Double Taxation Concern

I have through marriage a permanent resident Visa for Brazil but reside in the U.S . I keep it active as I'm planning to retire in Brazil.  I have been told that after paying income tax in the states that I am obligated to also pay Brazil taxes on the income made here. Any advice in regards to double taxation and does Brazil really try to enforce it

You can not keep your residency active. If you've been out of the country for 2 years... Your residency for BR can be revoked.

Unless you mean the Vitem XI/family reunion visa that the consulate issues you. I believe you have 1 year to enter the country and register through PF, and upon entering the country 90 days to report to PF.

As far as taxes goes. Other US expat members can answer.

Best regards,

I go to Brazil every year for several weeks but the income taxes is the issue. Another concern on taxes does Brazil expect one to pay social security and pension taxes even though they have been already paid in the U.S..? If so, what are some tricks to avoid as double dipping on taxes would defeat the purpose of living there.

Robert60

Your several weeks' stay per year in Brazil is enough to keep your permanent residency alive.

If you earn any income in Brazil, you have to pay Brazilian income taxes on it.  If you transfer more than about R$20,000, depending on age, to Brazil in any given year, you may have to pay income taxes on the overage.  You should speak to an accountant the next time you're in Brazil to get an expert opinion.

Under the new Social Security Treaty that went into effect last October between Brazil and the United States, a citizen or permanent resident of either country who pays Social Security taxes in one country, is not required to pay them in the other.

I heard about the social security treaty but it seamed it was to prevent s/s taxes from being withdrawn from both countries paychecks. I did not read about ss taxes not being taxed after retirement and deposited into Brazil. Be so much simpler if there was a tax treaty and speaking with a expat tax attorney is advisable and thanks for your advise. If any members know of excellent tax attorneys I would like their web site. Thanks

As it happens, someone from Social Security was here in Manaus this afternoon to meet with beneficiaries, and I was at the meeting.
It's not that "ss taxes not being taxed after retirement and deposited into Brazil"; it's that only one country at a time can collect from an employee and his/her employer for one job, whether that employee is physically located in the US or Brazil.  This is mainly intended to keep expats and their employers from being double dipped. 
The money never gets pooled.  However, credits can be.  Social Security requires a person to contribute to the system for at least 40 quarters, or 10 years, to qualify for a benefit.  Under the agreement, however, if a person works and contributes only 8 quarters in the US, s/he can still qualify for a US benefit if they work and contribute the remaining 32 quarters in the Brazilian system.  That's new.  The person will receive separate US and Brazilian benefits, but will be able to receive both.
Surviving spouse and child benefits can now be paid to the family members of a deceased beneficiary, even if those family members are not US citizens and were never US residents.  That also is new.

True, that's what I thought I read. Bringing in funds to live in Brazil I think can be questioned if they are income generated and are taxable.

There's no tax treaty between the US and Brazil, so it's up to expats to work with their tax advisors in both countries to minimize double taxation.  It's not terribly difficult,  but it's not automatic, either.
On the other hand, as James Woodward reported several years back, Canada and Brazil have a tax treaty that treats our Canadian friends very favorably indeed.  Then again, they lose all their benefits if they become dual citizens.   So everything has an upside and a downside.

In this country if I make 100k I would pay the U.S. about 25k in taxes and Brazil another 25k. I would rather have the tax treaty and loose Brazilian benefits. Thanks for replying

abthree has explained.
You pay income taxes in US on all income. No taxes in unless you have made income in Brasil.
That said, take care as to how much you transfer to Brazil. I was only allowed $2K US per month for a few years. I then went to bank and requested a higher amount. Explained that some months I had real property, medical ins., auto taxes and Ins and other expenses. FBAR for filing on banks outside US. It is mandatory for of $10K, but accountant said to file each year, just in case.
Do not know many places you can make over $10KUS from a Brazil firm. If you mean an online business and all is income paid to your bank it is US income.
I am not keen on having SS deposited direct into a BR Bank. Never know you may want to return to US or go to another country.........Then you have to wait until SSA gets it all straight

What you are saying is since all my income is made in the U.S. there is no need to worry about the Brazilian tax man? Good info on the limits of what I can possibly bring in monthly and 2 thousand per month is kind of low. I would think charging everything on no fee international credit cards would be a good idea and using xoom to transfer funds to a friends account. I plan to retire in the Porto Seguro area. Thanks, Robert

Exactly what I did. Used card for many things and had  most bills debited from bank. When those bills were paid I would transfer additional funds. Tip: It is best to transfer a different amounts. I tried $1000 the first of he month and had to wait until cleared bank. (which took time at first. I would then do another $1000K some days later. Had trouble asking about the second $1K cause they looked on system and it showed the first $1000 and said "you got it"! Then days later the second came. So I now do $800 and second a different amount.
One thing to watch for is a BR savings account. Even if interest is low, it is still BR income and "papa bank" knows.

