Expats: how do you stretch your Reals further?

10/27/25 @Pablo888.  Great topic.  US Citizen (and naturalized Brazilian Citizen) here, with most investments located in the US.  Those facts are important in evaluating any responses. 

I receive all of my income in USD, deposited with the same people who service my investments.  When I got married in 2017 and moved to Brazil, my initial plan was to transfer enough USD to my Brazilian bank account every month to maintain a lifestyle that my spouse and I enjoy while basically spending the transfer down to zero every month.  I anticipated that over time, Brazilian inflation would require me to gradually increase the transfer until it amounted to my entire US income.  After that, I expected to be at the age when I would have to make Required Minimum Distributions (RMDs) from my IRA, and to start gradually liquidating my investments.  Between that and my spouse's income in BRL, I expected that we'd be on a steady glidepath pretty much for the rest of my life.

I completely miscalculated -- some Brazil Expert!

What has happened in fact is that over the past eight years, Brazilian inflation has been largely offset by the gradual devaluation of the BRL against the USD.  This year is a good example:  the headline annualized inflation rate of the BRL is around 5.5%, and the decline of the BRL against the USD has been around 10%.  Actual inflation is probably somewhat higher and available exchange rates are somewhat lower, and since we're talking averages here, we've had some (very few) tight months where I've had to make an unplanned ATM withdrawal or two, but you get the picture:  I've never had to increase my monthly transfer. 

This could all change on a dime depending on Trump's latest tantrum -- currency controls, targeted sanctions against US expats in Brazil, a global recession caused by his trade wars, even the collapse of the USD.  I have about five months' expenses in a multi-currency emergency account with Wise, but there's not much more I can do about that. 

I've stayed away from Brazilian investments, mostly because I haven't taken the trouble to learn about them, I wanted to limit my BRL exposure to exchange fluctuations, and I especially wanted to avoid the onerous US reporting requirements that a large Brazilian portfolio would bring. 

Great question . Looking forward to hearing from others .

@Pablo888

Would a Certificado de Depósito Bancário (CDB) help you?

@Pablo888
Would a Certificado de Depósito Bancário (CDB) help you? - @alan279

28 Oct 2025

Certificate of deposits can be good in Brazil.  I am not sure if CDs pay interests as dividends.  In the US, dividends are taxable.  I was under the impression that dividends are not taxable in Brazil (because of double taxation rules).

If dividends are not taxable, then this can be an interesting hedge against taxable income in Brazil.   But the IRS will still want to get its cut.

In the end, is it better to keep cash in the US or move it to Brazil?  The dollar is still very strong compared to the Reals - which means that the R$ will most like devalue more than the interest rate earned from inflation.  Looks like there are 2 negative to move cash to R$ - 1. devaluation uncertainty and 2.  inflation rate that is higher in Brazil than the US.

Investing in the US is a safer bet.

Any other thoughts?

Unfortunately I am no expert on predicting echange rates, but I do take advantage when an opportunity presents itself. So if the euro suddenly weakens against the BRL, then I will shift some reais to euros on my Wise card. I would then use those funds when travelling in Europe.

The problem with investing outside your home country, and then wanting to repatriate as part of your investment plan is exactly this - the exchange rates. I recall 2 US guys bought a home where I am 15 years ago, when the rate was 1.7. That home has tripled in value in reais, but with the rate now over 5, they would get exactly their original purchase price back in dollars... So, if they want to sell (they do not as they use it and rent it), they would need to wait until the rates drop back down again to realise a dollar profit.

Personally, I think the dollar is very high at over 5, and was far too high at 6, but this is exactly the right time to invest if you see the rate dropping over the next few years (never view Brazil as a flip or short term investment, costs to buy and sell are too high).

If you purchase a CD before 1st January 2026 (as I have, with the interest rates now up to 15%), you will pay tax (only on the profit) on a sliding scale depending on how long before you withdraw funds. This varies from 22.5% within 6 months, to 15% after 2 years.

If you invest after 1st January 2026, the proposal is you pay a fixed rate of 17.5%, but if you withdraw before 30 days you will have to pay an additional IOF tax.

I also have a company which is registered with the Simples Nacional tax scheme. This means that ALL income is taxed on a sliding scale, with exact % dependent in the previous 12 months sales. My accountant works this out, but for me is typically between 5% and 15%, depending on the type of sale.

But if the company pay dividends, then those dividends are tax free, due to double taxation rules.

With a CD you do not get taxed on the principal investment (it has already been taxed), but on the profit, which has not been previously taxed...

@Pablo888In the end, is it better to keep cash in the US or move it to Brazil?

- @Pablo888

Maybe not keep all your eggs in one basket? 😀

Seriously, do you have accountants in Brazil and the US (and other relevant countries) to advise you?

