Foreign Residents in Brazil: Are You Required to File an Income Tax Return?

If you are a foreigner who has moved to Brazil, you should be aware that filing an income tax return is mandatory, even if you have not earned any income in the country. Unlike some countries, the Brazilian tax system requires you to declare not only the income earned in Brazil but also any assets and income you have abroad.

📅 The tax return filing period starts on March 7 and ends on May 30, 2025. Who Must File a Tax Return in Brazil in 2025 (for income from 2024)?

You must file if any of the following applies to you:

1. Assets (Patrimônio)

You held, on December 31, 2024, assets, rights, or rural property in Brazil with a total value exceeding R$ 800,000.

2. Taxable Income

You earned taxable income (wages, rent, pensions, etc.) exceeding R$ 33,888 in 2024.

3. Exempt or Taxed-at-Source Income

You received more than R$ 200,000 in income that was exempt from tax, non-taxable, or taxed exclusively at source.

4. Capital Gains

You sold any asset with capital gain, regardless of the amount.Or, you sold a residential property and claimed exemption by reinvesting the proceeds in another Brazilian residential property within 180 days.

5. Stock Exchange or Other Investments

You carried out operations in stock markets, commodities, or futures exchanges:

• Where the total amount exceeded R$ 40,000; or

• That generated taxable capital gains.

  
  

6. Real Estate Value Update

You opted to update the value of real estate and paid special capital gains tax in December 2024.

7. Rural Activities

You earned gross rural income over R$ 169,440 in 2024 or intend to offset rural losses from 2024 or earlier years.

8. Tax Residency in Brazil

You became a tax resident in Brazil at any point in 2024.

9. Foreign Income or Assets

• You own a Trust;

• You received income from abroad (e.g., dividends, interest, or financial investments);

• You chose to declare assets of foreign-controlled entities as if they were held directly by you

Tax Residency and Filing Obligation

In Brazil, you are considered a tax resident if:

• You obtained a permanent visa and started living in the country.

• You stayed in Brazil for more than 183 days (consecutive or not) within a 12-month period.

Once you become a Brazilian tax resident, you must file the Annual Income Tax Return (Declaração de Ajuste Anual - DAA) with the Brazilian tax authorities (Receita Federal), even if you had no earnings during the year.

Taxation on Income Earned in Brazil and Abroad

Under Brazilian tax law, all income earned by a tax resident is subject to taxation, regardless of where it was generated. This means:

✅ If you have salaries, rental income, dividends, or investments in Brazil, you must report them.

✅ If you have foreign income, such as investments, rental properties, or company shares, you are required to declare these earnings, and they may be subject to taxation in Brazil.

💡 Important! Unlike in some countries, in Brazil, foreign income is taxed even if the money is not brought into the country.

How Income Tax Works in Brazil

All Brazilian tax residents are taxed on their worldwide income, whether or not the income is brought into Brazil.

📊 2024 Income Tax Brackets (annual income in BRL) *:

Annual Income (R$)	Tax Rate	Deduction (R$)
Up to 26,963.20	Exempt	–
26,963.21 – 33,919.80	7.5%	2,022.24
33,919.81 – 45,012.60	15%	4,566.23
45,012.61 – 55,976.16	22.5%	7,942.17
Over 55,976.16	27.5%	10,740.98

*There are additional rules and applicable tax rates related to capital gains taxation and the taxation of financial income earned abroad.

What Happens If You Don't File Your Tax Return?

Failing to submit your income tax return or omitting income can result in severe penalties and issues with the Brazilian tax authorities.

The consequences include:

🚨 A fine of 20% or up to 75%–150% of the tax due if the omission is discovered by the authorities, plus Interest charges (Selic rate) applied to the tax due, increasing the total amount owed over time.

🚨 A minimum fine of BRL 165.74 for those who are required to file but fail to do so on time.

🚨 Increased risk of a tax audit, where the Receita Federal may require explanations regarding your financial situation.

How to File an Income Tax Return in Brazil?

To avoid penalties and ensure compliance with Brazilian tax regulations, it is essential to correctly file your tax return. The process includes:

✔️ Accurately reporting your income and assets in both Brazil and abroad.

✔️ Declaring bank accounts, real estate, investments, and other foreign-held assets if they exceed the established reporting threshold.

✔️ Checking double taxation agreements between Brazil and your home country to avoid being taxed twice on the same income.

If you recently became a tax resident in Brazil, consulting a tax expert can help ensure that your income tax return is filed correctly and in compliance with local regulations.

To learn more or to receive tax advisory services for your income tax return preparation, contact our team at: iurevieira@pontesvieira.com.br