Taxation for the Brazil Real Estate and Land Investor

Taxation for the Brazil
Real Estate and Land
Investor
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company name: ‘Brazil Real Estate Partners’). Copyright and other intellectual property laws protect these materials.
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is a violation of copyright law.
This guide is intended for educational purposes only and the author has made every effort to ensure its accuracy and reliability.
However, the author suggests that readers should, in addition, seek professional advice from a suitably qualified accountant
and/or tax advisor when conducting any kind of real estate business in Brazil. The author shall in no event be held liable for
any loss directly or indirectly arising from any material contained within this guide.
Should you wish to contact the author directly, please email:
[email protected]
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Taxation for the Brazil
Real Estate and Land Investor
CONTENTS
Page
1
Summary
3
2
The Brazilian Taxation System
3
3
Imposto Sobre a Propriedade Predial e Territorial Urbana
(IPTU): Tax on Property and Urban Land
4
4
Imposto de Renda das Pessoas Físicas (IRPF):
Income Tax on Individuals
6
5
Imposto de Transmissão de Bens Inter Vivos (ITBI):
Property Transfer Tax
8
6
Imposto de Transmissão Causa Mortis e Doação (ITCMD):
Inheritance Tax
9
7
Imposto sobre a propriedade Territorial Rural (ITR): Rural
Land Property Tax
10
8
Taxa de Terrenos de Marinha:
Marine Land Tax
11
9
Tax Evasion
11
9
Frequently Asked Questions on Brazilian Real Estate and
Land Taxation
11
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1. Summary
Regardless of your real estate and/or land buying strategy in Brazil, it is imperative to be aware of the various
taxation regimes that apply. The main taxes to be concerned with are the ‘Imposto sobre a Propriedade predial e
Territorial Urbana, IPTU’ (an annual tax paid to the individual state depending on where your property or piece of
land is located); ‘the Imposto sobre Transmissão de Bens Imóveis, ITBI’ (a transfer tax, based on the true value
of the asset, which has to paid for the property / land to be fully registerd at the Notary Public); ‘the Imposto de
Renda das Pessoas Físicas’, IRPF (income tax applicable, for example, if you are renting or leasing amongst other
reasons) and the Imposto sobre a propriedade Territorial Rural, ITR (a rural land property tax). Note that if you are
a resident of Brazil other taxes, such as social security, will also need to be considered and, if you are investing in
stocks, specific credit taxes will need to be paid.
What follows, starts with a short explanation of the Brazilian taxation system followed by detailed information on
each of the taxes; a short warning on tax evasion and some frequently asked questions all enabling you to
understand your necessary obligations. As with all our guides, we aim to make the content easily accessible and
digestible please also feel free to contact us at [email protected] for any further assistance.
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2. The Brazilian Taxation System
Authoritative decisions with regards to Brazil taxation are made solely by the Federal Constitution which establishes
the general principles; the limitations on the power to tax and the competence across all levels of government. The
Consitution states that it is the the Federal Government, the States and the Municipalities that can institute taxes,
related fees and other contributions.
1) Federal Taxation – taxes used to finance expenses in the Brazilian territory (including national infrastructure,
public management, civil servant salaries to name a few);
2) State Taxation – taxes used to finance the expenses of the 26 individual states of Brazil;
3) Municipal Districts Taxation – taxes used to finance the expenses of the districts´prefectures (taxes vary between
municipalities with the most industrialized areas collecting more). The tax competences are as follows:
Tax Competence
Federal
State Taxes
• Income (Imposto de Renda das Pessoas Físicas, IRPF);
• Imports (Imposto de Importação, II) and exports (Imposto de Exportação, IE) of goods and services (foreign trade);
• Income and earnings (Imposto de Renda, IR);
• Industrialised products (Imposto sobre Produtos Industrializados, IPI);
• Financial operations (Imposto sobre Operações de Crédito, IOF);
• Rural Land Property (Imposto sobre a Propriedade Territorial Rural, ITR).
