Simple Question - Are US Social Security funds taxed in Brazil?

I believe SSN deposits aren't taxable as they are already taxed in the US.

@bepmoht I'm not a tax lawyer or accountant, but everything I have read indicates that the full amount received is counted as taxable income by Brasil (in the US, FICA income is taxed based upon your adjusted gross income up to a maximum of 85% of benefits - in Brazil 100% of benefits are counted).  That said, as others have mentioned, you receive a credit for taxes paid in the US in Brazil - so for example if  your tax liability in the US is 15,000 and in Brazil it is 16,000 you only pay 1,000 to Brasil not 16,000. 

As I mentioned in another post, there is an agreement on Social Security between the US and Brasil, but that applies to the paying of taxes into both repective systems and benefits received if you participate in both countries systems.  It has nothing to do with the tax liability of benefits received.

So the short answer is YES. They basically count US Social Security as regular income in Brazil.

Thanks….

Thats one vote for YES.

@madrac

Thats one vote  for NO.

Thanks for replying…

In my opinion, if you receive your pension directly into your bank account in the US (tax paid as required), when you transfer those funds directly to your Brazilian bank account in the same name, you are sending your own personal money and it is not earned income that should be taxed again in Brazil.

I have made numerous transfers between the UK and Brazil over the years, for myself and others, pensions and other funds, and it has always been regarded this way. Plus, if you keep the value to less than R$10k per time, it is not reported autromatically.

(Note that this is not the same as sending large amounts of funds for, eg, a house purchase, etc.)

01/24/24    So the short answer is YES. They basically count US Social Security as regular income in Brazil.
Thanks….

Thats one vote for YES.
   

    -@bepmoht

Here's another vote for "yes", with my usual proviso that expats should review their entire income picture with a Brazilian tax professional, including taxes paid in their home countries, before reaching any final conclusions.

@Peter Itamaraca

The double taxation agreement between Brazil and the UK  signed on 29.11.2022 is not in force as yet. on 19.07.2023 the UK & Northern Ireland approved the agreement  The agreement still needs ratification by the Brazilian government.  Therefore at present any income earned by UK tax residents either in the UK or elsewhere that includes pensions and social security benefits are taxable both in Brazil and the UK should they exceed the threshold of the current UK tax free allowance. With regard to the UK you will only need to pay tax in the UK on the amount that exceeds your annual tax free allowance. I believe the tax paid in the UK will be off set in Brazil against the tax payable in Brazil bearing in mind that the basic tax rate in Brazil is higher than that of the UK.

    In my opinion, if you receive your pension directly into your bank account in the US (tax paid as required), when you transfer those funds directly to your Brazilian bank account in the same name, you are sending your own personal money and it is not earned income that should be taxed again in Brazil.
I have made numerous transfers between the UK and Brazil over the years, for myself and others, pensions and other funds, and it has always been regarded this way. Plus, if you keep the value to less than R$10k per time, it is not reported autromatically.

(Note that this is not the same as sending large amounts of funds for, eg, a house purchase, etc.)
   

    -@Peter Itamaraca

@Peter I don't believe it works that way (although it would be very nice if it did).  Brasil and US do not have a tax treaty… so they really aren't concerned about if you've already paid taxes on money in another country (although as I mentioned earlier, Brasil has a policy of allowing taxes paid by US Citizens in the US to be applied to the tax liability owed to Brasil). 

If your interpretation was correct, US Citizens would never have to declare their US income for tax purposes, and the Brasilian law clearly states that they tax ”Worldwide income”.   Otherwise they would simply tell people that they only need to pay taxes on money earned in Brasil, and that isn't the case.

I wish it was that easy, but unfortuately, I don't think so.

Yes, the SS income should be taxable in Brazil.  There is a totalization agreement covering the taxing of state pension contributions between the US and Brazil, which helps to ensure a Brazilian working in the US or US citizen working in Brazil is not contributing to both pension systems.  It does not provide any special tax benefits related to distributions for those collecting though.  In the event you do pay income tax on the SS income in the US, those taxes will be deductible against your Brazil tax liability.

@Peter Itamaraca I'm trying to figure this out also. Have you been filing a Brazilian tax return in the years since you have been here?

    @Peter Itamaraca I'm trying to figure this out also. Have you been filing a Brazilian tax return in the years since you have been here?
   

    -@jasonlovesdogs

Every year the bank (in March or April I think) allows you to print a report that details the previous year's activity. This I then give to my accountant and he submits it... Never had a problem.

