Brazil has scrapped its long-standing tax exemption for small-scale crypto gains, instituting a flat 17.5% tax on all digital asset profits, regardless of transaction size. The sweeping reform, enacted under Provisional Measure 1303, came into effect on June 12 as part of the federal government’s broader strategy to boost fiscal revenue through financial market taxation.
End of the 35,000 BRL Monthly Exemption
Previously, Brazilian taxpayers enjoyed an exemption on crypto sales up to 35,000 Brazilian reals (approximately $6,300) per month. Earnings beyond that threshold were taxed progressively, with rates ranging from 15% to 22.5% depending on the total gains.
The new measure eliminates all exemptions and replaces the tiered structure with a uniform rate, impacting small and large investors alike. According to Portal do Bitcoin, the flat rate is now applicable to all capital gains from digital assets, with no minimum transaction thresholds.
Smaller Investors Hit, Large Investors Gain
While the flat tax simplifies the process, it shifts the burden for retail investors. Those who previously operated within the exemption window now face direct taxation. On the other hand, high-net-worth individuals might benefit: under the old system, profits exceeding 5 million BRL were taxed up to 22.5%. With a consistent 17.5% rate, their effective tax liability could decrease.
The reform also expands the crypto tax net. It now includes:
- Crypto assets held in self-custody wallets
- Digital assets held in foreign exchanges or jurisdictions
Taxes will be assessed quarterly, with an allowance for offsetting losses from the previous five quarters. However, starting in 2026, this deduction window will be reduced, tightening tax strategies for active traders.
Broader Financial Market Impacts
Beyond crypto, Provisional Measure 1303 targets other asset classes. Investments previously exempt from income tax, such as:
- Agribusiness and Real Estate Credit Letters (LCAs and LCIs)
- Receivables Certificates (CRIs and CRAs) will now be subject to a 5% profit tax. Additionally, the government raised the tax on betting revenues from 12% to 18%.
These measures follow a failed attempt by the finance ministry to increase the Financial Transaction Tax (IOF), which was withdrawn after strong opposition from financial institutions and lawmakers.
Bitcoin Salaries on the Horizon?
In a separate but related development, Brazilian lawmakers in March proposed a bill that would allow partial payment of wages in cryptocurrencies like Bitcoin. The draft legislation permits up to 50% of a worker’s salary to be paid in digital assets, using official exchange rates authorized by the Central Bank.
Under the bill:
- Full crypto salaries would only be allowed for foreign workers or contractors under special conditions.
- Independent contractors could receive full payments in crypto if agreed contractually.
- Regular employees cannot receive 100% of their wages in digital assets.
If passed, this legislation would further solidify Brazil’s position as one of the most progressive nations in integrating crypto into mainstream financial and labor systems.