• Inheritance and Gifts (Imposto sobre Sucessões Doações, ITCD);
• Circulation of Goods, Transportation and Communication (Imposto sobre Operações
relativas à Circulação de Mercadorias e Prestação de Serviços de Transporte Interestadual e
Intermunicipal e de Comunicação, ICMS): a value added tax levied on goods and some services;
• Motor Vehicles (Imposto sobre Propriedade de Veículos Automotores, IPVA);
• Property Transmission Causa Mortis (Transmissão Causa Mortis e Doação, ITCD)
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Municipalities • Urban Land Property Tax (Imposto sobre a Propriedade Predial Federal District e
Territorial Urbana, IPTU);
• Real Estate Conveyance Tax (Imposto sobre Transmissão de Bens Imóveis, ITBI)
• Services Tax (Imposto sobre Serviços, ISS), except those subject to ICMS.
Decree 63,659 of 20th November 1968 established the Secretaria da Receita Federal do Brasil (SRF) as a
replacement of the the Diretoria-Geral da Fazenda Nacional (General Directorate of National Treasury). The role of
the SRF is to overlook the majority of revenues including taxes (income tax, industrial production tax, foreign trade
tax, credit and insurance tax); economic contributions and social security contributions (for example those paid to
retired workers, disabled people, the poor and elderly). Its mission statement is to: “exercise tax administration
customs control and tax fairness with respect for citizens and for the benefit of society;” and its future vision is of:
“being an institution of excellence in tax and customs administration with national and international reference”.
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3. Imposto Sobre a Propriedade Predial e
Territorial Urbana (IPTU): Tax on Property
and Urban Land
Defined by Article 156 of the 1988 Constitution as: “a tax imposed on individuals or legal entities (corporations)
who retain ownership of property or land throughout the 26 states of Brazil”. It is essentially an obligatory property
tax payment made every month to the district municipality. The tax is referred to as being ‘progressive’ – in other
words, its main function is to provide financial resources for the municipality and as a control of urban land prices.
According to Article 156, the tax of clause may:
• be varied in proportion to the value of the building;
• have different rates, in accordance with the localization and the use of the building.
It should be noted that it is within the competence of the municipality where the property is located to undertake
the following roles:
• establish the maximum and minimum rates;
• regulate the manner and the conditions by which exemptions, incentives and fiscal benefits shall be granted and revoked;
• exclude exportations of services to other countries from the tax levy.
The tax is calculated on the market value of the property or piece of land (directly via the Registry Imoveis) – which
is its sale value and not its asking price (as stated by a real estate agent, for example). It is established locally in
every city and can vary from between 0.5% to 1.5% of the valuation depending on the use of the property; its type
(house, apartment, commercial unit or land) and its location (more centrally situated property and land, generally
speaking, would be subject to a higher levy). The IPTU is administered and controlled by each individual
municipality in Brazil. Therefore, each one has sole responsibility to ensure that taxation is collected on time and
efficiently and any individual tax exemption is accounted for.
The annual bill will usually arrive in January (with a payment booklet and information on the details for payment as
per the municipality). The tax needs to be paid on a yearly basis as one lump sum or split into 10 monthly
instalments (no interest is charged). The easiest method to pay is to set up a direct debit directly via a Brazilian
bank account – or it can be paid via most ATMs and banks.
