Small Investor Exemptions Removed
Brazil has officially scrapped its tax exemption for small-scale crypto investors. Previously, those who sold up to 35,000 Brazilian reals (roughly $6,300) in crypto per month paid no tax on gains. This exemption helped encourage grassroots adoption and everyday trading. But under the new policy, even the smallest crypto profits are now fully taxable at a flat rate.
17.5% Flat Tax Replaces Tiered System
The new regulation, enacted via Provisional Measure 1303, implements a 17.5% flat tax on all crypto capital gains, regardless of the volume. This replaces the older tiered tax system which ranged from 15% to 22.5% depending on the size of monthly transactions. While the new rate raises costs for casual traders, it slightly lowers the tax burden for high-volume investors, who previously paid more.
Tax Rule Applies to All Investors
The flat tax applies universally to all residents engaging in crypto transactions. There are no exemptions for transaction size, holding period, or income bracket. This marks a shift toward a more aggressive and inclusive taxation policy, as Brazil aims to expand its tax base and generate revenue from previously under-taxed financial activity.
Offshore and Self-Custody Holdings Now Taxed
One of the most controversial parts of the new measure is the inclusion of offshore and self-custodied crypto. Investors who store crypto in private wallets or on foreign exchanges will now be required to report and pay tax on all gains, closing a longstanding regulatory gap. Tax will be calculated on a quarterly basis, giving investors limited time to manage tax liabilities.
Loss Deduction Window Tightened from 2026
Investors will still be able to offset crypto losses, but only from the past five quarters. Starting in 2026, this deduction window will be further restricted. This change is likely to impact active traders and speculative investors who rely on loss deductions to reduce taxable gains.
Fixed Income and Betting Also Face Higher Taxes
The tax overhaul isn’t limited to crypto. Profits from previously exempt fixed-income instruments such as LCAs, LCIs, CRIs, and CRAs will now be taxed at 5%. Additionally, betting income will face a tax increase from 12% to 18%, part of a broader strategy to target under-regulated sectors of Brazil’s growing digital and financial economy.
Government Walks Back Earlier IOF Hike
The new tax rules come after the failure of a previous proposal to increase Brazil’s Financial Transaction Tax (IOF). That attempt faced widespread backlash and was ultimately shelved. In its place, the government shifted its focus toward digital assets and financial instruments, areas less protected by traditional lobbying power.
Bitcoin Salary Bill Still Under Consideration
Despite its aggressive tax moves, Brazil continues to explore crypto integration in labor laws. In March, a proposal was introduced to allow employers to pay up to 50% of wages in crypto. Full crypto payments would be limited to foreign workers or contractors under Central Bank guidelines. The bill includes measures for exchange rate stability and regulatory oversight to prevent misuse.
