Carnê-Leão

04/06/26 @ibdegen.  Everyone's tax situation is different, so I can't give you individualized tax advice, and am not qualified to do so anyway.  I'm a retiree from the US like you are, though, and have been paying taxes in Brazil since 2018, and can share with you some insights and topics to discuss with your accountant.  If s/he is not receptive to a creative discussion, and perhaps to doing some research if the material is unfamiliar, consider talking to another accountant.  There are lots of ways to interpret the tax regulations, which are complicated and constantly changing.  So with those caveats, here goes:

1. I always start my annual discussion with my accountant by saying, "I want to pay everything I owe, but no more than what I owe."  In my view, that principle should always guide your accountant's work.
2. Even though Brazil and the United States don't have a tax treaty, they do practice reciprocity, and Brazilian law frowns on double taxation.  So if you're bringing funds into Brazil that have already been taxed in the US, including post-tax savings, you should be receiving significant consideration for that fact.  It's not exactly a deduction or an exemption in the US sense, but your Brazilian taxes should be substantially lower than your US taxes.
3. I always complete my US taxes first.  Then I give my Brazilian accountant my completed US return, my 1099s, my yearend investment statements, the monthly extracts from my Brazilian bank accounts, and the statements for any miscellaneous Brazilian income (minimal) that I may have received.
4. You should get deductions for payments to a health plan if you have one, for being a senior, and perhaps more depending on your individual situation.
5. Prior to moving to Brazil, I was making my living as an independent consultant, and was considering continuing that work living here.  Perhaps for that reason, my accountant classified me at the time as a "Profissional Liberal" rather than "Aposentado", and I didn't have to use Carnê Leão, and still don't.  I always file my Brazilian taxes well before the due date, and pay them in full at the same time.  I have never had a problem with the RF over this.  I don't know whether the same setup would be available to you, but it wouldn't hurt to ask.
6. My understanding of Carnê Leão is that it's only a way to pay estimated taxes, like the quarterly payments that you may be making in the US already, except that it's monthly.  If you're making monthly dollar transfers to your Brazilian account  through Remitly, i would talk to your accountant about the feasibility of using the average monthly values in Reais of your previous year's remittances as the basis for your monthly Carnê Leão payments this year, after reducing them to take into account the fact that you'd already paid US taxes on the funds.  That way, you should end up approximating your Brazilian taxes pretty closely, and not have to concern yourself with exchange rates at all. 

I hope that some or all of the above is helpful to you.  The Receita Federal only expects us to pay what we owe, but if we overpay they'll be happy to accept it, and getting it back later may be a problem.  So it's worth the effort to get it right upfront.

Thanks @abthree. I will share this info with my accountant. It's very helpful.

Good morning @ibdegen - for the sake of the carnê-leaõ calculations of income earned and taxes paid in the US I use this table:

https://www.gov.br/receitafederal/pt-br … /conversao

Thanks @thetravelfox. This is very helpful.

I pay carne leao monthy on income sourced outside Brasil. I do not pay on my locally sourced income.

My foreign income is taxed at source in another country. I pay tax on the net amount I receive here by direct deposit based on the central banks forex rate for that day. My accountant has told me that is the rule. Then at tax time, I get a full credit for the foreign tax deducted at source outside the country, against any Brasilian tax due, as well as a credit of the nominal amount I paid thru carne leao every month.

I should get my tax refund of R$8.300 on this Friday actually.

And......the tax refund money was sitting in my account this morning, having been transferred by PIX from the RF.

29 May 2026

@hagece8690, does the country from which you get foreign income have a tax treaty with Brazil? 

I suspect that getting a refund from the RF is more straightforward if there were sharing of tax information between the foreign source and the RF.

US and Brazil do not have a tax treaty.

Yes it does. But that doesn't matter IMHO. Here's why.

I doubt there is any official and formal sharing of information between countries (it would be too onerous a time commitment, and expensive, especially since many governments around the world are cutting back on public service employees, like the IRS, which cut 100K people this last year) other than that which I personally provided to my accountant, in the form of my government tax documents which I filed for the relevant tax year from my prior country, proving income and tax at source deductions, for use here in filing with the RF.

BTW tax refunds here are not done on a first come, first serve basis. They are released once a month for 2-3 months IIRC, starting with people who filed early, want a PIX refund, and are in certain age groups. If you're 20, want a cheque because you don't have a bank account, and filed late, you are in the last bucket of people for example.

Yes it does. - @hagece8690

30 May 2026

One more question - does the foreign country tax on world income?  US is just like Brazil - i.e. taxes on world income.  Tax payments to the IRS tends to be higher than in Brazil and I am counting on the Brazilian law preventing double taxation that @abthree mentioned before - so that I do not have to pay Brazil any taxes.

Would Brazil refund me the balance between the US taxes and the Brazilian tax assessment?

That would be an interesting loop hole if this were the case...