The report is called IRPF - income tax for individuals, with a deadline of 30th April each year...

My attorney has advised: in the Brazilian Constitution there is something called bitributação - it is forbidden to charge taxes for the same amount twice, and this does apply to pensions.

Foreign residents with permanent visas may receive their pensions on which they have been taxed in their home country, without having to pay taxes on it again in Brazil - as to charge this for a second time would be illegal. The only time this will occur is if the person declares that they are domiciled in Brazil.

But you must still send in the IRPF tax return every year...

    My attorney has advised: in the Brazilian Constitution there is something called bitributação - it is forbidden to charge taxes for the same amount twice, and this does apply to pensions.
Foreign residents with permanent visas may receive their pensions on which they have been taxed in their home country, without having to pay taxes on it again in Brazil - as to charge this for a second time would be illegal. The only time this will occur is if the person declares that they are domiciled in Brazil.

But you must still send in the IRPF tax return every year...
   

    -@Peter Itamaraca

That's great news, I want to make sure I understand what you are saying, so please excuse if I'm being pendatic.   I had heard before that for US Citizens that Brazil would give you a credit for taxes paid in your home country… for example if you had income of 10,000 and the taxes in the US for that amount were  1000 and in Brazil they would be 1100, you would only  be required to pay 100 in Brazil.  Are you saying that in effect you would pay nothing in Brazil since the amounts were already taxed in the US?  I also looked up the definition of domiciled.  Basically it says that residency is where someone chooses to live, but domiclied is what is considered someones home base… which roughly I would consider this to mean citizenship.  Would you

agree with this definitions.  If true, this would clear up alot of confusion.  Thanks much!

@mikehunter

Yes, you have it right. You can legally be resident in one country for many years, yet be domiciled in another at the same time.

When people talk about Brazil taxing on world-wide income, this is aimed at those who are domiciled in Brazil, working abroad but probably claiming tax-free income in that country. So the boss of a large company who is domiciled in Brazil, cannot be paid tax free in another jurisdiction, for example - unlike numerous US conglomerates that choose to pay their taxes in a "tax-friendly" country.

I think there are about 2 million Brazilians living and in the US, earning money and paying taxes there. How many of them do you really believe are volunteering to pay taxes in Brazil on top of this, when the vast majority of Brazilians in Brazil do their utmost to avoid paying any tax at all... or at least to pay as little as possible?!

@Peter Itamaraca Well, thanks again for that info.  You just made my day.  I currently don't file because I'm under the 183 day limit mainly just to avoid the headache of filing - since with Federal, State and FINCEN it's just a paperwork mess.  At least I know now when I do stay longer it won't increase my tax liability, but will instead just be a paperwork exercise.

@mikehunter

As @abthree has stated many times, always get the advice of a professional in these matters - just make friends with a neighbourly accountant, and ask him to do it for you, then buy him a few beers...

@Peter Itamaraca I hired an attorney to do an analysis regarding filing requirements, so I'm ok in that regard.  I just wasn't aware about the tax liability as it relates to domicile.  It's a bit of a surprise for me since you always hear about the fact that the US doesn't have a tax treaty with Brasil and that Brasil taxes worldwide income. 

    @Peter Itamaraca I hired an attorney to do an analysis regarding filing requirements, so I'm ok in that regard.  I just wasn't aware about the tax liability as it relates to domicile.  It's a bit of a surprise for me since you always hear about the fact that the US doesn't have a tax treaty with Brasil and that Brasil taxes worldwide income. 
   

    -@mikehunter

That last bit is a bit of a generic statement, that needed research and qualification, rather than a generalised opinion - hence my contact with my attorney (so this is not down to my interpretation or understanding!).

I have lived in Brazil for nearly 17 years with a permanent investor visa. I have received income from the UK, taxed in the UK, transferred it to Brazil numerous times and never had a problem. Nor have any of my colleagues and contacts over the years. So I would not have any big worries, if I were you...

As a quick culture guide to Brazil, it appears to me there are 2 priorites in Brazilian's minds - the first is football (soccer, if you must), and the second is tax evasion (not avoidance)!

@Peter Itamaraca Great info. Could you send me a private message and let me know what lawyer you've used? Because I've used a lawyer to give me a tax opinion and it may be the same person. But in the opinion it didn't say anything specific about domicile but it did refer to something about double taxation and how I would have to file a tax return but would not have to pay Brazilian income tax on a pension. I'm confused and tax season is coming and I want to make sure that I do it the right way and all bases are covered. One lawyer is telling me one thing and another lawyer is telling me something else.