I get more information from you than international living magazine. So the secret is to use international debit and credit cards and try to pay house bills,  medical and everything with them. Never would I deposit social security into a Brazilian bank. I do have a Brazilian bank account and have no problem paying taxes on that if needed. Imagine living in the U.S. and after paying the U.S. income tax then being expected to pay Brazil the same... This is what I have been told by some. Love to hear your story about Brazil and thanks for chatting.  I'm from Long Beach,  California

Probably anywhere else would be less taxes than CA. Fed+State+sales,+prop and gas taxes would leave me with very little.
I can live within SS here. I go back to US at least twice a year and that's when I go over the SS alone...

You file taxes for income in both Countries.  Once abroad, you are not expected to file taxes in Brazil, for as long as your last filing prior to leaving Brazil  specifies you are about to leave the Country.

In the Brazilian filing, you are supposed to download a client software every tax season , and at the filing you are faced with three choices:
1.Your Yearly Filling Update
2.Your I am leaving Brazil Update
3.Your last filing made by your survivors after you hit the grave ditch.

The USA is a reverse. You are supposed to file taxes, even if no income is to be Declared. Pay close attention to FATCA guidelines. 

Simple as that.

Indeed CANADA AND BRAZIL have a tax treaty. I had my permanent residency status for 10 + years and kept traveling between the two countries and always paid my taxes in Canada. Now I have my Brazilian naturalisation and I received all my pensions (from my previous work, plus 2 social security pensions) from Canada. They are deposited directly in my Canadian Bank account. I applied for a Non-Resident tax exemption and was granted a lower income tax rate. The Revenue Agency in Canada advised the payers of that new tax rate, so I did not have to do it.

As for losing the benefits, I am not sure which benefit you loose, except your medical insurance. That is no concern to me has my brazilian spouse has a plan that covers me. If I ever go back to Canada I have to advise my province that I would be returning and there is a three months wait to regain full health insurance coverage.

Went to the Brazilian Federal Revenue Agency. They trace you with your CPF easily.

However the chap there said that you can have a credit card from your original country and make your purchases on credit card and nothing shows. I have a credit card in Canada and one in Brazil.

He also mentioned that the limit is now set at 4,000 a month.

Very easy problem. Leave your money in Long Beach and come to Brazil with US credit cards and debit cards.  Use your credit cards for food in restaurants and purchases at supermarkets and stores at shopping centers. Use your debit cards in ATMs for cash to pay rent and utilities and at places that don´t accept credit cards. For big transactions like real estate purchases, wire the money direct from the US to the seller´s account in REAIS! You can also use this once in a while but wire it to your wife´s account.

Don´t deposit any money at a local Brazilian bank to avoid foreign income paper trail and also to eliminate foreign account reporting to the US. Keep your accounts active in the US to pay for things like investments if you have any and also
for miscellaneous shopping upon visit. If you ever return to the US for major health problems, you´ll be prepared. Pay your premiums if you have Medicare just in case.

You can purchase a health insurance in Brazil if you so choose. They cap insurance costs at age 60 in Brazil. 500 reais per month can be easily purchased from regional insurers.

Don´t naturalize until they guarantee that they won´t double dip on your taxes like pensions from private companies, 401K etc. If you do, keep your money in the US and do the above mentioned procedure.

robal

Well written,  I hear that sometimes using a credit card at a restaurant a 3rd party transaction company in Brazil may even charge 6%. Cant wait for Bitcoin or other peer to peer transactions to eliminate the middleman and use of Brazilian banks. You should write  book for future American expats to Brazil.

Quarkchain (QKC) is my favorite to be adapted for P2P, social media, high frequency trading, Internet of Things (almost because of MIOTA) , payments and also gaming. It can
perform 100,000 TPS because of sharding/cross sharding. I´m out of topic so I should stop now but I´m glad to know of forward thinking people like you.

About Tax Deferred Income.....

If you invest any monies in Brazil for the purpose of having scheduled payouts,  there are the equivalent of Tax Deferred investiments such as bonds and Treasury Bills.  They have a different name under, otherwise they work the same as if you purchased T-Bills and Bonds. 

There is also a possibility to invest in Hotel Rooms.  Most of the hotel management companies that manage properties under a pool revenue system do handle the tax accounting such as when your monthly distribution statement arrive with your wired funds transfer, that issue is already taken care. You still have to declare these earnings annually, however the income distribution is already pre-taxed and deducted. 

