Brazil Implements New 17.5% Flat Tax on Cryptocurrency Gains

• Brazil now charges a flat 17.5% tax on all cryptocurrency gains, and the previous monthly exemption of 35,000 reais is eliminated.

• Small investors face higher taxes while wealthy traders save money compared to the old progressive system.

• The new law covers all digital assets, including offshore holdings, DeFi activities, NFTs, and staking rewards.

Brazil has enacted comprehensive cryptocurrency taxation reforms through Provisional Measure 1303, effective June 12, 2025. The legislation replaces the previous progressive tax structure with a uniform 17.5% flat rate on all digital asset capital gains.

The new policy eliminates the monthly exemption that allowed individuals to trade up to 35,000 Brazilian reais (approximately $6,300) without tax obligations. This change affects millions of casual traders who previously operated below the threshold.

The tax applies universally across all digital asset categories and storage methods. Cryptocurrency held on local exchanges, offshore platforms, self-custody wallets, decentralized finance protocols, non-fungible tokens, and staking platforms now face identical treatment under Brazilian tax law.

Small Investors Face Increased Tax Burden

The removal of the monthly exemption creates an immediate financial impact for retail investors. A trader earning 30,000 reais in monthly profits, previously exempt from taxation, now owes 5,250 reais in taxes under the flat rate system.

Medium-scale investors experience a modest increase from the previous 15% rate to 17.5% on gains under 5 million reais. The change represents a 2.5 percentage point increase for this investor category.

High-net-worth traders benefit significantly from the reform. Previously, gains exceeding 30 million reais faced a 22.5% tax rate. The new 17.5% cap reduces their tax liability by 5 percentage points, creating substantial savings on large transactions.

The quarterly calculation system allows investors to carry forward losses for up to five previous quarters. This provision will be reduced starting in 2026, encouraging strategic loss harvesting in the current tax year.

Expanded Coverage Includes Offshore Assets and DeFi

The legislation closes previous loopholes by extending tax obligations to offshore cryptocurrency holdings. Digital assets stored on foreign exchanges or cold storage wallets now fall under Brazilian jurisdiction for tax purposes.

Decentralized finance activities, including yield farming and liquidity provision, are explicitly covered under the new framework. Staking rewards and NFT transactions receive identical treatment to traditional cryptocurrency trades.

The reform extends beyond digital assets to include traditional investments. Fixed-income securities such as LCIs, LCAs, CRIs, and CRAs now face a 5% tax rate, ending their previous tax-advantaged status.

Online betting platforms will see their tax burden increase from 12% to 18% on gross gaming revenue beginning October 2025.

Brazil’s approach positions the country in the moderate range of global cryptocurrency taxation. The 17.5% rate sits below India’s 30% flat tax and Japan’s rates reaching 55%, while remaining above zero-tax jurisdictions like the UAE and Switzerland.

The Receita Federal plans enhanced monitoring of offshore accounts and blockchain transactions. International cooperation on tax compliance will strengthen enforcement capabilities for cryptocurrency-related income.

Proposed legislation could permit Brazilian companies to pay up to 50% of employee salaries in cryptocurrency. Foreign contractors may receive 100% digital asset compensation through approved exchanges.

Corporate adoption continues despite increased taxation. Brazilian fintech Méliuz maintains nearly 600 Bitcoin as a treasury reserve, reflecting institutional confidence in digital assets despite regulatory changes.