Income tax for retiree with CRNM obtained under new 2017 law

08/19/21

Hi, Mike,

I'm assuming that you  were admitted under a VITEM  XIV as a retiree.  The definition of that visa is still flexible,  but the rest if what I say follows from that assumption.

At some point, you should talk to a Brazilian accountant to confirm your tax status.  If you have or will have a Brazilian bank account into which you'll be making transfers,  or even regular deposits, you should do it soon, since that will make you visible to the Receita Federal.  If not, you can probably wait until early next year, since Brazilian tax returns are due at the end of April.

Chances are that you'll be told that you only owe taxes on funds that you bring into Brazil, not your global income, but I can't guarantee that.   There may even be a magic number of days that, as long as you don't exceed it, you owe nothing.  You definitely want to confirm that with a professional:   nothing could be worse than staying 183 days, if the limit is 180!

Thanks for the quick response.  Yes I entered under VITEM XIV.  From the Receita website: 
Para fins do disposto no item "b", caso, dentro de um período de doze meses, a pessoa física não complete 184 dias, consecutivos ou não, de permanência no Brasil, novo período de até doze meses será contado a partir da data do ingresso seguinte àquele em que se iniciou a contagem anterior. So, the limit is 183 days, but I'll keep to 182 just for safety sake.  The includes both the entry and departure day, so It's really only 181 full days.  The other thing I found was this:

Local laws define a resident for Brazilian tax purposes as the person who:

1. resides in Brazil permanently;
2. leaves Brazil to render service as an employee of a Brazilian governmental agency or body;
3. enters Brazil:
a. with a permanent visa, on the date of arrival;
b. with a temporary visa:
i. to work under an employment agreement regarding taxable events occurring from the date of the arrival;
ii. on the date she completes 184 days in Brazil, whether consecutive or not, within a period of 12 months;
iii. on the date she obtains a permanent visa or becomes an employee in Brazil before completing 184 days in the country, whether consecutive or not, within a period of 12 months;
4. being Brazilian and nonresident for tax purposes returns to Brazil with the purpose of becoming a permanent resident, on the date of arrival;
5. leaves Brazil on a temporary basis;
6. leaves Brazil on a permanent basis without filing the “tax exit” return within the first 12 months of absence.

My assumption with the new law would be that retirees fall under section:  3 b iii, which says you are a tax resident:  on the date they obtain a permanent visa or becomes an employee in Brazil before completing 184 days in the country, whether consecutive or not, within a period of 12 months;

It all boils down to whether a CRNM with an expiration date of 2 years would be considered a "permanent visa" or "permanent resident".  Logic seems to imply that it wouldn't since it expires in 2 years, and I haven't been able to find anything that states otherwise.

08/19/21

I would read that the same way that you do. 

There are no more new permanent visas (since November 2017), and a CRNM that expires in two years can't really be said to establish permanent residency.  If the PF issue you a CRNM with "validade indeterminada" when you renew two years from now, that may change your status, but that's off in the future.

I always like to have a professional opinion behind me on this sort of thing, but I'm very risk-averse. 

I did a bit more research and found that tax residency is defined here:

Instrução Normativa SRF nº 208, de 27 de setembro de 2002

Bom dia!

Have you found out any more information regarding how this all works with the Retirement Visa Vitem XIV? 

I got mine last May, 2022 (valid until 2024) and Arrived June 16, 2022.  I Went back to the US for 3 weeks last September-October. My time was 175 days in 2022,  less than the 183 days you've written about here.

I already filed and took care of my US taxes in February, but unfortunately I haven't found a local Tax Professional here yet (João Pessoa) as I've been busy dealing with a few health issues.  Filing would be due on Friday, April 28, 2023 if I have to do this, right (the last working day of April)?  I am hoping I don't need to file for tax year 2022 at this point... Any updates will be appreciated...  Thank you!

From what i understand, the deadline is the last day of may this year.  Also, it's my understand that it is imperative that you file, even if you own no taxes.  If you know a portuguese speaker and have retirement income, i. understand the electronic filing is straight forward.  I believe banks look at these filings as th only real way to substantiate income, for things like credit cards, loans, etc.  That is a hornets nest i won't go into now, but you need to pay credit cards in particular off every month or do not use them.  The APR on my Visa from Bradesco is 237.00 per YEAR!.

Roderick

@rsrenfrew

I got this deadline from a friend who is retired from KPMG in Rio and as far as dates go, he is meticulous.  This calendar year 2022 the deadline is May 31, 2023.

04/26/23 @MA22, rsrenfrew.  I spoke with my accountant this morning, and she confirmed that the deadline this Year is May 31.

@rsrenfrew

Just got done on the phone (whatsapp) with a local Tax person here in João Pessoa.  In my case, since I have been in the country less than the 183 days listed on the government website, he says I don't need to file or do anything for last year, 2022.  Big relief!  We will be meeting in person soon to evaluate everything else for 2023 and moving forward.  Probably, I need to set up for paying income taxes on a monthly basis...

