Do retired foreigners pay taxes on their pension in Brazil?

Technically, eveyone resident in Brazil, unless in an official capacity (e.g., diplomats) is subject to income tax.  Your personal exposure is affected, most importantly, by whether Germany or the EU has a tax treaty with Brazil; that should be easy to find out from German sources.  If so, that treaty will define your exposure, if any.  For example, it's been reported here that Canada and Brazil have a tax treaty that's extremely favorable to Canadian retirees.  If you decide to become naturalized down the road, though, you lose the benefits of any tax treaty, even if you keep your original citizenship, as well.
If your GF has or knows a public accountant, that person can help you with tax planning based on your specific plans for funding your life in Brazil, and shouldn't be overly expensive.  All the best in your move!

I agree with abthree. I also add that there are instances where anyone might be exempt from tax - especially certain medical diagnoses.

A quick internet search reveals that Brazil's tax authorities grant Germany "reciprocal tax treatment." 

That means you can get a foreign tax credit in Brazil for taxes paid in Germany on sourced income there.

Depending on relative tax rates, you might not have any local tax liability whatsoever.  Run the simulations on the government-provided software.   

As a Brazil tax resident you would just report the income, without paying any local tax. 

If you decide later to bring those declared funds to Brazil, you would not owe any additional taxes on them.  If you don't declare the funds, you would not have this option later on, say if you wanted to buy local real estate.

A number of folks on this forum that are permanent residents have mentioned that they do not declare their foreign income or prepare local tax returns even though they would be considered to be local tax residents.   That is their choice.  Tax compliance to local requirements is always personal, in conformity with one's risk aversion.

Just be informed about CRS as a European citizen, and the automatic exchange of  your financial and tax information between the tax authorities.

Likewise, informed Americans know of FATCA agreements between the two governments, as well as the TIEA, two separate mechanisms for automatic financial and tax information sharing between the tax authorities.

Even though there is no tax treaty with the US, Brazil also recognizes reciprocal tax treatment with the US.  That largely eliminates double taxation for Americans, and depending on their tax bracket, declaring their income on their local return may well end up with zero local tax liability.   In which case local tax compliance, aside from mitigating taxpayer risks, would be a no-brainer.  Local tax software is available free of charge direct from the local tax authority.

Technically you should, in reality no one really gives a F%^&......seriously
I've been all the way through the system without ever been asked about my foreign affairs....not that I have a foreign income but still .....zero interest, even at receita.

As others have said if theres a tax treaty with your country (USA doesn't have one)
then you are kind of exempt.

Tanks a million.
So here is a bit of a gray zone.
Switzerland (my native country of citizenship) has a tax treaty with Brasil.
But, i do not pay taxes on my pension in Switzerland - because i live abroad (if i would be living in Switzerland it would be a different matter and depend on the local municipality but in my experience they can not force taxes on pensions because the pensions are around the national poverty line.

I also get a pension from Liechtenstein, also with a tax treaty to Brazil.
There the situation is simple, i am taxed on my pension by force - but just so they can keep control, at the end of the fiscal year they return the money to me (talking about "interesting"  administrative waste :-(

These circumstances taken in account i still wonder what it would eventually mean for me being in Brasil.

Simply not signing up for any tax form as someone seems to suggest, is that even an option??
Can i indeed just start up the Recita online tax form and "test" it for the result without the Receita knowing yet getting a definite answer that way??

Well the 2017 tac season just closed on 31st April.

Every year Receita release a new IRPF tax app download for the relevant year. (IRPF2017)
Yes you can enter all your info in and have it calculate the amount you will owe without actually submitting.
It only goes through when you actually submit the return.

I have no clue how you would go about declaring Foreign pensions with regard to tax treaties though, as I've never had to do it and it could get pretty complicated.
You need to be careful you don't end up paying money that you don't need to.

Tanks.
My GF just informed me that - for using this online tax form - one needs a certain number (not the CPF, that one i already have), something related to either the income or pension fund, which i definitely don't have, and  i doubt i can use the one from my LI pension :-)

But, if i could test drive that thing somehow i would love to do so.

P.S. can the office that issued my CPF document inform me on taxes, they seem to be part of Receita??

That office is a bureau of the Receita Federal.  They probably can't answer your questions themselves, but can certainly direct you to the office that can.

Sometimes on that program you can just leave certain numbers out if you are not a Brazilian citizen and it still accepts, but generally it's designed for Brazilian citizens to do there taxes.

