Brazil's crypto tax landscape has undergone a significant shift in 2025, with the introduction of a flat 17.5% capital gains tax on all cryptocurrency transactions. This new regulation, enacted through Provisional Measure 1303 on June 12, 2025, eliminates the previous tiered system and exemptions, impacting small investors most significantly.
The Shift to a Flat Tax Rate
Before June 2025, Brazilian taxpayers enjoyed a monthly tax exemption of R$35,000 (approximately $6,300) on crypto sales. Profits exceeding this threshold were subject to progressive tax slabs ranging from 15% to 22.5%. However, the new law imposes a flat 17.5% tax on all crypto transactions, regardless of the transaction size, profit amount, or asset type. This applies to tokens held on centralized exchanges, self-custody wallets, and foreign platforms.
Impact on Small Investors
The elimination of the monthly exemption has a disproportionate impact on small investors. Previously, they could trade modest volumes of crypto without incurring capital gains taxes. Now, any crypto trade that results in a gain, no matter how small, is subject to the 17.5% tax. This could even affect everyday transactions, such as paying for coffee with crypto, potentially triggering capital gains. Industry leaders fear that this change could harm Brazil's national crypto market by burdening those who can least afford it.
Potential Benefits for High-Volume Investors
While small traders face increased tax liability, high-volume investors may benefit from the flat tax rate. Under the previous system, large trades exceeding 5 million Brazilian reals were taxed between 17.5% and 22.5%. With the new flat rate, these investors could see their effective tax rate decrease.
Closing Loopholes and Expanding the Tax Base
The new tax regime aims to close loopholes and expand the tax base by including crypto assets held in self-custody wallets and foreign crypto holdings. This means that all Brazilian residents, regardless of where their crypto is held, are subject to the 17.5% tax. The government's objective is to simplify enforcement and increase tax compliance across Brazil's growing crypto ecosystem.
Calculating and Reporting Capital Gains
Capital gains on crypto in Brazil are calculated by subtracting the acquisition cost from the sale price of the digital asset. The resulting profit is subject to the 17.5% tax. Taxpayers will begin calculating and paying the 17.5% tax on cryptocurrency gains realized from January 1, 2026, forward. Taxation will be assessed quarterly, with investors allowed to offset losses from the previous five quarters, although the window for loss deduction will be tightened from 2026 onward.
Broader Regulatory Context
The new crypto tax rules are part of a broader effort by the Brazilian government to regulate the crypto market and increase revenue. The Central Bank of Brazil (BCB) is actively working on creating a comprehensive regulatory framework for Virtual Asset Service Providers (VASPs), focusing on anti-money laundering (AML) measures, risk management, and blockchain custody monitoring. Brazil has also introduced strict regulations targeting stablecoins, limiting transfers to self-custody wallets and imposing restrictions on transactions involving foreign currency-denominated stablecoins. These measures aim to improve consumer protection, reduce risks, and combat illicit finance.
