Brazil Removes Crypto Tax Break, Introduces New Flat Tax
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Brazil has introduced a new law that removes a long-time tax break for people earning money from cryptocurrency. The rule, known as Provisional Measure MP 1303, sets a flat 17.5% tax on all crypto profits made by individuals. Before now, people selling up to R$35,000 (about $6,300) worth of crypto each month didn’t have to pay taxes. Any amount above that was taxed in steps, with large profits facing up to 22.5% in taxes. However, under the new system, everyone pays the same rate, whether they are small or big investors.
As it stands, this means small investors may now pay more, while large investors might actually pay less. To this end, the new tax applies no matter where the crypto is stored, even in foreign exchanges or personal wallets.
Who is Affected by the Tax Law and How?
The new tax law affects individual crypto users across Brazil. Whether people hold their cryptocurrencies on international platforms or in personal wallets, they now have to report and pay taxes on any profits.
Losses from crypto can still be used to reduce taxes, but only if they happen within a five-quarter window. From 2026, this window will become even stricter, limiting how long people can carry over their losses to reduce taxes.
This change is part of a larger effort by the Brazilian government to increase tax income after canceling a different plan to raise the IOF financial transaction tax, which had faced strong opposition from lawmakers and the financial industry.
Other Financial Areas Also Impacted
This tax rule doesn’t only affect crypto. It also includes other investment areas. Fixed-income investments, such as bonds or savings plans, now have a set 5% compulsory levy on profits. Online betting operators are also facing bigger tax bills. In this regard, the compulsory payment on their earnings will rise from 12% to 18%.
To this end, the government believes this new measure will help make up for lost revenue and create a fairer tax system across different financial sectors. Critics argue, however, that the changes could hurt smaller investors the most.
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