There is a section called "Redimentos do exterior" where you can enter any outside income month to month, but you won't get any exemption if you put it in there.

You probably won't have to pay tax on your pension given your situation, but you would have to make an appointment at the Receita offices.

The Program you want to look at, and download, will give you a very good idea;  it's called the Carne Leao, it's on the Receita site, and eventually feeds into the overall IRPF tax return.   As Steve mentions, you can input the Rendimentos do Exterior (in reais naturally), and as long as any pension withholdings or tax prepayments are made during the month in question, you can enter that in the Compensaçao section, equivalent to a foreign tax credit.   As you may know, a foreign tax credit is better than a foreign tax deduction because you can actually get a direct and equivalent reduction in local tax for foreign taxes paid on the same foreign income, as opposed to just a reduction in local income.   There are limits to the credit, and the program figures it all out for you.  Doing the simulations on this simple program will give you a very good idea about your local tax liability.   It might even be lower than that when that program is uploaded into the IRPF program, as there are certain annual deductions that are only considered on the overall program.

Wonderful to get this much useful info, so me and my GF have to try this online program over the weekend with your various instructions.

She also says i need to get my already existing CPF somehow verified or certified by the Receita or tax bureau before i can even open up a bank account here in BR ... which maybe another question for another forum segment within these expat forums, but i try to ask anyway .... I already made the experience that getting my bank from back home in Europe to send Euro or CHF (none of my banks will deal directly with BRL so i can not exchange at my home bank already) to a Brazilian bank is a bad idea because the fantasy exchange rate they apply is HORRENDOUS ... so, besides of awful and frequent ATM runs, are there any possible alternatives to transfer foreign currency into BR without the humongous loss at the banks interstellar exchange rates?? (Oh, and, is it true about that "verified / certified CPF i need to get a bank account)??

You can verify your CPF online.  Go to this website and input the information from your card:  https://servicos.receita.fazenda.gov.br … tentic.asp
If it comes back that your status is "Regular", you're good to go.
She may mean that you need to update your record for a change of address.  That is true, and has to be done at the Receita Federal, Banco do Brasil, Caixa Econômica Federal, or the Post Office.  Bring proof of your current address.
To open a bank account, you need:
1. Your CPF
2. Your RNM number (National Migrant Registry, formerly National Foreigner Registry -- RNE).  This you receive ONLY after the Federal Police has approved your request for permanent residency, so there's no point in even trying to open a bank account before.
3. Your passport
4. Proof of address:  electric bill, Internet bill, phone bill, rental contract for home, etc.  If in your girlfriend's name, you'll have to provide a marriage certificate or a certificate of "união estável" from a cartório.
5. Proof of income.  What constitutes "proof" varies some by bank.  Only current accounts require this; savings accounts do not.  If you open a current account as a "Profissional Liberal" -- a self-employed knowledge worker -- Banco do Brasil will accept a declaration signed on the spot, up to a certain amount, which has no bearing on how much you can actually run through the account.  Other banks may well do the same.
Bank charges and fees, from an American perspective, are high; from what I remember from living in Europe, you may not find them as shocking.  Caixa was founded as Brazil's bank for the poor, and has the lowest fees.
Banco do Brasil and Caixa are government-owned, and can be found in virtually every town and city in the country.  Bradesco is the largest private bank, and has a network almost as large.  Itaú and Santander are also private, and well represented in the Center-South, and in the state capitals and larger cities elsewhere.

Hi,  you don't need to verify  your  CPF, in any case the bank can do this themselves through the website if they need to check your status.

To get a bank account you need a job offer, this is the easy way to open it, then you just take the RNE card and the letter from your employer there and of course the old proof of address, but I don't even know if I needed that with the letter.

Most banks (especially private) are hesitant to open an account without the letter from an employer, however I managed at Banco do Brasil just by going there, but it was a pain, this is the situation that most expats run into difficulty with.
-Banco do Brasil's fee are ridiculous too R$50 a month just to keep it open, I finally shut the thing after it sat unused when I got bradesco for a job.

