable income, limited prepayments of the annual tax
from the tax due and not from to a certain specific amount liability. If the Brazilian annual
the calculation base, established each year by the income tax return shows a tax
the following: tax authorities). The option underpayment, the payment
for a standard deduction is not must be made at once or in up
• Donations made to official allowed on exit returns. to eight installments, due on the
Government, State and/or last business day of April and of
Municipal child care entities; the succeeding months.
Assets and Liabilities
• Donations made to National,
State and/or Municipal funds 23. The Individual Brazilian Income
Tax Return includes schedules
Assessment
for the elderly;
for reporting assets and 25. If the return shows a tax
• Certain qualified liabilities. Taxpayers are required overpayment, the taxpayer will
contributions to cultural and to report their significant assets, have to wait until the Federal Tax
sports projects; such as houses, apartments, Authorities process the income
• Investments in audiovisual land, cars, boats, jewelry, tax return and pay the refund. In
activities. paintings, checking accounts, case the Federal Tax Authorities
savings accounts, investments, do not agree with the taxpayer’s
Note, however, that those stocks, etc., regardless of where assessment, they may question
deductions are limited to 6% of the assets are located (Brazil the amounts declared in the
the tax due. and/or abroad). Acquisition return. Therefore, the taxpayer
• Contributions made by the prices, as well as dates of should retain the receipts for
taxpayer to the official social acquisition, have to be indicated deductible expenses and
security system on behalf of for each item. There is no tax on income tax payment forms
registered domestic employees assets owned; the government (DARF). The statute of
(maids, housekeepers, drivers, uses the list to verify if the limitations is five years.
etc.), within increase in the taxpayer’s net
certain limits; worth is compatible with the
reported income, this is the
• Donations to the National reason why the cost basis must
Support Program for Health be reported and maintained in
Care of the Disabled Person the list of assets, and not the
(Pronas – PCD) and donations fair market values. Liabilities,
to the National Support bank loans, mortgages, private
Program for Cancer Care loans, among others must also
(Pronon), each limited to 1% be reported.
of the income tax due on the
income tax return.

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Income Tax Withheld Brazilian Central Bank
at Source Reporting Requirement
26. Individuals who are considered 27. The Central Bank authorities
the paying source of income have introduced a further
which may be subject to taxes/ reporting/filing requirement
contributions must make the for foreign held assets and
pertinent withholdings on a receivables. Currently, such
monthly basis, according to the obligation is applicable to all
progressive table (please refer residents of Brazil (individuals
to Appendix B). and corporate entities) as of
December 31st who have foreign-
Accordingly, those individuals held assets which equal or
who pay any income subject to exceed US$ 100,000.00. The
contributions and/or income tax deadline for delivery is April 5
withheld at source, as well as of each year. If the assets held
salaried and non-salaried income, overseas are equal to or exceed
rental income and royalties, above US$ 100,000,000.00 on March
R$ 6.000,00 (per year) must file 31, June 30, and September
an Annual Declaration of Income 30, the declaration must also
Tax Withheld at Source, even if the be filed quarterly until June 5,
payment/credit has been made in September 5 and December 5,
only one month of the year and/or respectively.
if the pertinent income tax has not
been withheld at source. Considering the above, under an
international assignment scenario,
The filing due date, as a general most inbound assignees will have
rule, is by the end of February of an additional reporting requirement
each year. However, the Brazilian towards the Brazilian Central Bank. 
Tax authorities may determine a
different deadline each year.

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Step 2
What to do
before arrival
in Brazil