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For more information on payment of the 2010 IPTU (translated into English) for most of the major cities of Brazil,
please click on the appropriate link below as well as direct links to the Prefeitura (city hall administration):
Aracaju – 2010 IPTU Information / City Prefeitura
Belém – 2010 IPTU Information / City Prefeitura
Belo Horizonte – 2010 IPTU Information / City Prefeitura
Boa Vista – 2010 IPTU Information / City Prefeitura
Campo Grande – 2010 IPTU Information / City Prefeitura
Cuiabá – 2010 IPTU Information / City Prefeitura
Curitiba – 2010 IPTU Information / City Prefeitura
Distrito Federal – 2010 IPTU Information / City Prefeitura
Florianópolis – 2010 IPTU Information / City Prefeitura
Fortaleza – 2010 IPTU Information / City Prefeitura
Goiânia – 2010 IPTU Information / City Prefeitura
João Pessoa – 2010 IPTU Information / City Prefeitura
Macapá – 2010 IPTU Information
Maceió – 2010 IPTU Information / City Prefeitura
Manaus – 2010 IPTU Information / City Prefeitura
Natal – 2010 IPTU Information / City Prefeitura
Palmas – 2010 IPTU Information / City Prefeitura
Porto Alegre – 2010 IPTU Information / City Prefeitura
Porto Velho – 2010 IPTU Information / City Prefeitura
Recife – 2010 IPTU Information / City Prefeitura
Rio Branco – 2010 IPTU Information / City Prefeitura
Rio de Janeiro – 2010 IPTU Information / City Prefeitura
Salvador – 2010 IPTU Information / City Prefeitura
São Paulo – 2010 IPTU Information / City Prefeitura
Teresina – 2010 IPTU Information / City Prefeitura
Vitória – 2010 IPTU Information / City Prefeitura
There are two exemptions to having to pay the IPTU:
(i) If there is a building permit in place – as stated in art. 16 of Decree 16.100/94 (regulation of
property tax) those who are in ownership of a building permit are entitled to a reduced tax rate ranging from 3% to 1% to a non-extendable period of thirty-six months, provided that:
• the building permit has been issued until the last day of the year preceding the release of tax;
• the property is residential;
• the owner(s) has/have not received another property of the same type
(ii) Elderly – those aged over 65 years are entitled to exemption from the tax
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4. Imposto de Renda das Pessoas Físicas (IRPF): Income Tax on Individuals
The IRPF is a Federal tax payable by any individual based in Brazil earning over a certain amount (controlled by the
Ministry of Finance) – as established by Article 153, Part 3 of the Brazilian Constitution: “The Federal Government
shall have the power to institute taxes on ... (iii) income and earnings of any nature”
For real estate and land investors, this will mainly be any kind of rent / letting / leasing income and it is your
legal obligation to report all receipts on yearly basis (in April). Income tax will also be levied on earnings of over
R$15,764.28 (as at January 2010) in any form of the following:
• Salary / Wages;
• Pension payments;
• Bonds;
• Commissions;
• Prizes.
The table below shows the gradual tax percentage you can expect to pay depending on the level of income you
receive in 2010 (per month):
Year
2010
Income Level
Up to $ 1499.15
From $ 1499.16 to $ 2246.75 USD
From $ 2246.76 to $ 2995.70 USD
From $ 2995.71 to $ 3743.19 USD
Above $ 3743.20
Tax Free
7.5%
15%
22.5%
27.5%
IRPF Deduction
Free
U.S. $ 112.43
U.S. $ 280.94
U.S. $ 505.62
U.S. $ 692.78
The IRPF calculator from the Ministry of Finance can be found by clicking here:
Ministry of Finance IRPF Calculator
As there is not an English version, please see a definition list of the terms on this form below:
Rendimentos Tributáveis
Taxable Income
Deduções
Deductions
Previdência Oficial
Social Security
Dependente
Dependent
Quantidade
Quantity
O valor da dedução mensal é R$ 144,20 por dependente
The monthly value per dependant is R$144.20
Alimentícia Judicial
Child Support Costs
Outras Deduções
Other Deductions
Total das Deduções
Total of all Deductions
Base de Cálculo
Base Calculation
Imposto Devido
Tax Due
Demonstrativo da Apuração do Imposto Devido
Statement of the Determination of Taxation Due
Faixa Range
Alíquota
Part
Valor do Imposto
Tax Value
Alíquota Efetiva
Effective Tax
Percentual do imposto devido sobre os Percentage of tax payable on the
rendimentos tributáveis taxable income
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Income declarations must be done prior to 30th April every year (or face late penalty fines) and can be made using a
number of methods:
(i) Either yourself or your accountant can use the Ministrys of Finance’s downloadable programme where the tax can be calculated; the necessary forms filled and returns submitted (you will also get a reference number enabling you to track the return):
Programa Gerador da Declaraçã
(ii) The Programa Gerador da Declaração can be saved on to a disc (disquete) and taken to any
Bank of Brazil (Banco do Brasil) or Post Office (Correios), of which there are plenty of across Brazil. (remember to take a copy of the disc for your own records);
(iii) A copy of the return form – Formulario Declaração de Ajuste Anual – can be handwritten and delivered to the Correios or Banco do Brasil.
