Expatriate’s tax obligations

Brazilians living abroad or foreigners living in Brazil shall pay attention to the Income Tax rules and the norms of country in which establish their new fiscal residence or even their country of origin. Countries which have signed an agreement with Brazil to avoid double taxation or even to practice tax reciprocity, since, in other cases, the individual is liable to be taxed twice.

For foreign workers living in Brazil, it is important to know which are required to state their revenue and pay tax in Brazil.

Firstly, the alien situation shall be legalized and the employment agreement and the kind of authorized stay should be analyzed. Then some questions are required, as follows:

In what situation does the foreign worker is required to file income tax in Brazil?

The obligation depends on the alien's visa and/or intention to establish residence in Brazil. The holder of temporary visa with work agreement, for example, is subject to this accountability to Brazilian government from the arrival. In case of temporary visa with no employment agreement, the expatriate should only be required if stays in Brazil for more than 183 days within 12 months. The aliens in this situation should state their revenue received on a worldwide basis in their Income Tax, in addition to the assets, obligations held anywhere in the world.

May the contracting companies assist in the process?

Although it is individual’s obligation, the contracting companies are aware to guide their expatriates to comply with Brazilians tax requirements, so that the visa renewal of these employees may be undermined, if they are not up to date with their obligations.

Are taxes and deductions the same as those applied to Brazilian workers?

The rules are the same. However, it noteworthy that from the moment the alien states the income, properly collects it and complies with other obligations with Central Bank, it may remit or receive money from abroad with no additional IR taxation.

Are the rates in Brazil compatible with those from other countries?

In countries such as USA, France, Italy, England, Denmark, Norway, the rates are higher than those in Brazil. They may reach 40% or 50% and the maximum in Brazil is 27.5%. However, comparing to the least possibility to discount expenses, the expatriates consider Brazilian tax burden higher. This does not include health, education, and security, which in these countries is considered much higher. All this is very surprising, causes discomfort, and discourages them.

What is the concern of an expatriate leaving Brazil?

In addition to planning, the expatriate must present two documents required by the Brazil’s Federal Revenue: Final Departure Communication, which formally communicates the departure date from Brazil and the Final Departure Return, whose purpose is to state and tax the income earned between January 1 of the previous year and the effective departure date.