To tell you the truth though opening a bank account when I first arrived was the biggest mistake I ever made, It's really not worth it to transfer foreign funds to and you only really need one if you are working in which case it's easy to organize, I ended up going through 3 different banks with 3 different jobs. I realised I jumped the gun and actually really did not need an account until I got my first job in Brazil.
It's true the fees are ridiculous.....honestly most people just draw out what cash they need from their foreign accounts at the atm, you can get out about R$1000 a day for a fee of R$20.
I would say never do a bank transfer to Brazil if you can help it for many reasons.

In Brazil you get the bank account when you need it, same with most things here....I've found they generally tend to happen naturally when you need it, it's tempting in the beginning to race all over town, getting fustrated  trying to get every document under the sun, but they have a way of falling into place in you are here long enough.....just the RNE card and cpf are essential.

You don't need a job offer, or a job,  to open a bank account:  that's bad information.  You DO need a RNM/RNE.  Once the Federal Police have registered you , however, you don't need to wait for the card.  They'll give you a form, a "Protocolo" that has your RNM attached, and you can use that to open your account.

You don't need one for national banks, but it makes it easy...most private banks will flat out refuse.
Caixa and Banco are the exceptions

Thanks abthree. and stevefunk,
In fact my GF did do this last night, so we know my CPF is actually valid or verified, but i did not yet know the address change thing and the various other requirements for opening a bank account, good to know now.

As to European banks, the scenery has changed quite a bit probably since you were there last.
And, Europe is not the same as far as banking goes. But, many countries now have free accounts, free credit cards, exchange rates at official xe.com rates (plus a small percentage as a free, no fees for cash withdrawals at ATM's worldwide otherwise, no account keeping fees, no fees for dogs and cats we might have, you know, the new online only banks. Some countries have them by the dozen, others still don't have any and others have but are not high on public trust.

Canada is another example of fees free bank accounts.

But, i am glad you mentioned Caixa as the one with the cheapest rates or accounts, so we can go and start asking at one of those branches first and make our way up to Bradesco etc... if necessary ..

Oh, stevefunk, i am retired, not interested in working anymore especially for the kinds of salaries people (i assume) can get here compared to Switzerland :-)
Anyway, yes, i read this already in other forums, and i already made the pretty bad experience with fantasy exchange rates by ITAU 3 years ago when i paid my landlady here in Rio via IBAN bank-to-bank automatic rent - boy was my landlady outraged, ITAU charged her roughly 20 to 25% of the actual amount, sent in USD, just for exchanging it to BRL!!

ATM runs are, however, no exiting solution either, A: the risk of someone trying to rob you and B: the question if the ATM really works with my foreign and modern CC, at ITAU ATM's there were endless problems, at Bradesco so far fortunately none.

Compare this with the way we pay rent in Europe.
Set up a standing order using IBAN . and don't worry anymore about it until you move out - and all that at zero cost to either side, that is how you extend the joy of actual living each month for say 9 hours!!
I guess i need to find a landlord who is also at home somewhere abroad and has a bank account there so i could pay my rent in the future also here in BR with losing a single cent to any bank.

Totally with you on ATM runs.  And Brazil is reported to have a problem with gangs mounting readers in ATMs, as well.  The advice now that I've read is to only use ATMs in a bank building (not in stores, etc), and to only use them on weekdays, when they're under constant observation.

I haven't seen any stickups here yet, but in São Paulo, my then-fiancé now husband was robbed at gunpoint after daytime ATM withdrawals three times.

I don't run into the kind of problem you had with Itaú with Banco do Brasil.  I do a monthly wire transfer from my US account. The exchange rate is within centavos of the Financial Times rate, and for my usual transfer amount, the bank charges me R$100, and the Federal Financial Operations Tax is R$38.  The convenience is worth it to me.

I opened a Bradesco account and use TranferWIse to get my money here from American bank account. It's the cheapest and most convenient way to do it.

I used to do the ATM runs 3 days in a row to get enough money to pay my bills. It was dangerous and thankfully in 2 years nothing came of it. My American bank does refund ATM fees but the travel expenses to go three days is the difference.

Now I sit back and wait 3 hours for the transfer to come through.

CraigF wrote:

I opened a Bradesco account and use TranferWIse to get my money here from American bank account. It's the cheapest and most convenient way to do it.

I used to do the ATM runs 3 days in a row to get enough money to pay my bills. It was dangerous and thankfully in 2 years nothing came of it. My American bank does refund ATM fees but the travel expenses to go three days is the difference.

Now I sit back and wait 3 hours for the transfer to come through.

Craig,
Glad you found a better way.  I was thinking about a post of yours concerning "ATM runs" when this topic came up!