05/30/26 Would Brazil refund me the balance between the US taxes and the Brazilian tax assessment?
That would be an interesting loop hole if this were the case... - @Pablo888

That would be nice, wouldn't it?  Unfortunately the RF is smarter than that.  The tax regimes are different enough that I've always ended up paying Brazil something, although always less and some years considerably less, than I pay to the US.  What will happen with your state income taxes I can't imagine.  Illinois is civilized and turned me loose before that could become a problem; some of the highest tax states of the US are not so cooperative.

This is as good a place as any to point out that the US Foreign Earned Income Exemption applies to earned income only, not to investment income.  The IRS will not exempt income earned on Brazilian investments, and the RF will see no reason to allow a deduction for US taxes on them.  That is one reason that I've avoided substantial investments in Brazilian securities; the other is the punitive tax regime that US law has established on anything that it considers a Foreign Passive Investment Company -- a PFIC. 

There are always exceptions, and one big one is your investment in your principal residence.  Earlier this year when it appeared that we'd be selling our apartment and moving across Brazil, I discovered to my horror that we'd not only have the BRL capital gain that I'd expected, but a possible USD capital gain that I definitely had not.  My US tax advisor quickly put my mind at ease, though:  apparently the US capital gains exemption on sale of a principal residence applies wherever that residence is located.  Whew!

@Pablo888

No worldwide tax. Plus, I'm paying R$900 a month in carne leao.

05/30/26

There are always exceptions, and one big one is your investment in your principal residence. Earlier this year when it appeared that we'd be selling our apartment and moving across Brazil, I discovered to my horror that we'd not only have the BRL capital gain that I'd expected, but a possible USD capital gain that I definitely had not. - @abthree

FWIW we are in the process of finalizing renovations on our condo. My accountant told me that every receipt can be added to the value of your property on your tax return, increasing it, therefore providing a non-taxable cushion against capital gains tax, should that situation arise.

Buy a property for R$1MM and declare it on your taxes.

Spend R$200K on renovations, supported by receipts.

Declare it on your taxes, raising the property value to R$1.2MM for the tax baseline.

Sell it for R$1.5MM and you only pay capital gains on the R$300K difference, not the R$500K.

Numbers are for demonstrative purposes only, as living in Morro de Alemao or Alphaville can skew things somewhat.

@ibdegen Hi, I understand why this may feel confusing. The good news is that Brazil does not tax the full amount simply because you transfer it here.

In general, the Social Security benefit is the income portion that should be considered for the monthly carnê-leão. Transferring your own pre-existing savings from a US account is not income by itself, although it is important to keep the bank statements showing the source of the funds.

The Remitly exchange rate is also not the rate used for Brazilian tax purposes. Brazil applies an official conversion rate, so the taxable amount may be different from the amount actually deposited in reais. Your accountant should separate the Social Security payments from the savings transfers and review the calculation month by month

FWIW we are in the process of finalizing renovations on our condo. My accountant told me that every receipt can be added to the value of your property on your tax return, increasing it, therefore providing a non-taxable cushion against capital gains tax, should that situation arise.
Buy a property for R$1MM and declare it on your taxes.
Spend R$200K on renovations, supported by receipts.
Declare it on your taxes, raising the property value to R$1.2MM for the tax baseline.
Sell it for R$1.5MM and you only pay capital gains on the R$300K difference, not the R$500K.
Numbers are for demonstrative purposes only, as living in Morro de Alemao or Alphaville can skew things somewhat. - @hagece8690

Just for clarification, this is a way to save Capital Gains Tax (CGT) when you sell. But there are some important issues that must be followed.

Firstly the funds to purchase must be already be legally in Brazil, or sent from abroad through the Central Bank of Brazil (not the same as Banco de Brasil) with an Exchange Contract. The value that will be considered as the purchase price will be the value in the escritura, not any other number (eg underdeclared valuation).

Next, any receipt must be a formal Nota Fiscal, not scribbled or even typed simple receipts. All wages must be properly declared and taxed. If you employ a company, they should be able to supply NFs to cover everything, but make it clear you want this in the initial negotiation, as it can be much cheaper for them not to do this. If you employ workers, then they must be formally employed and taxed, and all materials must come with a NF.

Finally, if you do sell, you actually have 6 months to reinvest the money into another real estate without being liable to CGT, and the Receita Federal have only 5 years to catch up with you. After that time, they cannot get the CGT out of you.

Strangely, in my experience, CGT is one of the taxes least pursued by authorities in Brazil, and I know of several people who sold, did not pay CGT, and were never chased for it. But, of course, I would never advocate that course of action...

To add to what Peter has said, employing a legit firm (a CNPJ) also is wise for renovations or building somthing, as it will likely be a very small line item in your property insurance that trips you up if the unregistered cash contractor breaks his leg on your property, and you find out your liability coverage is null and void as a result. My policies prohibit anyone, including a simple empregada for example, from being employed  and physically present while working on my properties, unless they are salaried employees of my firm, or someone else's, including their own CNPJ.