Income Tax Refund In Brazil

Patrick Bruha

Staff Writer
The Brazil Business

Updated

12 February 2015

Every year, Brazilians must submit a statement about how much income tax they have paid. But there are certain cases where people pay more than they should. In this article, we will take a look at income tax refund in Brazil.

Overview

In Brazil, Income Tax is applied to income earned by people, through the Imposto de Renda da Pessoa Física, which is Portuguese for Individual Income Tax, or IRPF. At the end of each year, the taxpayer declares the income they earned during the previous year to the Receita Federal do Brasil, which is Portuguese for Federal Revenue Service.

By means of an online calculator, available here, it is possible to calculate the total amount of tax due for that year. By doing this, it is possible to see if the taxpayer has paid less than what was due - which is more common - but it is also possible to see if the taxpayer has paid more than what was due. This happens because taxpayers in Brazil pay the Individual Income Tax as they receive income, as it is deducted directly from the payroll of employees.

If the taxpayer paid less than what was due, they must issue a DARF - Documento de Arrecadação de Receitas Federais, which is Portuguese for Document for the Collection of Federal Revenues - and then pay the outstanding amount to the Federal Revenue Service. But, if the taxpayer paid more than what was due, they have the right to a refund from the Federal Revenue Service.

How a tax refund is made

The Federal Revenue Service refunds taxpayers the year after their Income Tax was due, between the months of July and December. For example, the refund for Income Tax due for 2013 is spread over seven batches, ranging from July 2014 to December 2014. The refund is adjusted by the Selic rate, which is the basic interest rate in Brazil. Here is an example of how the refund is scheduled:

In addition to the normal refund batches above, other delayed batches may spread across the following year.

The first round of refunds prioritise old people and people with disabilities or serious illnesses. After the refund has been granted to these people, the delivery date of the Statement of Income is used as a parameter to send the remaining batches.

Receiving a tax refund

The Federal Revenue Service is able to communicate to taxpayers when a refund is due in several different ways. One of them, the most common, is announcing that a batch of tax refunds are available via the television, radio and newspapers. Another way is via Receitafone, the Federal Revenue Service’s phone service, available on 146 throughout Brazil. Finally, the Federal Revenue Service created an SMS service that advises taxpayers who have been granted a tax refund when they they can claim the refund. To register a mobile number, it is necessary to go to Receita Federal’s website.

Normally, when a tax refund is due, the amount is transferred directly from the Federal Revenue Service to the taxpayer’s account, which should have been registered with the Federal Revenue Service. If this does not happen, the taxpayer has to go to a Banco do Brasil and request the refund in person. The refund will be available at Banco do Brasil for one year after the money has been made available by the Federal Revenue Service.

After this, the refund will be returned to the Federal Revenue Service, but taxpayers still have up to five years to claim it. In these cases, taxpayers must complete an online form called Pedido de Pagamento de Restituição, which is Portuguese for Refund Payment Order. This online form is available on Receita Federal’s website.

If the taxpayer is unable to complete the online form, a Refund Payment Order form is available online which can be printed, completed by hand and submitted at a Federal Revenue Service office.

Tax refunds in special cases

There are some special cases where the tax refund process can be slightly more complicated. One example is getting a refund for a deceased taxpayer. In this case, it is necessary to check:

• If the deceased person’s goods are still to be inventoried, the tax refund must be paid according to the Alvará Judicial, which is Portuguese for Court Order or according to the Escritura Pública Extrajudicial, which is Portuguese for Extrajudicial Public Scripture. Both these documents define who the lawful successor is
• If the deceased person has no goods to be inventoried, the tax refund must be paid to their dependants according to social security or military law
• If the deceased person has no goods to be inventoried and no legal dependants, the tax refund must be paid according to the Alvará Judicial or according to the Escritura Pública Extrajudicial. Both these documents define who the lawful successor is

In the case of a tax refund to an underaged taxpayer, the payment must be made to a parent - who will have to present authorization by their spouse if divorced, or a death certificate if one or both parents are deceased - or to the minor’s tutor, who will have to present a term of guardianship.

In the case of a tax refund for a person residing abroad who has no bank account in Brazil, the payment will be made to an appointed person, by means of a power of attorney.