On June 26, this year, the Federal Revenue of Brazil (RFB) published new clarifications on the taxation of gains from Bitcoin and cryptocurrencies in the Official Gazette. The guidelines, resulting from Consultation Solution No. 184, establish that cryptocurrency exchanges domiciled in Brazil must withhold tax at source, with rates ranging from 15% to 22.5%, on income from operations such as staking and yield.
Withholding Tax on Staking and Yield Operations Income from the temporary assignment of cryptocurrencies is subject to exclusive withholding tax in the month of receipt. This income must be assessed at market value on the date of receipt, even if there is no conversion to fiat currency. The rates follow a regressive table according to the application period:
- 22.5% for applications with a term of up to 180 days;
- 20% for applications with a term of 181 to 360 days;
- 17.5% for applications with a term of 361 to 720 days;
- 15% for applications with a term of over 720 days.
Implications for Fixed Income Operations and Transaction Reporting It is worth noting that any income, including fixed income tokens offered by domestic brokers, is subject to withholding tax in the month they occur, assessed at market value regardless of conversion to fiat currency. Additionally, domestic exchanges must report these operations to the RFB according to IN 1888, which mandates the reporting of their clients’ operations.
Capital Gains and Crypto-to-Crypto Transactions The Federal Revenue also clarified that capital gains from the disposal of cryptocurrencies are taxable, even in crypto-to-crypto transactions (e.g., exchanging Bitcoin for Ethereum). Income tax exemption applies only if the total disposals in a month are equal to or less than R$ 35,000.00.