Are US pensions taxed in Brazil?

https://www.ssa.gov/pubs/EN-05-10167.pdf

You may need an International Lawyer/Tax advisor as to real estate.
Withdrawal for a 401K is taxed upon RMD at age 72 or heavily taxed for early withdrawal(s).
Again speak with a tax professional as to your situation. Everyone is different.

Brazil's Receita has no claim on your 401k.  It's the early withdraw penalty  Stateside  that might concern you the most.

You might be taxed on deposits made here, more specifically on earned income through interest and dividends borne out of local investments, once they surpass the exempt threshold.

So keep your rollovers into your US Banking account, and use it here as needed through a debit card program. 

Beware that Banks and Plastic money processors love to nail you for transaction fees and exchange rate ( which is illegal, btw, watch Ralph Nader's Radio Hour on youtube , there was some topic discussion on this ).

What you need to do is to maintain a low median account balance in Brazil.

I personally never had to worry about this, since I brought in little.  So, in hindsight, I might seek expert advice on taxes, both State Side and in Brazil.

No matter where you go, you are still liable for your Taxes in the US   ( FATCA forms ).

What if my income is just from a pension (not 401K/IRA), and I'm there full time on the VIPER Visa for retirees?  According to the requirements, I would have to have my pension transferred to a Brazilian bank account.  Is that considered income and will I have to pay Brazilian taxes on it?

04/03/22

Hi, Tobie,

Yes, US pensions are taxed in Brazil.  To what extent and at what rate is something that your Brazilian accountant can tell you once you live here; it sounds like your family already has a network in Florianópolis, so they can probably connect you with someone reliable when you get here.  Your Brazilian tax advisor will -- and should -- take your entire financial situation into consideration in order to give you reliable advice.

Unfortunately, the VIPER was abolished when the immigration laws were reformed in 2017.  A new retirement visa was created after that, and now is listed as VITEM XIV; that's what you'd apply for.  The requirements and benefits of the visa are very similar to the old VIPER, although a little less generous. 

Under the terms of the VITEM XIV, you would be required to transfer at least US$2000/month to Brazil; if your pension is more than that, you can leave that in your US bank account, if that's advantageous to you.

I see from your other post that you and your husband will be retiring together.  More good news about the VITEM XIV:  it will cover you both, and the US$2000 requirement applies to you as a couple, not individually.  So, while you can and very well may want to transfer more of your income here, you won't be required to do so. 

If you have more questions, please ask away. 

@abthree   Hi, I had heard that a person has to document the ability to pay at least $2,000 per month but that there is no actual requirement or checking on whether the transfers are actually made, and there is no requirement that a bank account be established.

Of course, everyone not working needs an income, but, according to someone on this site, the person could bring cash from the home country on each trip (declared if more than 10.000 Reals) and could use ATMS and foreign credit cards with no need for a Brazilian bank.

Was I informed incorrectly? I don't pretend to know one way or the other. I'm just passing on what I have read, and I think you are an excellent source for validation.

04/03/22 @ Getting on.  Good question.

The English explanation on the websites of several Brazilian Consulates could lead the reader to the conclusion that only proof of the ability to transfer at least $2000/per month is required.  If this were the only guidance it would open up quite a loophole for gaming the system, since the transfer of the funds is the whole reason for re-creating the retirement visa in the first place, from the Brazilian point of view.  But it isn't.

Resolução Normativa No. 40 of October 9, 2019 that re-created the retirement visa says, in pertinent part:

"Art. 1º O visto temporário poderá ser concedido ao imigrante aposentado ou beneficiário de pensão por morte, que comprovar a transferência mensal ao Brasil da importância, em moeda estrangeira, em montante igual ou superior a US$ 2.000,00 (dois mil dólares)."