You will find you will have to pay Tax ,say for instance in Germany, as the Double Taxation law has not been rectified between Germany and Brasil. so the German tax authorities will be looking to tax you on the whole pension amount.
Brasil is supposed to be going to re sign the Double Taxation law , but no one knows when that will be. so be alert for tax claims from Germany.

Richard

Oi, unfortunately that is not good news to rad, someone with personal knowledge of hold up after an ATM withdrawal.
It does not pay to live in countries with such huge inequality, there is a reason why they call it social security - because it lowers the need for criminal ways to earn a living if the Govt. can manage to give some "free low income" to the sick misfortunate and elderly, works well for Singapore, Switzerland and so many countries.

Anyway, the suggestion on TransferWise i have to check on, always thought this is only for people with an US bank account (which i no longer have)??

Can you tell me CraigF
how do you receive the money in Brasil, i mean does it arrive in BRL and into a local bank account of yours, or do you have to pick it up at some office, or is it delivered in cash to your home (i never used this kind of service, sorry for the silly question, the more i know the easier the decision to try it myself, but i don't have any bank account in BR yet).

To Locatil,
i am not from Germany but CH, and it's the same or similar story, the treaty is already signed, but at the very moment not officially in place .... and this can mean anything or nothing in Brasil :-(
besides, while i was living in germany my pension from Switzerland was NOT taxed, at least not in Berlin.

Glad to know Banco do Brasil does not use mega fantasy exchange rates, something i have asked my GF (with a BdB account of her own) a long time to inquire, but she never did .. probably because the services and branches are melting away like snow in .. erh, Brasil, not great if you like something accessible and speedy ....

BdB's rate doesn't seem as good as TransferWise's, and TW's fees are lower.  For our June transfer, I'm going to follow Craig's lead and try them out.  It's a slick business model - check out their website.
We live in a wonderful time!

No silly questions here, I feel this forum is going back to the information that needs to be passed on between Expats...I almost left this forum recently.

With TransferWise you can use the website or App which are very convenient. I believe that it works with an array of banks all over the world. Not just American banks! Check out their website.

I go onto the App and choice the amount I want to send or the amount I want to receive at the bank. The amounts get converted to the end destination currency through the transfer.

This service is only bank to bank. So, you will need to open an account here.

The fees are very minimal and when you select to transfer funds it locks in the exchange rate. You know exactly what you will receive and what time frame. All the fees associated with transfer will be clearly stated.

I am beyond happy with this service and would love to be their spokesperson. Any questions let me know.

Thanks Abthree and CraigF, yes that sounds like the best option because if the "mediator bank" (TransferWise) does the exchange already the Brazilian bank cannot charge theirs - and anything else is better than theirs :-(
Let's hope it will take years before they figure it out and make "policy changes" in their favor, say extra charges for such transfer services.

I forgot to add this in case someone else things about TransferWise or similar services;
even if one does not yet have a Brazilian bank account, i would assume this service could be used to pay the monthly rent directly into the owners BR bank account. That alone would require less ATM runs each month.

The other thing ... i tried it just a week ago, i stick my card into an ATM that only spits out 1000. I get my 1000 out - and simply stick the card back in to get another 1000 .. and that actually works, at least at Badescu branches!

Yes, you can TransferWise to anyone's account and it would be easier to pay rent that way. At 24 hour banking ATMs I found that with my bank I can withdraw R$800 four times, Itaú I can do two withdrawals of R$1.400 and Bradesco is two withdrawals of R$1.000

Yeah it also depends of course on what the limit of your bank back home is....

I always had best luck with Santander, Bradesco hit and miss and I don't think Itaú has ever worked at all for me.

Ah that made me LOL stevefunk.
Nope, ITAU also only worked 50% of the time for me with my "Gringo" credit card.
In all i had 3 incidents were the process of withdrawing went through to the last bit, the one were the ATM spits out the cash!
No cash came out, not even a hair, but my card was billed for it. Good thing my bank back home took care of the problems each time.

I was told ITAU uses old ATM's that can not handle modern days cards very well. On the other hand, i have a few friends here that swear on ITAU .. but mind you, they have some kind of "better" accounts which gives them privileges the average bank customer does not get.