The tax can also paid over a six month period due before the last working day of the month (which can be done in
most commercial banks). Note that the first months payment will be interest free followed by a charge in line with
the SELIC on the subsequent five months.
There are a number of deductions that can be offset against the IRPF which you should take advantage of, if you are
able to:
• Social security contributions paid to the Instituto Nacional do Seguro Social, INSS (National Institute of
Social Security;
• Offsetting is available for other dependents including spousal maintenance payments, children and
elderly parents;
• Education expenses of both the tax filer and their dependents can be deducted (note that this amount is
limited to R$1,700 per year);
• Some health expenses including doctor, dentist, x-ray and operation costs can be offset.
Contact your accountant for more information about making use of these deductions and ensure that you record and
keep receipts of all your necessary expenses.
Note that Brazil also has double taxation treaties (DTTs) with the following countries: Argentina, Austria, Belgium,
Canada, Chile, China, Czech Republic, Slovakia, Denmark, Ecuador, Finland, France, Hungary, India, Israel, Italy,
Japan, Korea, Luxembourg, Mexico, Netherlands, Norway, Philippines, Portugal, South Africa, Spain, Sweden and
Ukraine. This essentially means that income tax payers in one of these countries can ensure that they do not pay in
Brazil and vice versa. There are several ongoing discussions between Brazil several other countries to initiate further
DTTs (as a method of increasing trade links).
Double Taxation Treaty Agreements between Brazil and the international community
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5. Imposto de Transmissão de Bens
Inter Vivos (ITBI): Property Transfer Tax
Law No. 11,154 of December 30, 1991 governs the ITBI which provides for: “the transfer ‘inter vivos’ in any way, by
paying deed, real estate, by nature or physical accession and of interests in land, except for guarantees and transfer
of rights to purchase.”
This is a municipal tax that that applies to:
• The transfer, by act of consideration, of real estate and land;
• The transfer, by act of consideration, of any interests in property.
The ITBI is paid, therefore, only when a piece of real estate is sold, and the transaction is registered with the official
state notary (and ownership of the deed changes). Note that if a real estate changes ownership because of death
of former owner, then the Imposto de Transmissão Causa Mortis e Doação would apply (see below).
The tax varies from city to city and is calculated on the market value of the property. Generally speaking, the tax
does not exceed 3% of the property’s value although most local real estate professionals will be able to give you the
most recent rate. Alternatively, contact your local State Prefeitura via their links below:
Aracaju – City Prefeitura
Belém – City Prefeitura
Belo Horizonte – City Prefeitura
Boa Vista – City Prefeitura
Campo Grande – City Prefeitura
Cuiabá – City Prefeitura
Curitiba – City Prefeitura
Distrito Federal – City Prefeitura
Florianópolis – City Prefeitura
Fortaleza – City Prefeitura
Goiânia – City Prefeitura
João Pessoa – City Prefeitura
Maceió – City Prefeitura
Manaus – City Prefeitura
Natal – City Prefeitura
Palmas – City Prefeitura
Porto Alegre – City Prefeitura
Porto Velho – City Prefeitura
Recife – City Prefeitura
Rio Branco – City Prefeitura
Rio de Janeiro – City Prefeitura
Salvador – City Prefeitura
São Paulo – City Prefeitura
Teresina – City Prefeitura
Vitória – City Prefeitura
The tax will need to be paid within 30 days of the arrival of the transfer deeds at the official notary’s office and is a
compulsory legal obligation (your lawyer will formally declare the sale and ensure that all the paperwork related to
payment of this tax is completed prior to the point of exchange and completion).
