The Taxation Of Bitcoins In Brazil

On March 25, 2014 the Internal Revenue Service (IRS) of the United States issued Notice 2014-21 stating that virtual currencies such as bitcoins will be treated as property, rather than a form of currency, for federal income tax purposes.

The Brazilian Federal Revenue Service (Receita Federal do Brasil - RFB) followed the same approach adopted by the IRS. The Brazilian newspaper Folha de S.Paulo announced on April 7, 2014 that bitcoins and other virtual currencies are deemed to be financial assets for income tax purposes. Therefore, these virtual currencies must be declared in the annual income tax return as other goods by any taxpayer who had the equivalent in Brazilian currency to one thousand Reais (R$ 1,000.00) or more in bitcoins or other virtual currencies on December 31, 2013.

It is also necessary for the taxpayer to collect the income tax at the rate of 15% on capital gains on any transaction exceeding R$ 35,000.00 carried out during the last five years. Now, the tax must be paid with penalty and interest. There is no conversion rule of the virtual currency into the Real, but the RFB accepts the use of quotations disclosed publicly by private sites.

In the case of Brazil the RFB has concluded that it is possible to collect the tax and information without changing the legislation. This position is only valid for income tax purposes and is based on the RFB's understanding that...