@abthree

Excellent response  thanks for sharing....as I married my wife (From Rio) in NY and we moved to Florida years ago....over time I have becomes a CRNM holder but we have "talked" about spening more time in Brazil...but this is a perfect talking point on this topic...as how it would work out  (financially wise)...   If I might ask..where do you live in Brazil?..as if I ever did move (or spend more time there) it would be in a Rio area....possibly Recreio.....as I do enjoy that area....   do you have an account in Brazil?---my wife wants to "invest" a tad in a BNB...but I am not so sure due to taxes...

thanks

Mickey

10/30/25 @easygoer1050.  Thanks, Mickey.  Recreio looks very nice, and you already seem to have some connections there, which will help.  We live in Manaus, Amazonas.  We started out here because it's my husband's hometown, then he went to university here, and finally got a good job with the federal government here, so we've stuck around.  We're more interested in the North and Northeast than the South or Southeast, and have looked hard at Fortaleza CE, Aracaju, SE (where I used to live), João Pessoa PB, Vitória ES, Belo Horizonte MG (where I also used to live, and pretty much our southern limit), and as expected for anyone with a federal career, Brasília.

Yes, we have our accounts at Banco do Brasil, two individual accounts and a joint account that we pay our household expenses through.  We chose Banco do Brasil because we weren't sure at the time where we'd be living, and they're everywhere in Brazil.  I've been pretty happy with them in general, but I've gone out of my way to develop and maintain a relationship with the back office managers there so that when problems arise -- as they eventually do -- I'm a familiar client and not just some stranger, or worse yet, some foreign stranger.  I always recommend that expats do the same.  Since you have a CRNM you should be able to open an account at any bank, as long as you can provide plausible proof of a Brazilian address.   As a Brazilian citizen, your wife should have no trouble.

If you're considering setting up a BNB and concerned about taxes, you'll probably want to consider talking it over with a Brazilian accountant the next time you're in Rio.  Have a look at @Peter Itamaraca's  Post #7 above:  it might give you some ideas for starting that discussion.

ABTHREE

Yes  my wifes family is from Jacarapagua area....(not far from RECREIO)  I have some friends from there too....  over the years here on this format..I was able to figure out some interesting items...I did finally open a NUBANK account as well as a ITAU one too  (as last year I was able to get my Brazil green card (Residente )---as I do have an address at my step sons place....Funny since not living there full time (or over 183 days)  a few lawyers have asked me about doing a exit report and closing my accounts...or if I dont want to....I will have to pay to get taxes done...

Funny---the method you used with the banks is the same one I used to use in NY...lol   it definiely helps....  my dad (who will be 89) still lives with us here so there will be no moving (hopefully for awhile)-   then?  who knows....but visitng Brazil I am sure is definitely differnt then LIVING in Brazil....and what you wrote before about...regarding finances...is a big thought....  thanks

mickey

@Pablo888In the end, is it better to keep cash in the US or move it to Brazil?
- @Pablo888
Maybe not keep all your eggs in one basket? 😀
Seriously, do you have accountants in Brazil and the US (and other relevant countries) to advise you? - @alan279

31 Oct 2025

@alan279, I have running expenses in Brazil and I am figuring out whether to move money to cover those.  I am not really thinking of moving large amounts of money.

I think that this is quite a common thing for expats and if we had a "rule of thumb", this would be good.

However if I get past this one initial hurdle, I agree that accountants would be something to consider.

How to find a competent accountant was the subject of another thread and that's another can of worms that I have not opened yet..... Hopefully never need to...

10/31/25 @Pablo888.  As a temporary rule of thumb for the situation you describe, you could consider the current minimum monthly income requirements for the Digital Nomad visa (US$1800) or the Retirement Visa (US$2000) both under the VITEM XIV classification as a benchmark.  You can always increase the transfer if you find that this is a little tight. 

@Pablo888

A NuConta might work for you. They claim to pay CDI, currently almost 15%. Less income tax, of course.

If you purchase a CD before 1st January 2026 (as I have, with the interest rates now up to 15%), you will pay tax (only on the profit) on a sliding scale depending on how long before you withdraw funds. This varies from 22.5% within 6 months, to 15% after 2 years.

If you invest after 1st January 2026, the proposal is you pay a fixed rate of 17.5%, but if you withdraw before 30 days you will have to pay an additional IOF tax. - @Peter Itamaraca

For reasons that I am about to post, I also invest in these instruments.  Since it sounds like you also invest for the longer-term, in part to secure a lower tax rate, you will be pleased to know, as I was, that that this proposal was killed by the Camara de Deputados on October 8.   

