Inspection of operations with virtual currencies

The Federal Revenue of Brazil (RFB) conducted Public Consultation 6/2018 to deal with the provision of information on cryptoactive operations (virtual currencies).

The purpose of this consultation is to establish how the market operators, known as exchanges, and individuals who perform cryptoactive transactions through exchanges abroad, or directly, provide information to the Brazilian tax authorities on such negotiations.

The cryptoactive market grows exponentially in Brazil and in the world. The RFB Public Consultation presents significant numbers of annual values traded in Bitcoins, for example, jumping from BRL 44.8 million, in 2014, to BRL 8.3 billion, in 2017 (approximate values). The prediction is that 2018 ends with a trading volume between BRL 18 and BRL 45 billion.

The market, primarily consisting of fintechs and startups, is already moving towards likely regulation, but is concerned about the monthly deadlines and penalties suggested by the RFB. The RFB is expected to determine a deadline for market adjustment without imposition of fines or penalties and increase the monthly minimum limit of transaction value from BRL 10 thousand (as in the Public Consultation) to BRL 35 thousand (limit for tax exemption on capital gains). The fear is that the imposed bureaucracy will end up retracting the emerging market that works extremely fast and sensitive to this kind of control.

The RFB intends to use the expertise of countries, such as Australia, the United States and South Korea, to create their control mechanisms. In all countries, the major concern is the use of crypto in money laundering and corruption, as well as tax evasion. Therefore, the provision of information will need to occur, according to the RFB, in an individualized way by the exchanges or individuals through Digital Certification.

Today, the RFB does not have control mechanisms on such operations, which results in ignorance by the tax authorities of the operations carried out until individuals annually file their Income Tax Returns (DIRPF). It should be noted that, in spite of specific regulation on the subject, operations with cryptoactive are subject to Brazilian taxation in the form of capital gain, with progressive rates from 15% to 22.5% in tax.

Therefore, DPC recommends that its clients maintain a strict control of their operations with cryptoactive, as well as advise in the monthly taxes due payment on any gains, in order to avoid penalties. Our department of services to individuals counts on a structured and qualified team to analyze the operations and to quickly and accurately calculate the results.