Tax on Income Made in US while living in Brasil

Hi all,

I have been reading the forums for a few years now and participating where I could.

I just moved to Brazil with my Brazilian wife to take care of her sick father.  I received my Marriage Reunification visa on March 24th and now i'm trying to figure out these gosh darn taxes.

I work for an American company with my managements permission to be here.  All my money is in the US and being taxed there.  What can i expect to pay in taxes and when are the payments due?

I pay roughly 25% Federal Income tax and I have pre-tax deductions for my 401k and HSA.  Will I need to pay taxes on those values as well?

I am working to find a trustworthy accountant in Sao Paulo but I have had no luck so far.  I will be doing this ASAP but in the meantime I am looking for some advice from you all because these questions/uncertainties are driving me nuts!
Like
04/06/22 Hi, HighVoltage1045

Only good news for you!  

We're doing 2021 returns now (usually due April 30, but the due date is pushed back to May 31 this year because of covid), so Brazilian tax filings aren't on your radar until early 2023.  You have ample time to talk to accountants, find one you click with, and strategize for the rest of 2022 and going forward. 
Like
I am actually in a very similar situation and recently consulted an accountant here in Brazil due to the very same concerns.

As it turns out, since I only just received my residency this year, my 2021 income through my US employment while working remotely from Brazil only necessitates filing in the US. I was also here on the family reunification visa and my wife was not employed at all either so household income is all from my US salary.

Next year will be more complicated based on my new residency status here in Brazil (will have to file) but will worry about that then and consult my accountants again. From what I understand, there is also something called "dupla tributação" which means you won't have to pay on your income to both the Brazil and US federal governments but rather the higher rate of the two.

This is obviously not tax advice, and I suggest you still find a strong accountant to be sure.

Good luck!
Like
04/06/22 Hi, HighVoltage1045

Only good news for you!  

We're doing 2021 returns now (usually due April 30, but the due date is pushed back to May 31 this year because of ... - @abthree
 That is great news! I read that there is monthly withholding for Brazilian employees.  Is that something that should be on my radar?
Like
I am actually in a very similar situation and recently consulted an accountant here in Brazil due to the very same concerns.

As it turns out, since I only just received my residency this year, my 2021 income through ... - @thebucknertheory
 Wow, very interesting!  Where do you live now (if you don't mind my asking)

I got residency this year and my wife works here.  I am hoping to find a good accountant ASAP but havent had any luck.  PWC supported my wife in the states but they are very expensive and lack any personal touch.
Like

Does anyone know if Medicare and Social Security count as Federal Taxes in the offset with Brazil?

Like
04/07/22 @HighVoltage1045 

"That is great news! I read that there is monthly withholding for Brazilian employees.  Is that something that should be on my radar?"

You and your accountant can work out the best payment plan for you.

For people who earn an income in Brazil, withholdings and estimated pre-payments work much as they do in the US.  If you plan to make regular transfers to a Brazilian bank account from a US bank account, you can probably simulate that, if you find it convenient. 

I pay my whole tax when I file every April.  It's not a lot (about 50% of my US tax), and I prefer to get it out of the way and close out the prior year.  If I preferred, the Receita Federal would also let me pay it in installments. 
Like
"I pay roughly 25% Federal Income tax and I have pre-tax deductions for my 401k and HSA.  Will I need to pay taxes on those values as well?"

Your 401K is not taxable unless you are taking RMD or early withdrawal. If you take withdrawals it does count in Brazil as income.
I am not sure about HSA's. They are pre-tax plans and the use of this plan has limits and different tax filings
Like
Good day:
I live in Rio.
I am looking for a referral for a Rio based tax accountant.
Like for  others on this discussion, the accountant would need to be well versed in how US based income is taxed in Brazil, what is and what isn't.
Thanks
Like

@HighVoltage1045 

Hey, good morning. 

I understand your stress. I have been living here for over 10 years and I totally get the tax thing. I Have two accountants. One is American and he deals with my mandatory American tax stuff over in the US. I meet with him once a year online, submit my info ( I am also married to a Brazilian) and he files my taxes. The fee for a tax guy for expats is highway robbery. My guy charges 500 dollars just to fill out and file my forms. Most of the American expat tax services overcharge because they know we have no choice but to declare taxes ( if you make over 13,000 dollars a year) in the US and they monopolize the online market. I have seen guys charge up to 1,000 dollars just to file for late taxes. 