The following parties have immunity from paying the ITBI:
• Property belonging to the Union, the Federal District and Municipality;
• Property belonging to churches of any denomination;
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• Property belonging to political parties, including their foundations and unions of workers;
• Education, social welfare and not for profit institutions.
Note that there is a recently instated bill which provides that in every five years a tax benefit can be used to offset
your ITBI liability provided that all the reinvestment is used towards other real estate assets up to 180 days after
the selling (contact your accountant for more information or email [email protected]).
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6. Imposto de Transmissão Causa Mortis e
Doação (ITCMD): Inheritance Tax
Created by the 1988 Constitution, Law 8927/88 in force as of 1st March 1989 states a tax is due upon: “any person
or entity that receives goods or rights as inheritance (due to the death of former owner) or as a donation.”
A taxable event occurs when:
• the transmission of any property or right is held as a legal or testamentary succession (including
provisional succession);
• the transfer is by gift, for any reason, of any property or rights;
• the acquisition of assets or rights by the heir or spouse detached is shared in succession by death or dissolution of the marriage.
The Federal State of Brazil has established the ITCMD at eight percent. However, each state may have its own
specific rate which can be lower or higher (in the State of São Paulo the inheritance tax payable is four percent).
Please see the following links to state secretariats throughout Brazil for further information (which often have information on other state direct and indirect taxes):
Acre – Secretariat of Finance
Alagoas – Secretariat of Finance
Amapá – Secretariat of Finance
Amazonas – Secretariat of Finance
Bahia – Secretariat of Finance
Ceará – Secretariat of Finance
Distrito Federal – Secretariat of Finance
Espírito Santo – Secretariat of Finance
Goiás – Secretariat of Finance
Maranhão – State Revenue Management
Mato Grosso – Secretariat of Finance
Mato Grosso do Sul – Secretariat of Finance
Minas Gerais – Secretariat of Finance
Pará – Secretariat of Finance
Paraíba – Secretariat of Finance
Paraná – Secretariat of Finance
Pernambuco – Secretariat of Finance
Piauí – Secretariat of Finance
Rio de Janeiro – Secretariat of Finance
Rio Grande do Norte – Secretariat of Taxation
Rio Grande do Sul – Secretariat of Finance
Rondônia – Secretariat of Finance
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Roraima – Secretariat of Finance
Santa Catarina – Secretariat of Finance
São Paulo – Secretariat of Finance
Sergipe – Secretariat of Finance
Tocantins – Secretariat of Finance
Payment will vary according to state procedures, but Federal law states that documentation (using form 3026 for
transmission by cause or death and 3018 for donations) would have to be submitted to the Procuradoria Geral do
Estado (State Attorney General) for the asset or rights to be valued and subsequently to the Delegacia Regional da
Receita (Regional Tax Delegate) for collection.
Law 8927, Article 4 provides for exemption from the ITCMD in the following circumstances:
• if the transfer caused by death of property owner is used solely for housing the surviving spouse or heir and they have no other property to reside in;
• if the transfer caused by death of the property owner is in a rural area of up to 25 hectares and its
ongoing usage is the only means of sustenance for the family of the heir or surviving spouse;
• if the donation of property is for the intention of land reform;
• if the donation of property is used for approved housing programs (such as Minha Casa, Minha Vida);
• if the property was owned by the following groups:
• the Union, States, Federal District and Municipalities;
• temples of any cult;
• political parties, unions, educational institutions, social and not-for-profit groups;
• foundations instituted and maintained by the Government;
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7. Imposto sobre a propriedade Territorial
Rural (ITR): Rural Land Property Tax
The tax is governed by Article 153, Section VI of the Federal Constitution: “the Union shall have the power to institute taxes on... (vi) rural property.”