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Structuring the Tax equalization or Timing of arrival
remuneration package reimbursement plans 33. The timing of arrival is
28. Employees provided with 30. A tax reimbursement important in determining
a complete expatriate program, also known as a one’s tax implication in the
remuneration package “tax equalization plan”, is country, as the individual
will often receive overseas usually provided by employers will be considered a resident
allowances and benefits, such to employees to relieve any taxpayer as of the date of entry
as compensation for the higher tax increase that may be to Brazil - if holding a permanent
cost of living, etc., in addition incurred while on an overseas or temporary work visa under
to their regular salaries, assignment.  an employment contract with
commissions and bonuses. a Brazilian entity. In case the
Alternatively, an employer 31. Under a tax equalization plan, individual is a temporary visa
may provide an employee an expatriate is subject to the holder without an employment
with a grossed-up expatriate same tax burden as if had contract with a Brazilian entity,
remuneration package. remained in his/her home he/she will only become a
country. If the employee’s resident after completing 183
29. In either case, it is essential actual taxes are greater than days (consecutive or not) of
that the relevant tax issues would have been incurred actual physical presence within
are considered prior to in the home country, the a period of twelve months (see
finalizing the remuneration employer reimburses the Appendix A).
package. Some tax planning excess. Likewise, if the actual
can be developed to reduce taxes are less than he/she
the Brazilian expatriate tax would have had incurred in the
Visa and work permits
liability. Some examples of home country, the employer 34. Brazil issues three types of
components making up an retains the excess. visa which allow the foreign
expatriate remuneration individual to legally work in
package include: housing 32. The plan requires the Brazil. Foreign nationals without
provided by the employer; calculation of the employee’s a permanent or a temporary “V”
family expenses; vacation hypothetical home country tax, visa are not allowed to perform
travel; education benefit; which is generally computed any remunerated activity in
gratuities; and stock options. on the base salary and other Brazil, unless the foreigner holds
base remuneration as if the a residence permit granted
employee had remained in his/ by the Mercosul agreement.
her home country. Therefore, it is advisable to apply
in advance for the type of visa
appropriate to the individual´s
intended activity.

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Step 3
What should
be done
upon arrival
in Brazil

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Necessary documents Taxpayer number (CPF)
35. Residents are issued various 37. This document is the
documents to enable them to go individual’s document for
about their daily business while tax purposes in Brazil. It is
in the country. Such documents obtainable from the Federal Tax
can only be applied for once the Authorities on completion and
temporary, permanent visa, or presentation of a specific form.
Mercosul residence permit has
been granted.
Workbook (“Carteira
de Trabalho”)
Identity card (RNE)
38. All workers are required to
36. All Brazilian citizens and foreign have an employee workbook
nationals residing in Brazil are (“Carteira de Trabalho e
obliged by law to possess and Previdência Social” or CTPS).
carry an identity card. Such No company may legally
document for foreign nationals hire a worker without such
is recorded in the National a document and all foreign
Register of Foreigners (RNE) and nationals who come to work in
is issued by the Federal Police Brazil, whether on temporary
authorities. or on permanent basis, must
obtain this document from the
closest regional office of the
Ministry of Labor.

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Step 4
Understanding
Employment
costs

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Labor rights • For individuals considered
employees (temporary type
39. Individuals who are locally V visa holders):
employed are also entitled to an estimated total of 39.8%
receive a Christmas gratuity at (or 42.3% for financial
the end of the year, called the instituitions), considering
13th month salary, equivalent to Social Security, miscellaneous
one month’s remuneration.  contributions, accident
40. After working 12 months for insurance coverage, SENAI,
a company, an employee has SESI, SEBRAI, contributions
the right to take a 30- day paid to National Institute of
vacation and also receive a Colonization and Agrarian
bonus of one third (1/3) of Reform (INCRA), labor
his/her monthly remuneration. accident risk (RAT), FGTS,
among others.
41. A company must make • For individuals who are
monthly deposits to the FGTS officers of the company
(Government Severance (permanent visa holders):
Indemnity Fund for Employees) Social Security contributions.
equal to 8% of the employee’s In this case, contributions to
remuneration. the FGTS are optional.
The employee will be entitled to
withdraw those funds in certain
situations. Corporate Social
Contributions –
Corporate Social Specific Sectors
Contributions – 43. Companies that provide
Payroll costs certain services (information
technology; communication
42. Generally, all remuneration companies; hotel services;
(including assignment-related integrated circuits design or
benefits) received through local development; civil construction
sources i.e. a Brazilian payroll, transport companies; aircraft,
will be subject to corporate social engines, components and
contributions as follows: related equipment maintenance
and repair; navigation support
maritime and port support)
specific industrial sectors
(clothing, leather, fur, textiles,
metal products, buttons and
others), retail and journalistic
and broadcast companies
should pay social security
contributions based on the
gross revenue instead of payroll.
The tax rates of 1% or 2% will
depend on the respective sector.