As far as the Brazilian accountant. I have one of the best ones. He is a personal friend and has a large, reputable company that is a family business. If you want his contact, I will be happy to give it to you. His name is Arthur. The name of his company is RContabil. You can contact me at my personal email: [link moderated] and I will help you. 

Have a terrific day ( but yes, you need two accountants)

Like
Thanks for the accountant referral, devoramichaela.
I am in Rio in search of an accountant for Brazil tax prep.
It appears your accountant is in São Paulo, only, correct?
FYI Expat blocked your email address.
Like
@HighVoltage1045

"Where do you live now (if you don't mind my asking)"

We live in Minas Gerais to be close to my wife's family. It's beautiful and especially nice if you like good Cachaça and unctuous foods (especially cheese) ;)
Like
@HighVoltage1045

Read on...

Like
thanks!
Like
This may be of interest to the OP as well as help me understand this tax situation.

I will be marrying my Brazilian fiancee early this year and traveling to Brazil for an extended stay of 6 -12 months.

I came across the following regarding tax residency in Brazil:
"Resident individuals are taxed on a worldwide and cash basis for each tax year (January 1st to December 31st, except for the arrival and departure years), whether or not their income is remitted to Brazil, while non-residents by contrast are taxed on income from Brazilian sources only."

I am trying to clarify this statement.
If I qualify as a tax resident in Oct 2022 (either due to exceeding 183 days, or arriving with a VITEM XI visa, or receiving a CRNM) then I will not be liable for any tax on overseas income received in 2022, and only be liable for taxes on overseas income received in 2023.

Can anyone clarify if this is correct?

I am also looking for a good/recommended Brazilian tax consultant, preferably in Alto Araguaia, or Cuiaba (Mato Grosso).

Thanks
Like
I have similar questions to those from seinfo3.  I am considering obtaining a retirement visa. As a US citizen, I am still confused about the double-taxation possibility. Some sources say I'll pay to both Brazil and the US, others say no.
1. Should I declare only the minimum amount of pension required to get the Brazilian retirement visa?
2. Do I have to bring this amount of funds into Brazil, or can I keep it in the US? (I wasn't planning to send it to Brazil if not necessary.)
3. Will Brazil tax me on the amount I declare for the retirement visa, even though I know I will also be taxed on it in the US?

Thanks
Like
04/25/22 @EricPau  Income taxes in Brazil]

Hi, Eric,

For planning purposes, figure that you may have to pay Brazilian income taxes on at least whatever portion of your income you actually transfer to Brazil.  It's wise to keep at least your principal US bank account after you move and to receive all of your income there, and then to transfer whatever amounts you want to live on to your Brazilian account.  That protects the excess from exchange fluctuations, and lets you cover your US expenses more easily, as well.

Everyone's situation is different, so it makes sense to find a reliable Brazilian accountant once you settle into the city of your choice, to help you navigate the tax code most efficiently.

With respect to your questions,

1, You need to prove that you will be able to transfer the minimum monthly amount that the visa application requires to Brazil; there's no need to either declare or prove anything above that.

2. There's no need to bring any set amount with you to Brazil.  You'll probably need at least $2000/month to maintain a comfortable lifestyle in Brazil, so that amount is probably moot; you're certainly under no obligation to transfer any more of your income than that.  The retirement visa is still pretty new, and what proof of transfers, if any, will be required to renew later is still unclear.

3. Brazil will not tax you on any amount that you simply declare on your visa application.  At least six months' residence and some taxable event under Brazilian law will be required; your accountant will be in the best position to let you know what could trigger a taxable event, and how to avoid the ones that are avoidable.
Like
@seinfo3 I met with a tax attorney last week. Brasil is complicated but you need to officially declare your intention to live in Brasil before you pay taxes.

Now you must acquire a visa to stay more than 90 days or 180 if you get it extended. But if you don't buy a house/apartment, a car, or open a bank account with investment capability you won't be subject to taxes here in Brasil.  Without these things you won't even exist to the Brazilian government.

Having the job in America is proof that you haven't decided. When you do decide to live here full time there will be a 13 month period of time for the decision.

It's complicated, just don't buy anything major and don't take a job from a Brazilian and you will be able to navigate it fine.
Like

@abthree thank you abthree. I appreciate the insight. Eric

Like
@HighVoltage1045
thanks for the info but it does raise some questions for me that still remain unanswered.