The tax will be triggered when land is in useful possession outside a specific urban perimeter established by
individual states. The taxpayer can either be the actual owner or a holding company and the calculation is based
upon the valuation of the land without any betterment or improvement (ie. the value of the ‘bare’ land).
The ITR was initiated to end the formerly widespread practice of unproductive land ownership and many attribute
the tax as one of the main contributory factors the led to Brazil’s agribusiness boom in the 1990s.
The following two exemptions apply:
• The ITR does not affect small rural plots, of which are defined as the following:
• Under 100 hectares if located in the Western Amazon and the Pantanal of Mato Grosso and Mato Grosso do Sol;
• Under 50 hectares if located in the Eastern Amazon;
• Under 30 hectares if located in another municipality;
• If the rural land is incorporated within the official program of land reform.
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8. Taxa de Terrenos de Marinha:
Marine Land Tax
This is a tax that even has many lawyers and accountants confused and was initiated to deter land ownership and
development close to Brazil’s 7,000 miles of coastline. If you are purchasing a Brazilian piece of coastal real
estate or land, ensure to verify whether this tax will apply (terms and payment conditions will vary according to the
individual state).
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9. Tax Evasion
In the eyes of Brazilian law, tax evasion is defined as the use of illicit means to avoid payment of any obligatory
governmental fees. The methods used to evade taxes are missing information, false statements and the production
of distorted documentation (for example the amendment of receipts, invoices, bills etc). As many readers would be
aware, an informal economy does exist in Brazil which has led to high levels of tax evasion in the past. However,
now that Brazil’s government has restored macro-economic stability – along with providing incentives to encourage
citizens and businesses to operate in a more orthodox manner – the authorities take a very strict view on tax
avoidance. Recent examples include, in 2009, an intensive operation to collect unpaid taxes from São Paulo’s
upscale building owners amounting to over $BRL 1.5 billion with recent announcements of expansion into several
other parts of Brazil. A new advanced monitoring database was also trialled successfully which has automatic
investigation triggers should indiscrepancies appear. Whilst only being fully operational in São Paulo, plans are
already in place to extend its reach to all parts of Brazil (replacing the bureaucratic and labour intensive existing
processes).
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10. Frequently Asked Questions on Brazilian
Real Estate and Land Taxation
How will I be taxed in Brazil? This will really depend on your activities as a real estate / land investor – in most
cases, the main taxes are the Propriedade predial e Territorial Urbana, IPTU (a property tax paid to the state where
your property is located); the Imposto sobre Transmissão de Bens Imóveis, ITBI (a transfer tax); the Imposto de
Renda das Pessoas Físicas, ITPR (an income tax) and the Imposto sobre a propriedade Territorial Rural, ITR (a rural
land property tax).
As a foreign investor, must I always file a Brazilian tax return with regards to any income gained?
Yes, if you earn over a fixed amount per year as a result of your investment, it will be obligatory to file a Brazilian
tax return. Note that relevant documentation will still need to be completed even if you fall under the tax bracket.
How will other taxes be made? Income tax and the rural property tax can be paid in one lump or in instalments
(see below); the ITBI (transfer tax) and ITCMD (inheritance tax) will be made within 30 days from the transfer of
sale (your lawyer will inform you of your tax payment obligations). The ITPU (state property tax) can usually be
paid in one lump sum or in instalments.
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What are the first steps that I need to undertake to ensure I am meeting my taxation obligations in
Brazil? You will first need to ensure that you have a Cadastro de Pessoa Física (CPF) Number – a straightforward
process that can be undertaken in a number of ways – this will ensure that you are formally registered with the tax
authorities. Please see our ‘Obtaining a Cadastro de Pessoa Física (CPF) Number’ guide.