Hotel rooms have taken a beating over this last recession, as the combined effects of a recession and AirBnb affected earnings severely.  Nonetheless, for unexperienced Real Estate investors, not having to deal with Brazilian Tenants , wear and tear , and the local tenancy laws  these asset class proved to be is a big plus as hassle free investment.

There are good ones and awfull ones.  To give an example, some hotel rooms for a well known Hotel Chain Brand  went without paying dividends from 2017 until now at their flagged operation in Rio , while others in Sao Paulo brought in a steady 5-6% return per anum, somewhere on the vicnity of R$ 2.000-R$ 2500 per month net of taxes. 

I bring along these anedoctal examples as living in one country and having your "cash cows"  are recipee for losing money over the long turn.

I know this is a while back, but gotta ask.  You stated the limit is now $4000.00.   Is that Reais or USD?

Reais.

The equivalent in reais of US$4000.00:  R$21,688 at today's exchange rate of US$1 = R$5.422

Does Brazil tax a NYC retirement pension?

Sharky114 :

Does Brazil tax a NYC retirement pension?

No, unless you place the funds in BR savings or investment account. (The income from such is taxable in BR)
Any income in the US is taxed in the US. Any income in BR is taxed in BR.
Normally taxes are witheld in the US, therefore you have been taxed.

Thank you, I thought you were taxed on income in the US a normal job for example. I believe your informing the a NYC retirement pension taxed in the US and not in a BR bank is exempt

Brazil and the United States do not have a Tax Treaty (they do have a Social Security treaty, but that's different), so double taxation is quite possible.   Your best bet when you settle in Brazil is to find a local accountant that you feel is trustworthy, and to use that person to file your Brazilian income taxes. 

My accountant's advice has been different from Tex's, and both are different from what you'll find on the expat websites of the international accounting firms.  So it's complicated:   you want your own local expert to lead you through the maze, and, quite frankly, to hide behind if necessary.

Thank you for your response, from all of my inquiries in the last 10 years have been told either a retirementment pension taxed in the US is not taxed here as long as there's no other income in either country or the I'm not sure answer.

Sharky114 :

Thank you for your response, from all of my inquiries in the last 10 years have been told either a retirementment pension taxed in the US is not taxed here as long as there's no other income in either country or the I'm not sure answer.

For Canadians, that's true:  they have a very good tax treaty with Brazil.  For Americans,  it's not so simple.  That's why I avoid giving tax advice,  aside from the general advice of getting professional help.  :idontagree:

It is true Brazil and the US do not have a tax treaty. Brazilian authorities have already officially recognized the reciprocity of tax treatment, which permits the offsetting of the tax paid in the US  against the tax due in Brazil, on the same earnings.
Now with tax cuts, expenditures, and various economic variables today, either country may change policies.

Thank you, appreciate your help.

There is a Brazilian saying "Boca fechada não entra mosca." There´s no way they know about your finances unless you tell them. Now, if you naturalize, it´s a different ball game altogether as interpretation depends on the one analyzing the tax codes. Although, like Tex said, a Brazilian lawyer in this forum also stated the same about offsetting taxes due to taxes already collected from the originating country. Tax laws change though, so be careful about the opening of the can of worms ahead of time like depositing your earnings at a Brazilian bank.

Leave that money in NY. Use only debit and credit cards!

robal

Thank you for the info.

I believe I know the answer but it may be so simple it sounds wrong. With respect to paying US income in Brazil, if you reside for example between 6-10 months working in the US and then spend the remaining 2 months in Brazil as many Brazillian citizens do, it appears common sense that you should be exempt from US income even as a estranged. Appreciate the help.

No such thing.  What you think you are entitled to and what the IRS wants are two distinct situations.  You must declare your earnings abroad, even if they are not subject to taxation.  It's the FACTA filling.

Appreciate your response but confused. As a estrangeiro in Brazil now residing in the US and visiting Brazil one month out of the year or once in 2 years to keep my status I would still be subject to reporting my new US income to Brazil. Always pay my US taxes not the question.

Sharky114 :

Appreciate your response but confused. As a estrangeiro in Brazil now residing in the US and visiting Brazil one month out of the year or once in 2 years to keep my status I would still be subject to reporting my new US income to Brazil. Always pay my US taxes not the question.

If you're here that seldom and not maintaining a permanent home, I wouldn't worry.  A CRNM holder living in Brazil, on the other hand, probably has a tax liability regardless of income source, depending on any tax treaty between Brazil and the native country. .

That's what I thought appreciate your confirmation. God bless

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