I will be moving to Brazil in Sept 2022 with my bride on and plan to stay for about a year or more.
My total time in Brazil in a 365 day period, at the end of 2022, will be under 180 days. This exempts me from the 180 day tax rule for 2022.

If I arrive with a VITEM XI , it must be registered within 30 days at the PF (I have declared residency intentions triggering tax liability at some point). Depending on how the VITEM XI is classified, this could trigger a Tax Resident Status for 2022 (to be clarified).

If I arrive on a Visitor Visa and file for residency with the PF (I have declared residency intentions triggering tax liability at some point).

With either approach, if I receive a Protocol or CRNM before 2023, these are permanent resident status and trigger Tax Resident Status for 2022 (to be clarified).

So, if a Tax Residency is triggered for 2022, am I still totally or partially exempt from taxes on 2022 overseas IRA & interest income based on this statement - "Resident individuals are taxed on a worldwide and cash basis for each tax year (January 1st to December 31st, except for the arrival and departure years)" ??

This is an important question as 2022 income was quite high in the US. If I fall into the Tax Resident status, then I will change my arrival timing, although that will be quite complex to do for me.

Can you clarify "When you do decide to live here full time there will be a 13 month period of time for the decision."

Is your tax attorney in the US or in Brazil? and could you provide his contact info?

Thanks.
Like
I believe you have a 6 month grace period from the date on your PR card. After that, you are subject to BR tax laws.
Hopefully, someone will confirm or correct my post.
Like
Thanks.... that is a hopeful sign. It is so difficult to get clarity on some of these issues. If I can find a good Brazilian/Expat tax consultant it might help.
Like
I am still looking for a tax accountant to handle Brazil taxes, competently, for US citizens in Rio.
Any referral is highly appreciated.
Like
Sima Accountants. Son used them for a short time until returning to Curitiba.
Like
@BrasilNY  I have an excellent Brazilian tax guy who helps us with our company. He doesn't speak English or Spanish though. I can give you his number if you want. I also provide simultaneous translation for a fee if you are interested.

Devorah
Languages4brazilians
Like
Thanks Texanbrazil and devorahmichaela.

Devorahmichaela, can you provide the contact info for your tax guy. Thanks
Like
@devorahmichaela
Is this accountant in Rio? If so could you provide contact info.
Expat blocks email addresses as you probably know.
Thanks
Like
So I think I found the relevant tax code which seems to indicate that entering as a permanent resident  invokes Tax Resident Status immediately. I assume this includes obtaining permanent residency while in the country. However, it appears you will only pay tax on taxable events after that date, in effect a "part year" tax.

Link attached (if the forum doesn't edit it out)

Section VI
Transfer of residence to the country

Subsection I
Permanent visa holders
Art. 16. Individuals who enter the country with a permanent visa are subject to income tax as residents in the country in relation to taxable events occurring from the date of their arrival (Law No. 9,718, of November 27, 1998, art. 12, caput, item II).
Single paragraph. Income and capital gains realized between the date of arrival and the last day of the calendar year will be declared (Decree-Law No. 5,844, of 1943, art. 61, sole paragraph).

Subsection II
Temporary visa holders
Art. 17. Individuals from abroad who enter the country with a temporary visa are subject to income tax, as a resident (Law No. 9,718, of 1998, art. 12, caput , item I) :
I - to work, with an employment relationship, in relation to the triggering events that occurred from the date of arrival; or
II - for any other reason, and remain for a period exceeding one hundred and eighty-three days, consecutive or not, counted, within a twelve-month interval, from the date of any arrival, in relation to the triggering events that occurred from the day following that in which the said period of stay is completed.
Single paragraph. The income received in the national territory by the people referred to in item II of the caput will be taxed as those of non-residents, under the terms established in art. 741 , during the period prior to that in which the period of permanence in the country is completed, determined in accordance with the provisions of that article, or until the date of obtaining a permanent visa or employment relationship, whichever occurs first.
Like
@devorahmichaela
Hi:
About your accountant referral.
I see in a previous message you mention RContabil.
They appear to be only in São Paulo.
Do you have a recommendation for one in Rio?
Thanks
Like
@Texanbrazil
Thanks Texanbrazil.
Sima is in Barra da Tijuca, about an hour away from us (and we don't have a car) so still seeking alternatives more centrally located in Rio.
But thanks once again.
Like

@HighVoltage1045 

Hi everyone!
I am Nilton Faria, accountant here in Brazil.
If necessary you can contact us at Master Consultores - [link moderated]
Have you already search for procedures of “carnê leão “ here in our tax rules?