04/26/23 @rsrenfrew
Just got done on the phone (whatsapp) with a local Tax person here in João Pessoa. In my case, since I have been in the country less than the 183 days listed on the government website, he says I don't need to file or do anything for last year, 2022. Big relief! We will be meeting in person soon to evaluate everything else for 2023 and moving forward. Probably, I need to set up for paying income taxes on a monthly basis...
-@MA22

Martin, on the point of pre-payment, you should definitely make that part of your discussion with your tax person, and follow their advice; if they offer you several options that satisfy the law, you can choose the one that's most convenient for you.

In my case, I asked my accountant several times whether I should set up monthly payments.  She told me that I didn't have to, and that I could pay all at once when I filed, which is what I do.  Neither she nor I have ever received a question from the Receita Federal, at least so far.  Every year, the folks at Banco do Brasil ask  me about it when I drop off a copy of my tax return, but when I tell them that I'm just doing what my accountant said to do, they just shrug and we're good for another year.

@abthree

Boa tarde!  Yes. He mentioned this.  We will see.  If I don't have to pay anything monthly and we can do everything when it's time to declare, that might be better, including figuring out what I can deduct for taxes already paid in the US and other items I can deduct.  These would  include health insurance premiums and those types of things, right?

Since I haven't done this before, hopefully, it will be a good informational session.

Thanks for all you do to help us on here abthree! 

Muito obrigado!

@abthree
Boa tarde! Yes. He mentioned this. We will see. If I don't have to pay anything monthly and we can do everything when it's time to declare, that might be better, including figuring out what I can deduct for taxes already paid in the US and other items I can deduct. These would include health insurance premiums and those types of things, right?
-@MA22

Thanks for the kind words, Martin.  My husband has his eye on a concurso coming up in João Pessoa, and if we go I hope that we'll have a chance to meet up some of our friends from the site in Paraíba.

There is definitely an interplay between my US taxes and my Brazilian taxes, but I'm not sure exactly what it is:  I give all my raw data and my US return to my Brazilian accountant, she does some black magic, and my Brazilian return appears.  She needs to have my US return in hand to do her work, though.  I file in the US as "Married Filing Separately" and we file in Brazil as "Married Filing Jointly", and both of our private health plan premiums are considered in the Brazilian return.

Paying all at once works for me, but I was accustomed to it already, since I paid my property taxes and income taxes that way in the US.  Obviously, it's important to plan ahead and have the money on hand; my accountant has told me that I could pay in installments, but if I were going to do it that way I'd make the monthly payments in advance rather than play catch-up every year.

abthree- thanks for the info as always! 

Yes. Let us know when you plan you come to Bela Jampa (João Pessoa). We have a possible trip this winter (July) but definitely let us know when you will be coming.  Abracos!

@MA22 If you have no taxable income that was generated in Brazil, i.e. your income is generated outside of Brazil and you haven't exceeded 183 days then you are not required to file or pay taxes in Brazil. 

Tax residency is completely different with it's own rules.

@MA22 See you got the answer.  Good!  One thing to remember is that you count days from the initial entry day for each 365 day period.   In other words, if your 1st entry is June 5, 2023 then that particular year will end on June 4 2024;  Lets say you are in the USA on June 1st, and you return on September 14, 2024.  That means the next 365 day period starts on September 14th 2023 and ends on September 13, 2025.  It's floating based upon the 1st entry of the next 365 period.

@MA22 Does your tax professional speak English well?  Since I hear it's a relatively straightforward thing (and for sure I have been here more than 183 days in 20222) I am required to file.  Unfortunately, the friend who used to work at KPMG does not seem to have a contact.  If you. could privately reply to me either on linked in or whatsappUSA:  +1-305-987-9688. I would be very grateful for his/her name.

All the best, Roderick Renfrew

@rsrenfrew

Bom dia. I just got him as a reference recently from a friend whose husband is from France, so he has some experience with foreigners, but I don't know how much he has with Americans in particular. His English is very limited.  My Portuguese is much better than his English. We communicated via Whatsapp and my translator app (google translator) as I usually do when I don't understand something and/or need to communicate my information to someone more quickly in Portuguese. I will meet with him in person in a couple of weeks.   I will send his contact info to you privately.  Boa sorte amigo!

This response is for U.S. Taxes Only. My Brazilian wife has an accountant that takes care of our Brazilian taxes. I will be looking for a tax preparer (possibly in the U.S.) to do the taxes of my wife and I for USA. I previously worked for Turbo Tax and did our own taxes on Turbo Tax, but it got too confusing with the Brazilian residences.

Any suggestions would be appreciated. fyi before I went to Turbo Tax I had mine done with H & R Block. Unfortunately my advisor literally ran for the door when the IRS had a question etc., so I finished them myself (amended them) and never looked back.

Roddie in Retirement