Why would that matter if we both invested prior to January 2026?  As the following article points out, financial institutions would simply apply (in this case, Genial, but I heard the same thing from Itau) whatever the prevailing tax rate is at maturity of such instruments (in this case, 17.5%), regardless of when the investment was actually made:  https://www1.folha.uol.com.br/mercado/2 … stos.shtml

While this was in play I checked with a tax lawyer and accountant, who both told me that such an interpretation would undoubtedly be challenged in the courts, as the Constitution expressly prohibits retroactive tax hikes (principle of "anterioridade," as it is known here). 

While the Finance Ministry is working hard to revive some parts of its now expired Medida Provisoria, it is extremely unlikely that the revised tax withholding will again rear its head anytime soon, given the market reaction to it - local treasury yields surged, as investors demanded a market premium that more than offset the effective tax increase! 

As the cost of issuing new debt surged, not to mention the implicit discouragement  to investing in longer-dated instruments, the Finance Ministry eventually took note of its monumental public policy fiasco and retreated.

My approach is similar to one taken in a former life of working stateside and Brazil in corporate finance :  "Asset - Liability Matching."

The idea is to generate enough local currency income to cover recurring local currency expenses.   

Note that i mentioned *recurring* expenses.   As a longtime  permanent resident here with most assets and income concentrated in my home country (the US), I was certainly  not looking for a major portfolio make-over to Brazil. 

But I did want to repatriate just enough to my country of residence in order to cover monthly expenses (like utilities, condo fees, health insurance premiums), with local investment income, a natural currency hedge.  For larger ticket items or the occasional one-off's I would utilize a US debit or credit card, but otherwise, for extended periods, now forego regular international transfers.   These expenses are on automatic debit, and so there is very little maintenance work involved.

I invest in fairly conservative instruments like CDBs issued from one of the five principal banks, in amounts lower than the FGC (similar to FDIC) thresholds, as well as local treasuries.   I feel comfortable doing this as historically Brazil overnight rates (the Selic, or CDI) have significantly outpaced local inflation (although there was a brief period during the Dilma administration when real rates were  negative).   According to the Central Bank, inflation over the last 12 months was 5.17%, and with the benchmark interest rate presently at 15%, we presently have real interest rates of nearly 10%.

That compares to the US with real interest rates at less than 1% ("official" inflation at around 3% and the open market rate now less than 4%).   

So that leaves an approximate 9% interest rate differential in Brazil's favor that can be considered an additional cushion against future currency risk.

What about interest rate risk? Overnight rates are, after all, floating.  To mitigate this you might want to consider locking in a portion of your portfolio with higher rates when favorable market conditions arise with medium-term fixed ("pre-fixado") CDBs or local treasuries.  In the treasury market you can presently lock in rates of 13% for terms of 3 years or 14% if you want to go out for 10 years (an eternity, here in Brazil). 

One risk, that I mention in my post above, is the risk of changes in local tax treatment.  What may not have been clear in that post is that the now aborted tax hike proposal applied to local government treasuries as well as bank CDBs, resulting in the market reaction that led to that proposal's demise.     

The current local tax treatment, and in force for the last two decades, is as @Peter Itamaraca describes above, dependent on the holding period of the investment with eventual withdrawals taxed at 15% after two years.  This tax is automatically withheld by financial institutions.  For US taxpayers this generates a tax credit on their US returns, which depending on their relative tax rates, may eliminate US taxation on the investment altogether, if the Brazil tax rate is higher.  If the US tax rate is higher, Brazil taxes may be fully offset against US tax on the investment and the taxpayer would pay the difference.  In practice, while double taxation is avoided, you end up paying the higher rate.   

At the end of the day, you would need to look at the relative after-tax returns of investments in both countries, as well as your risk tolerance, in order to determine if this approach would work for  you. 

I do not live in BR but I intend to. I just withdraw at Bradesco ATM with my U.S. bank card and since it has slightly better conversion rate compared to Wise. But for large amounts I would have to use Wise.

Since predicting the exchange rate is difficult as with any investment, the best strategy is to use dollar cost averaging.  I like to transfer monthly into short term CDB and at maturity I roll into treasuries which I made a yearly bond ladder. The amount doubles every 5 years at the current rate. Regardless of the currency rate I will have enough buying power every year.  Inflation highly depends on where you live in BR.

Dividend on stocks are not taxed and so are LCA LCR also. CDB and treasuries are taxed. But in US you report world wide income so does not matter which investment I did. What I am irked about with no tax treaty is if one is a tax resident in BR they will not recognize Roth so doing Roth conversions would be almost useless but RMD will make it worse for U.S. taxes.

The current Selic rate 15% and Real above 5.0 is unsustainable for growth.  But once below 5.0 the rates will drop also.  Looks like Lula will run for President again so many think the Real will depreciate and rates will have to remain high probably.