Brazil has officially overhauled its crypto taxation system. As of June 12, 2025, all cryptocurrency profits—whether from local exchanges, self-custody wallets, or offshore holdings—are now subject to a 17.5% flat tax. This shift, enacted under Provisional Measure MP 1303, marks a significant change from the previous, more lenient regime.
What’s Changing?
Previously, Brazilian taxpayers enjoyed a monthly exemption on crypto sales up to R$35,000 (around $6,300 USD). Gains above that threshold were taxed progressively, reaching as high as 22.5%. The new tax structure eliminates that exemption and replaces the tiered system with a flat rate, aiming to simplify compliance and boost government revenue.
Here’s a breakdown of the new system:
- Flat 17.5% tax on all cryptocurrency gains, regardless of the amount.
- Applies to all holdings, including those in self-custody wallets and foreign accounts.
- Losses can offset gains within a five-quarter rolling window. However, starting in 2026, this offset window will be shortened.
- Quarterly reporting is now mandatory for all crypto gains.
The policy shift also aligns with broader tax reforms. Fixed-income investments like LCAs, LCIs, CRIs, and CRAs will now face a 5% tax. Additionally, the tax on revenue from online betting operations will jump from 12% to 18%.
Who Gains and Who Loses?
This new approach will impact investors differently:
- Retail traders lose their tax exemption, potentially leading to higher overall tax bills on smaller gains.
- High-volume and institutional investors might benefit from the uniform rate, especially if they previously fell into higher tax brackets.
- Global investors and crypto-focused businesses must now account for taxes on offshore and self-custodied crypto, adding complexity to portfolio management.
Brazil’s new crypto tax rules represent a firmer stance on digital asset regulation. The government is closing loopholes and aiming for consistency across asset classes. While some investors may find relief in a predictable flat tax, many everyday traders will feel the pinch.
This policy is part of a broader fiscal strategy that seeks to increase revenue without implementing a previously proposed IOF tax hike. As loss-offset opportunities shrink starting next year, traders and investors should consider proactive tax planning to stay compliant and minimize their liabilities.
