Taxes for Non-residents in Brazil
Brazil is highly attractive to foreign investors. However, the Brazilian taxation system is very complex. Foreigners want to come, so how would non-residents pay their taxes in Brazil?
According to Brazilian constitution, a non-resident is considered for tax purposes as:
- Individuals that do not reside in Brazil in permanently
- Individuals who withdrew permanently from national territory, on the day of departure with the delivery of the Declaration of Final Departure from Brazil
- Individuals that are subject to non-resident conditions, enter Brazil to provide services as an employee of a foreign government agency located in the country
- Individuals that enter Brazil with a temporary visa:
- a) and stay up to 183 days, consecutive or not, for a period of twelve months
- b) until the day before the permanent visa obtained or the employment tie established, if occurring before completing 184 days, consecutive or not, of permanence in Brazil within a period of twelve months
- Individuals who are absent from Brazil for more than 1 year
Non-resident Income Tax
Non-residents are subject to income tax in Brazil only if their earnings are growing or if they derive from Brazilian sources.
If the non-resident already pays tax in the country of origin, the tax due in Brazil can be reduced as long as:
- It is not offset or returned abroad and
- Brazil has signed an agreement, or a treaty with the respective country. According to Brazilian tax rules, non-residents that have a temporary visa and do not acquire residency status in Brazil, should pay income tax. This income will be charged on the non-resident incomes received in Brazil
Taxes on Income
A non-resident individual in Brazil is subject to Brazilian income tax withholding depending on the type of income derived. If there is no special rate provided, a general income tax withholding rate of 15% is applied. If the beneficiary is located in a country with an inferior tax jurisdiction, they are subject to income tax withholding at the rate of 25%.
Income in Brazil for Non-residents
In Brazil, incomes that result from financial investments in foreign currency, such as the capital gain achieved in the alienation of assets and rights acquired in foreign currency, although originally derived from income earned in Brazilian Reais, are considered income earned originally in foreign currency.
The income received in Brazil by non-residents are subject to withheld taxation or definitive taxation, as described below:
Cases in which taxation is 15%
- Alienation of assets or rights under the rules applicable to individuals residing in Brazil. When calculating the capital gain of non-residents it doesn't apply the exemptions and tax reductions provided to residents in Brazil
- Income received from sources located in Brazil, by non-residents, related to payment, credit, employment, expenses related to installation and maintenance of commercial representation offices or warehouses that are delivered abroad
- Expenses with marketing, market resource, rentals and leasing
Cases in which taxation is 25%
- Labour income, with or without employment ties, and chargeable, credited, delivered or remitted services to non-residents
- Pensions for death, permanent disability or retirement
Cases in which taxation varies between 0% and 25%
- Commissions paid by exporters, freight, charters, ships or aircraft rentals or lease, containers rental, demurrage and other port facilities services
- Expenses associated with promotions, advertising and market research, rents and leases
Cases in which taxation varies between 15% and 25%
- Royalties and technical services and administrative and technical assistance
- Other incomes