"Art. 1 The temporary visa may be conceded to the immigrant retiree or beneficiary of a survivor's pension who proves the monthly transfer to Brazil of the value, in foreign currency, of an amount equal or greater than US$2,000.00 (two thousand dollars)." (emphasis added)

Would someone gaming the system actually get caught?  I try to never say never about Brazil, so I can't say for sure.  But, different from the old visa, which was permanent, the Authorization of Residency for this one has to be renewed with the Federal Police every two years.  Very few people have been required to go through the renewal process yet, so we don't know yet how hard or easy it will be.  But the Federal Police certainly have the right to demand proof of the applicant's transfers and to review their Brazilian income tax returns as part of the renewal process, if they choose to.

@abthree   Thanks for much for the great info.

ad3 is correct.

You are going to have to show proof of the $2000. In my first 2 years, every January I had to show proof of income (assets) and tax return to BB. (my bank did this)

Bringing in more than $R 10.000 via air is fine, but you will have your retirement visa for entry. It only takes a few minutes for the RF you review your account ( if they choose to do so) and showing no bank account may raise red flags.

Bringing in funds every so often via can be expensive. Where are you going to keep the cash?

@Texanbrazil   Hi Texan, Were you able to get a credit on your U. S. taxes based on the taxes you paid to Brazil? Or was it double taxation?

@Texanbrazil   Hi Texan, Were you able to get a credit on your U. S. taxes based on the taxes you paid to Brazil? Or was it double taxation?

- @Getting on

@abthree I know this is an old post but I have an update and a question. I was referred to a Brazilian lawyer that wrote a tax document for me saying that US pensions are exempt in Brazil. I paid about $500 for this opinion so it was in writing. However, upon reading the document, it the reference notes, to justify this opinion, if references the agreement between the US and Brazil not to tax Social security. I inquired again and she still claims my US pension is exempt. So I don't know what to do. It seems suspect. It's like one of those "anything is possible in Brazil". It's like as long as you aren't audited you are ok. She also claims in the document that even though I was in Brazil more than 183 days the first year I was here, before I got my residency, I don't have to pay taxes because I was not on a "permanent visa". It looks suspect to me but I'm not a tax lawyer. It looks like to me I am paying her to not get the truth but to get what I want to hear. Just not sure if I was audited, how that would work. I suspect when she files my taxes she would claim my US pension is Social Security. Either she doesn't understand the difference or she knows the difference and is telling me what I want to hear and hoping not to get audited. Any thoughts or recommendations?

That is an interesting topic  worth folling for the future...

Does anyone know if you have to report income on your US tax return for a VGBL account in Brazil. It appears that it  falls into the categories similar to a pension or life insurance contact in the US, thus no taxes need to be paid until a withdrawal or distribution and then taxes would be paid in the US and Brazil.

Obviously either way it needs to be reported to FinCen.

   12/22/23  @abthree I know this is an old post but I have an update and a question. I was referred to a Brazilian lawyer that wrote a tax document for me saying that US pensions are exempt in Brazil. I paid about $500 for this opinion so it was in writing. However, upon reading the document, it the reference notes, to justify this opinion, if references the agreement between the US and Brazil not to tax Social security. I inquired again and she still claims my US pension is exempt. So I don't know what to do. It seems suspect. It's like one of those "anything is possible in Brazil". It's like as long as you aren't audited you are ok. She also claims in the document that even though I was in Brazil more than 183 days the first year I was here, before I got my residency, I don't have to pay taxes because I was not on a "permanent visa". It looks suspect to me but I'm not a tax lawyer. It looks like to me I am paying her to not get the truth but to get what I want to hear. Just not sure if I was audited, how that would work. I suspect when she files my taxes she would claim my US pension is Social Security. Either she doesn't understand the difference or she knows the difference and is telling me what I want to hear and hoping not to get audited. Any thoughts or recommendations?       -@jasonlovesdogs

Every year, I tell my accountant that I don't want to overpay, but I do want to pay whatever income tax amount Brazilian law requires in my situation.  I give that instruction in a text, and put a memo of it in my tax folder for that year.  I give her all the supporting data for my income and investments that my US accountant has, plus my US 1040, which I make sure is ready every year for her to have available.  If I have a specific question, we discuss it before she starts; once I'm sure that she understands my wishes and what she's looking at, I follow her advice, which has never seemed irrational or dishonest to me.  If I'm ever audited and the RF rules that I've underpaid, I feel pretty confident that it will be treated as an honest mistake and not tax evasion.

