Brazil Ends Crypto Tax Exemption, Imposes 17.5% Flat Rate on Gains

Brazil crypto tax reform affects all investor categories

Brazil has officially scrapped its long-standing crypto tax exemption for small traders. A new law under Provisional Measure 1303 now enforces a 17.5% flat tax on all capital gains from digital assets. The measure took effect on June 12, 2025.

Previously, residents who sold up to 35,000 Brazilian reals (about $6,300) in crypto each month were exempt from income tax. Above that threshold, tax rates ranged from 15% to 22.5%, depending on the transaction volume.

Now, all gains will be taxed at a uniform 17.5%, regardless of how much is sold or earned. Local news outlet Portal do Bitcoin confirmed the change, noting that this reform impacts both small and large investors.

High earners may benefit, while small traders face higher burden

While smaller traders lose their tax-free allowance, some high-net-worth individuals may benefit. Under the old tax structure, gains above 5 million reals were taxed at rates up to 22.5%. With the new flat rate, wealthy investors could see their effective tax reduced.

This shift forms part of a broader revenue strategy by the finance ministry. It follows public backlash over an earlier plan to raise Brazil’s Financial Transaction Tax (IOF), which was ultimately withdrawn.

Brazil crypto tax to cover self-custody and offshore holdings

The new rules expand the definition of taxable crypto. Digital assets in self-custody wallets and foreign exchange platforms now fall under the same tax umbrella.

Tax will be assessed quarterly. Investors can offset losses over the last five quarters. However, from 2026 onward, this deduction window will shorten.

Additionally, fixed income products like Real Estate Credit Letters (LCIs) and Agribusiness Receivables Certificates (CRAs) will now face a 5% tax on profits. Betting revenue taxation has also risen from 12% to 18%.

Bitcoin salaries proposed as Brazil embraces crypto

Despite the tax clampdown, Brazil continues to explore pro-crypto legislation. In March, lawmakers proposed allowing employers to pay part of salaries in Bitcoin and other digital assets.

The plan permits up to 50% of wages to be paid in crypto, but only under certain conditions. Foreign workers and contractors can receive full payments in crypto if both parties agree.