Like
Thank youNilton.
We are in Rio and really trying to meet our tax accountant in person.
Appears you are in SP.

I am still seeking a referral for a Tax accountant for Brazil taxes based in Rio.
Thanks
Like

@HighVoltage1045 

Hello,
I am in a very similar situation, as I recently relocated to Brazil in November of last year. I entered with a VITEM XI visa and have my RNM with Interminado residency status now.

I work for an American company, but am now a tax resident of Brazil. As such, I (and it seems you as well) are obligated to pay taxes to Brazil on world-wide income monthly. It's called Carne Leao. Here's some reference material:


You declare your taxable income monthly, you get a DARF statement, and pay the amount. You can prepare the DARF yourself but I have a tax person do it for me. My tax preparer is based in Curitiba (I am in Santa Catarina) so they will work with you regardless of location, and speak English. Let me know if anyone is interested in the contact.

You have until the end of the following month to pay your DARF. For example I just prepared the DARF for my April compensation and it's due by the end of May.

Your US federal tax is deductible from Brazilian tax. I do not believe SS or Medicare is though, but I am not certain. Also not certain of state taxes being deductible as my tax residence is based in a state without income tax.

At the beginning of next year you'll also need to file your federal taxes for Brazil, similar to the US.

Like

@BRBC You brought up an excellent point, before moving to Brazil, if possible, it would be ideal to establish residency in a state that does not have state income tax, like Texas or Florida.

Like

05/02/22  @BRBC You brought up an excellent point, before moving to Brazil, if possible, it would be ideal to establish residency in a state that does not have state income tax, like Texas or Florida.

- @mooseheadlaw

If you even feel the need for a US residence at all.  Everybody is different, but I don't have one, and don't feel the lack of one.
Like
one of the last sentences on that link to the Deloitte website reads,



"Dividends received from local Brazilian companies are exempt from taxation."



Since both Vale and Petrobras are considered local companies and they pay in excess of 15% dividends, at least they did last year, this could be  critical for your strategy going forward ......
Like
@Inubia

Yes, from what I understand Brazil does not tax dividend income or cap gains on stock sales when it's less than BRL$20K/month.

For a US citizen or permanent resident, you would still owe US taxes on the dividend income. US tax residents owe on their global income regardless of their location or the location the income was produced from. It seems the only way out is to renounce US citizenship.

Perhaps a strategy would be to have other sources of income that are relatively high tax in Brazil because the Foreign Tax Credit can be used to offset US taxes with taxes you pay to a foreign government.  Or keep you total taxable income relatively low, putting you in a lower tax bracket.  Based on my cursory research it does not appear Brazilian company dividends would fall under US Ordinary Dividend tax rates, which are higher than US qualified rates.

I feel I should say I'm not a tax professional, so don't listen to some random guy on the internet ;-).
Like

Articles to help you in your expat project in Brazil

The tax system in Brazil
The tax system in Brazil

If you earn income in Brazil, you'll have to pay a graduated tax to the Receita Federal, Brazil's federal ...

Using phones in Brazil
Using phones in Brazil

It's much easier these days to get a cell phone in Brazil, and phones and calling plans are inexpensive ...

Marriage in Brazil
Marriage in Brazil

Brazil can be a romantic country, and you may want to marry here. Perhaps you even want to remain in Brazil ...

Leisure activities in Brazil
Leisure activities in Brazil

Have you always dreamed of dancing to the rhythm of a Brazilian carnival? Do you wish to enjoy the sand and the ...

Dating in Brazil
Dating in Brazil

If you're single and ready to mingle, then you might want to try your hand at dating after you've settled ...

Accommodation in Brasilia
Accommodation in Brasilia

Brasilia, the country's federal capital, is home to many highly-paid government employees and foreign ...

All of Brazil's guide articles
Choose the best health insurance
Protect your health and get easy access to treatment for expats in Brazil.
Open a bank account that suits you
Discover the best international banks to manage your money securely.
Plan your international move
Facilitate your move to Brazil by getting a quote from our top rated movers.
Send money overseas at the best rate
For fast, safe and secure money transfers to and from Brazil.