But before the banking comes the visa, today we were at a cartorio that said 2 witnesses and their verification of a uniao estavel will be accepted by the FedPol  and that that never heard of a judge approval as a necessary requirement by the FedPol- i will go to their office here in town towards the end of the week with faint hopes that one of them might actually has the time to talk to me and give me accurate information on whether a judge approved uniao is necessary or Cartorio approval with witnesses is still the accepted form, anyone of you knowing more or the latest on this issue??

It appears from the Ministry of Justice's website, as well as from the experience of others, that a Certidão de União Estável from a Cartório de Notas is just as acceptable as a decree from a judge.  Since the first is much less hassle to get, I'd give it a try first.

Thanks abthree, hope the FedPol can confirm that this coming Thursday. I'll post here what they tell me - or if they will tell me anything at all :-(

Useroo

Interesting data point, re:  exchange rates.  We're buying an apartment here in Manaus, and today happens to be the day that the wire transfer arrived from the US, and we closed the deal.

Banco do Brasil x-rate on the transfer:  3.6450713
Financial Times x-rate today:  3.5345
TransferWise x-rate today:  3.62163

I'm still going to give TransferWise a try because their fee structure and rate are attractive, but I'm feeling pretty good about BB's rate, too.

If you are comfi with that not so good exchange rate (once you get to the cost for 1000, or 10 000 USD /BRL) abthree i would still recommend that you ask at a branch specifically if there are other costs and fees involved!!
At ITAU there definitively were other hidden fees involved and they made my then landlady to sign a paper in which she basically agreed to the banks terms and conditions, and somewhere in the small print it probably said something like "the bank reserves the right to apply whatever exchange rate and fees"??

I have read about these fantasy exchange rates plus fees in other forums from other people, so i just advice, cover all bases, also with TransferWise - but there you are dealing with a company that mainly makes their money in XE and they can forward BRL to you in BR so no local bank can apply any exchange rate .. but they might apply some fees that will be awful??

And on my visit to the FedPol Galeao i learned some things, albeit, there is one short desk, on one side 2 to 4 officers and on the other side an ever changing number of people with questions. The officers answer half of your question, than answer half of someone else's question and maybe another officer needs to jump in to help out or ask for help - in other words, someone that deals with you only while you are there .. only in your wildest dreams, the reality is a total chaos.
Anyway, Uniao Estavel is best done through a Cartorio plus a judge homologacao (or whatever the word is), but Cartorio and 2 witnesses plus a utility bill of the Brazilian partner to prove place of living is also accepted just the same.
It's also a fact that the visa will be issued on the spot once all documents are handed over to the FedPol, in other words, if handed over completely  before the 90 days of a tourist stay are over the estrangeiro is welcome to live at and enjoy his / her Brazilian partner.

Anybody is going to apply fees.  The bank's fee was R$275, which is their top fee, and it was right out there in black and white -- nothing secret or hidden.  The IOF, which is the Federal tax on financial transactions, was the same 0.38% that any bank has to charge.  (It will be interesting to see what TransferWise does about IOF.)  Those were the only two deductions.  Not sure what you think is wrong with the rate, or why you're convinced that something underhanded is going on -- that must have been some experience with Itaú!
If we were talking about Venezuelan Bolivares, I could understand:  those rates are all fantasy, all the time.  But Brazil isn't a failed state, and I'm not aware of an active black market selling reais at rates that are far higher than market.  A black market like that wouldn't last very long!

Reference TransferWise, I have been using TW for several years and they do provide a good service, if you go to the Web site you will find they have a Support Center where many of your questions have been answered, like how much money can be transferred per calendar year in to your account and so on. Before I use to use my Bank but they up and did a runner,However i had several problems with them this end , caused by the clearing bank here in Brasil no knowing the rules, and so on.

Sorry about the confusion with "hidden" fees abthree.
To me they were hidden during my experience with ITAU, not because of the bank but because the owner never told me any details, only that the total drawdown off the original amount sent to her ITAU bank was somewhere in the realm or 20%, so the bank creamed off nicely.
The other term you mentioned, from the Government i had also no clue about.

I can only tell you that if i withdraw money with my German online bank card anywhere else in the world but Brasil my bank is charging me almost spot on what the official xe.com going rate for that currency vs. the Euro was at the moment of transfer and they add a 1% fee onto that exchange rate, say 10 bucks for 1000 Euro and that's already all, so you might understand why i or some other people find the exchange dealings of Brazilian banks a total rip off .. we're just used to better deals.