In your case, I'd do the same thing.  I would make SURE that she understands that your pension is not Social Security, and confirm how she plans to treat it when you have that certainty.  Then I'd follow her advice, and leave myself a memo in my own files. Same for the period before you received your CRNM.  They understand the intricacies of Brazilian income tax law, and as long as they also understand our intent, I'm comfortable relying on their expertise.   

@abthree Thanks

@abthree

I am receiving Social Security and a separate pension. So, it's true my Social Security is not taxable in Brazil? I started paying taxes this year and my tax guy is including both of these in my income to be taxed. He is newer and younger. I Don t know if he knows the difference.

He is  just looking at any income I am bringing into Brazil.  Thank you.

@MA22 There is an agreement between the US and Brazil on Social security. You can Google it and find it online.

@abthree Does your accountant put their name on your Brazilian tax return as the preparer?

    @abthree Does your accountant put their name on your Brazilian tax return as the preparer?        -@jasonlovesdogs

I don't see it on the return, but the return is submitted online from her electronic address.

12/23/23    @MA22 There is an agreement between the US and Brazil on Social security. You can Google it and find it online.        -@jasonlovesdogs

I didn't want to opine on this until I had reviewed the US-Brazil Agreement again, because I didn't recall it addressing the question of income tax at all.  Here it is:

https://www.ssa.gov/international/Agree … html#part3

(For some reason this link is opening at Part III, but you can scroll up to read from the beginning.)

As I remembered, it's silent on income tax in either country.  It sets the terms for portability of benefits, accruing credited time, not losing credited time, and claiming benefits for citizens of either country who may have earned rights to a benefit from the other.

This doesn't necessarily mean that Brazil does or does not tax US Social Security benefits; tax treatment would be found in Brazil's tax regulations with no necessary reference to the Agreement.  I would depend on a qualified Brazilian tax professional to be acquainted, or to become acquainted, with the relevant regulations.

  12/23/23  @abthree
I am receiving Social Security and a separate pension. So, it's true my Social Security is not taxable in Brazil? I started paying taxes this year and my tax guy is including both of these in my income to be taxed. He is newer and younger. I Don t know if he knows the difference.
He is  just looking at any income I am bringing into Brazil.  Thank you.
   

    -@MA22

See my response above, and the Agreement itself.  It's worth asking your guy the question just to cover all your bases, but if he assures you that he's right, I'd go with his advice.

The links I have for this agreement are Brazilian links and were working last time I checked earlier in the year but they are not working now for some reason.

  12/23/23   Does anyone know if you have to report income on your US tax return for a VGBL account in Brazil. It appears that it  falls into the categories similar to a pension or life insurance contact in the US, thus no taxes need to be paid until a withdrawal or distribution and then taxes would be paid in the US and Brazil.
Obviously either way it needs to be reported to FinCen.
   

    -@MikeFlores_CLT

Hi, Mike.  That's a question for your US tax advisor, including the reporting requirements.

12/23/23   The links I have for this agreement are Brazilian links and were working last time I checked earlier in the year but they are not working now for some reason.     

    -@jasonlovesdogs

As you recall, did the agreement you saw following the links that don't work now look different from the agreement I reference above?

Unfortunately it was earlier in the year and I don't remember. Good find though.

@MA22 Did you ever get any answers on this? I'm still trying to figure it out as I'm going to have submit a Brazilian tax return this year. One lawyer tells me one thing and another lawyer tells me something else. Feel free to send me a private message or respond here. Thanks much.