Filing the information on crypto operations begins in August/2019

The Special Secretariat of the Federal Revenue of Brazil (RFB) published on May 5, 2019 the Normative Instruction 1888 establishing and disciplining the obligation to provide information on operations performed with cryptoactive, effective from Aug-01-2019.

Such regulation affects individuals, companies and brokerage firms that carry out any type of transaction involving the transfer of cryptoactive: purchase and sell, exchange, donation, transfer of cryptoactive to the exchange, withdrawal of cryptoactive from the exchange, temporary assignment (rent), payment, issuance, etc.

As it is a new obligation, one must pay a great attention to the information sending procedures. Therefore, we prepared an analysis of the main topics of IN 1888:

Concepts

RFB considers the following definitions in the application of IN 1888:

• Cryptoactive: digital representation of value named in its own account unit, whose price can be expressed in local or foreign sovereign currency, transacted electronically with the use of encryption and distributed registration technologies, that can be used as an investment form, instrument transfer of securities or access to services, and which is not an official currency of payment; and
• Exchange of cryptoactive: legal entity, although not financial, that offers services related to operations performed with cryptoactive, including intermediation, negotiation or custody, and that can accept any means of payment, including other cryptoactive. The intermediation concept of operations with cryptoactives includes the provision of environments to conduct its purchase and sale operations between the users of the exchange services themselves.

Obligatoriness

Those following must provide information:

a) Exchange of cryptoactives domiciled in Brazil for tax purposes;

b) Individual or legal entity resident or domiciled in Brazil when (i) the transactions are performed in an exchange domiciled abroad or (ii) the transactions are not performed in exchange.

Important: In the cases listed in item "b" above, information should be provided whenever the monthly value of the operations exceeds, alone or jointly, BRL 30,000.00.

Information provided

The IN establishes a series of information to be provided: the date and type of transaction, the holders, the cryptoactives used, the amount of traded virtual currencies, and the value and service fees of transaction charged in in Brazilian Reais, when it is the case.

It is noteworthy that, in all cases, the identification of the holders of the transactions must be included and also the name, nationality, tax domicile, address, individual or corporate taxpayer registration number or Tax Identification Number (NIF) abroad, if any, corporate name and other registration information.

Deadline

The information will be sent monthly by the last working day of:

a) calendar month following to that in which occurred the set of operations with cryptoactives;

b) January of the following calendar year related to the December 31 information of each year to be provided by the exchange of cryptoactive domiciled for tax purposes in Brazil, for each user of its services, as follows:

• the balance of fiduciary currencies, in Brazilian Reais;
• the balance of each type of cryptoactives, in unit of the corresponding cryptoactives; and
• the purchase cost, in Brazilian Reais, of each type of cryptoactive, reported by the user of its services, if any.

Important:

1. The transmission of the information does not release the taxpayer from the obligation to keep the documents and maintain the systems from which they were extracted.

2. The first set of information to be filed in September/2019 will refer to the operations in August/2019.

3. Find here the Manual for filling in the obligation to provide information on the operations with cryptoactive, approved by the Executive Declaratory Act (ADE) of the General Coordination of Programming and Studies (Copes).

4. The information should be provided using the "Coleta Nacional" system, made available through RFB's Virtual Services Center (e-CAC), at http://receita.economia.gov.br, at the service “Cobrança e Fiscalização, Obrigações Acessórias - Formulários online e Arquivo de Dados“ (Collection and Inspection, Accessory Obligations - Online Forms and Data Files), whose layout was established in the Executive Declaratory Act (ADE) of the General Coordination of Programming and Studies (Copes) nº2.

Penalties

The individual or legal entity that fails to provide the information to which it is required or to provide it after the set deadline or that omit information or provide inaccurate, incomplete or incorrect information will be subject to the following penalties, as the case may be.

Extemporaneous filing:

 

• BRL 500.00, per month or fraction of a month, if the taxpayer is a legal entity, at the beginning of activity, immune or exempt, opting for the Simples Nacional, or that, in the last statement presented, has established the Income Tax (IRPJ) based on assumed profit;
• BRL 1,500.00 per month or fraction of a month, if the taxpayer is a legal entity not included in the above item; or
• BRL 100.00 per month or fraction, if is an individual.

Providing inaccurate, incomplete or incorrect information or omission of information:

• 3% of the transaction value to which the information omitted, inaccurate, incorrect or incomplete refers to, not less than BRL 100.00, if the taxpayer is a legal entity; or
• 5% of the transaction value to which the information omitted, inaccurate, incorrect or incomplete refers to, if the taxpayer is a natural person.

Failure to comply with RFB's injunction to comply with an accessory obligation or to provide clarification within the deadlines stipulated by the fiscal authority:

• BRL 500.00, per calendar month.

Correction

If the information provided contains errors, inaccuracies or omissions, the individual or legal entity may correct or provide them, as the case may be, by submitting a correction. The penalty shall not be applicable if the information is corrected prior to commencement of any ex-official proceeding.