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Repatriating funds: taxation on amounts transferred from other countries to Brazil
The situation of the Brazilian Reais depreciation in relation to the US Dollar has increased the movement of those interested in repatriating funds to Brazil. This is a chance to take advantage of the high quotation of the American currency to bring back amounts invested abroad and expand the assets here.
It is important to advise that this repatriation procedure should be carefully and properly done to avoid further doubts from the Federal Revenue, the agency that supervises this type of operation.
When repatriating funds to Brazil, is there any tax payable?
The exchange rate variation issue in the repatriation of funds appears linked to the capital gain concept, which is the income between the difference in the acquisition value and the sale value of goods and rights or the value of an initial investment and the effectively redeemed amount.
The capital gain in foreign currency is regulated by NI 118/2000. . According to this instruction, the origin of the funds must be observed for the determination of capital gains.
“If the income source is earnings in Brazilian Reais, the capital gains are determined in Brazilian Reais. If the income source is in foreign currency, the capital is determined in U.S. Dollars", explains Augusto Andrade, Domingues e Pinho Contadores' partner and manager of the Individual’s Department.
An example may help to understand the issue:
An individual accumulated USD 100 thousand overseas and purchased shares of the same value in a period when the US Dollars rate was at BRL 3.00, in a transaction reported with the Revenue Department in the proper period.
Furtherly, when selling such shares, they amounted to USD 90 thousand, a loss situation in foreign currency for the investor.
Considering that the origin of the funds that financed the purchase of the shares is in other country, there would be no tax on capital gain, since there was a loss in the sale of the shares.
However, as the funds source is the income earned in Brazilian Reais, at a period when the US dollars rate is in the range of BRL 5.00. After all, the investment that was initially registered at BRL 300 thousand became BRL 450 thousand due to the exchange variation.
In summary, in this hypothesis, even if the gain in foreign currency is zero (given the loss overseas), the Revenue understands that the taxpayer must pay tax on the exchange variation due to the source of the funds is from the perceived income in the Brazil.
Determination of capital gain in foreign currency
The capital gain tax is payable by the last business day of the month following the entry of the amounts, considering the rates:
|
Realized Capital Gain Amount |
Progressive rates |
|
Up to BRL 5 million |
15% |
|
From BRL 5 million to BRL 10 million |
17.5% |
|
From BRL 10 to BRL 30 million |
20% |
|
Over than BRL 30 million |
22.5% |
Find more: Capital gain in foreign currency
Repatriating funds: Consultancy and operational support
DPC advises individual clients interested in repatriating funds, providing the proper guidance on issues related to capital gains in foreign currency, filling out the proper information in the Federal Revenue Service program and issuing payment slips.
How DPC may help you?
Domingues e Pinho Contadores has specialized team ready to assist you.
Contact us by the e-mail dpc@dpc.com.br
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