Can the deadline for payment be extended? No, if you miss the deadline you can expect to receive a fine.
Do I have to pay the income tax in one lump sum? Taxpayers have the choice to pay in one lump some or
as six monthly payments – although it should be noted that, with the latter option, the first payment is interest free
and the remaining five will be subject to added interest in line with the SELIC. Some Brazilian investors pass on this
extra cost in the form of higher rents and lease payments.
Will I be able to offset income tax against any of my expenses? If structured in the correct way, a number
of expenses can be offset (such as moving expenses, home leave, health expenses, language lessons and the use
of a car) – a good accountant will be able to advise further on this issue.
What about my income from other countries of world, will I have to declare these to the Brazilian
authorities? As a non-resident, you will be subject to Brazil-sourced income tax only so there is no need to file
any returns for any external gains.
Should I open an offshore bank account and will I benefit from doing so? If you receive any kind of
payment (be that rent, fees or other income) it would be classed as Brazil sourced so setting up an offshore account
may be an effective way to save tax. Contact us at [email protected] for the details of offshore
tax specialists.
What is the Brazilian tax year? The official Brazilian Tax year is from 1st January until 31st December (the
calendar year).
What if my income varies from month to month? The amount of income you earn (from a rental property
for example) will be compounded within the tax year and calculated accordingly (note you will be exempt if your
income is below a certain threshold (see this table with the latest income tax rates).
How is tax residence determined in Brazil? As a non Brazilian national, you will only be treated as a resident
for tax purposes if you stay in the country for more than 183 days in any 12 month period.
Is there any benefit of filing a joint tax return with my spouse? You are legally obliged to file your own tax
return, although if the piece of real estate and land is jointly owned separate additional documentation will have to
be provided. Married couples are jointly taxed on all income if one of the spouses has no income and is registered
as a dependant on the other spouse’s return.
What are the main indirect taxes in Brazil that I may need to be aware of as a real estate investor?
The Imposto sobre Operações relativas à Circulação de Mercadorias e Prestação de Serviços de Transporte
Interestadual e Intermunicipal e de Comunicação (ICMS) is a tax imposed on the circulation of merchandise,
transportation and communication services and similar to value added taxes in other countries. A general rate of
18% applies, with specific taxes for a number of goods and services (for example, 25% for luxury goods). The
Imposto sobre Propriedade de Veículos Automotores (IPVA) is a monthly tax which is paid by all motor vehicle
owners.
How can I find out about double taxation to ensure I can offset my liability?
Double taxation treaty (DTT) agreements enable income tax paid in a number of countries to be offset against gains
in Brazil and vice versa. Click on this link for detailed information on international conventions.
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Will I have to pay social security? Social security taxes will have to be paid if you are an employer in the country
(the rate will vary from state to state but usually is approximately between 5 and 9 percent). It is also worth noting
that social security is tax deductible in certain circumstances (speak to your accountant as each individual case is
different).
How can I check that the Brazilian accountant I am working with is legitimate? The Brazilian Accounting
practices adopted in Brazil (GAAP) are based on legal requirements defined in the Law and a set of several
technical standards that are published by several official entities. The most reliable technical accounting standards
are published by the not-for-profit organisation – Comitê de Pronunciamentos Contábeis (CPC) – which was
created in 2005 as a merger of the regulatory bodies of the following entities: Abrasca, Apimec Nacional,
Bovespa, Conselho Federal de Contabilidade, FIPECAFI and Ibracon. The CPC is responsible for the
continual review of accounting practices as well as creating new ones compliant with International Financial
Reporting Standards (IFRS). You should ensure that your accountant is fully compliant with the stipulations of the
organisation (if in doubt, an email can be sent to [email protected] to verify).
I have further questions...
Please feel free to contact us at [email protected].
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