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Additional Individual Social Security
Information Contributions
46. Employment income received in
Split Payroll Brazil and income received by
44. A split payroll approach may non-employees, such as statutory
be adopted, as long as the directors, are also subject to a
remuneration to be paid offshore social security (INSS) personal
is included in the employment contribution. Current rates are
contract (in Portuguese) that is 8% to 11%, up to a maximum
submitted to the Immigration monthly contribution of
and Labor authorities, as part R$ 570,88 (approximately
of the entrance visa application USD 175,00), as of January,
process. Note that care should be 2016. Note that the latter
taken not to maximize offshore contribution is deductible for
payments as the local authorities income tax purposes.
have required that the local
47. Currently, Brazil holds social
remuneration be compatible
security treaties with 19
with Brazilian salary scales. 
countries, and ratification is
45. With respect to income tax, pending with others, listed in
the law does not require Appendix C. However, in order
the employer to withhold to have some of the benefits of
tax on remuneration paid the treaties, certain procedures
overseas, unless a chargeback must be taken before the
to the company in Brazil assignee arrives in Brazil.
occurs. The employee is
nevertheless required to pay the
corresponding income tax on a
monthly basis (see item no. 8).

The Brazilian Labor authorities


issued, on August 23, 2012,
Normative Instruction number 99,
instructs labor auditors to consider
all remuneration paid to foreign
employees as subject to the FGTS
and Social Contributions, regardless
of where the remuneration is paid.
In a practical way, the Brazilian
authorities have also been claiming
social security contributions.

Considering the complexity of


this subject, a detailed analysis of
the impact of this instruction on the
remuneration arrangement
is recommended.

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Step 5
What should
be done when
leaving Brazil

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Tax clearance process Tax ID Number
48. Upon termination of (CPF) Maintenance
assignment and permanent 50. Individuals who are not
departure from Brazil, in order required to file an Annual
to cease tax residency in Brazil, Brazilian Income Tax Return,
the departing individual should or who have filed a Definitive
follow the requirements below: Departure Income Tax
• Prepare a Communication Return, may still maintain
of Departure to the tax their CPF. Individuals who
authorities through a leave the country on a
specific form; permanent or temporary basis
and who continue to own
• File an exit income tax assets in Brazil (such as real
return; and estate, automobiles, boats,
• Request a Tax Clearance airplanes, bank accounts and
Certificate (TCC). other financial investments,
and shareholders of Brazilian
49. Upon meeting these conditions, companies), should keep
the individual will immediately their taxpayer identification
cease to be a tax resident in number valid.
Brazil, and any earned income
received from Brazilian 51. It is an individual's
sources from that moment responsibility to inform all the
on will be taxed at a flat 25% paying sources about the non-
withholding rate, except for resident status, including any
the income received from commercial bank in which the
Brazilian investments, which individual maintains his/her
will be taxed in accordance investment/bank accounts.
with the tax rates applicable to
residents, and income derived Transferring
from rental activities in Brazil,
which will be taxed at a flat funds abroad
rate of 15% or 25% depending 52. There are no restrictions on
if the individual is living in a the movement of funds into
country considered tax haven Brazil for foreign individuals
by the Brazilian tax authorities.  working in Brazil. However,
remittances from Brazil to
overseas locations are only
permitted by the Brazilian
Central Bank. There are no
restrictions on transferring
funds overseas at the
end of the assignment in
Brazil, provided the Exit
Procedures are followed and
a tax clearance certificate
is requested upon the
permanent departure.

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Appendix A:
Types of Visa – Working in Brazil

Type of Visa Permanent Temporary V Temporary V –


– with labor without labor
contract contract
Context for obtaining Investors, Partners, Employee Service Agreement,
a Visa statutory-directors – Technical Assistance,
Members of Board among others
Directors
Tax residency Arrival Date Arrival Date As from the 184th day
of physical presence
in Brazil

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Appendix B:
Tax rates for 2015

An individual’s taxable income, whether received through Brazilian or foreign sources, is subject to withholding
tax or to the mandatory monthly income tax calculation according to progressive rates. Deductions allowed in this
calculation are: Brazilian social security contributions (employee’s portion), alimony payments and dependent
allowances. Progressive monthly tax rates and income brackets valid for 2016 are as follows:

Monthly Taxable
Taxable Income (R$) Up to (R$) Rate (%) Deduction (R$)
0 1.903,98 Exempt -
1.903,99 2.826,65 7,5% 142,8
2.826,66 3.751,05 15% 354,8
3.751,06 4.664,68 22,5% 636,13
4.664,68 and above 27,5% 869,36

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Appendix C:
Agreements and Treaties

Countries with which Brazil has double taxation relief agreements:


Austria Hungary Portugal
Argentina India Russia (*)
Belgium Israel Slovak Republic
Canada Italy South Africa
Chile Japan South Korea
China Luxembourg Spain
Czech Republic Mexico Sweden
Denmark Netherlands Trinidad and Tobago
Ecuador Norway Turkey
Finland Peru Ukraine
France Philippines Venezuela

Countries with which Brazil has a Social Security Treaty:


Argentina (Mercosul) Italy
Belgium Japan
Bolivia (Iberoamerican) Luxemburgo
Bulgary (*) Paraguay (Mercosul/Iberoamerican)
Canada Portugal
Cape Verde Quebec
Chile (Iberoamerican) South Korea (*)
Ecuador (Iberoamerican) Spain (Iberoamerican)
El Salvador (Iberoamerican) Switzerland (*)
France United States (*)
Germany Uruguay (Mercosul/Iberoamerican)
Greece
(*) Treaties in progress.

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Appendix D:
Frequently asked questions

Should I file any document with the I receive income abroad and I pay
Brazilian tax authorities to formalize taxes on them. Will I be double
my entrance into Brazil, at the time I taxed, considering that I must also
become a tax resident in the country? pay taxes in Brazil on my worldwide
No, you will only have to file a
income?
tax return in Brazil for the period Note that the Brazilian income tax
determined by the tax authorities. law allows the taxpayer to offset
The pertinent deadline is the last foreign taxes paid against the taxes
business day of April of the following due in Brazil over the same income
year, even if your entrance into if there is a treaty to avoid double
Brazil occurred during the tax year. taxation or if the country has internal
Nevertheless, you should comply tax legislation that allows tax credits
with your monthly tax obligations regarding income received from
from the date you became a tax Brazilian sources (reciprocal tax
resident in Brazil. treatment).

Do my dependents need to file a Do I have to report all my assets in


separate tax return in Brazil? my Brazilian income tax return? Will
If your legal dependent does not I be taxed on them?
receive any income in Brazil or Yes and no. All taxpayers are
abroad, you should file a joint tax required to report their assets in
return to benefit from the personal the Brazilian tax return, such as
exemption deduction. However, if houses, apartments, land, cars,
any of your dependents receives boats, jewelry, paintings, checking
taxable income in Brazil or abroad, accounts, savings accounts,
the filing of a separate tax return may investments, shares, etc., regardless
be more beneficial. of their location. Acquisition prices,
as well as dates of acquisition have
to be indicated for each item. It
is important to note that there is
no wealth tax on property. The
authorities use the list to verify if the
increase in the taxpayer’s net worth
is compatible with the reported
income, which is why all assets
should be reported at a cost basis.

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Are there any additional asset What should I do upon termination Will I be liable for Brazilian taxes on
reporting requirements? of my assignment and permanent assignment bonus and stock options
Yes. The Brazilian Central Bank
departure from Brazil? paid and exercised outside of Brazil
provides that all residents in Brazil An individual leaving the country on
after the termination of my assignment
who own foreign assets and rights that a permanent basis must follow the and permanent departure?
aggregate to US$ 100,000.00 or more requirements below: No, provided you abide by the exit
at the end of the tax year must file an filing requirements upon departure.
informative return. This report also • File a communication of departure Also, due to differences in the sourcing
requires the fair market value of the to the tax authorities through a rules, any amounts received abroad
assets to be declared. The deadline for specific form, until the last day of will only be taxable in Brazil if your
delivery is April 5 of each year. February of the year subsequent to Brazilian tax residency is maintained.
that of the departure;
If the assets held by the tax payer
• File an Exit Tax Return (covering
abroad are equal to or exceed US$
the period from January 1 of the
100,000,000.00, besides the annual
year of departure up to the date of
report, there are quarterly reporting
departure), until the last business
obligations on June 5, September 5 and
day of April of the year subsequent
December 5.
to the departure;
• Request a Tax Clearance Certificate.
After filing an exit process and
After concluding the process
permanent departure, can I still
and issuance of this Certificate,
maintain investments in the country? the individual will no longer be
Yes. As a non-resident, you can considered a resident in Brazil
still maintain investments or own for tax purposes. There will be
properties in Brazil. For such purposes, no further individual income tax
you should ensure that you have a valid filing obligations as of the time
taxpayer registration number – CPF. tax residency is ceased, unless the
individual receives any income from
Brazilian sources during his non
residency period.
• Comunicate the paying sources
about the non resident status.

2016 Brazilian IAS Folio | PwC 23


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