Episode #73: Daniel de Paiva Gomes on Why Brazil's Crypto Tax Regime is Among the World's Best

Brazil Crypto Report

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Episode #73: Daniel de Paiva Gomes on Why Brazil's Crypto Tax Regime is Among the World's Best

Plus, Gomes breaks down the good, bad and ugly components of a newly proposed 15% to tax on overseas crypto gains

Aaron Stanley

Nov 04, 2023

Daniel de Paiva Gomes is a partner at VDV Advogados and is one of Brazil’s leading experts on issues of cryptocurrency taxation, having authored the book “Bitcoin: the Taxation of Cryptocurrencies”

In this interview, we talk about Brazil’s existing tax structure for crypto assets — which Daniel argues is among the most advanced in the world, and the potential impact of new legislation recently approved by Brazil's Chamber of Deputies.

This bill, which now moves to the Senate, would create a 15% baseline capital gains tax on “foreign” cryptocurrencies or cryptos that are held in wallets hosted overseas on exchanges like Binance or Bitget.

While this sounds nefarious, and many influencers in the Brazil crypto world are sounding the alarm, Daniel argues that this rule wouldn't actually change much given that Brazil already operates a worldwide taxation regime where citizens are taxed on income and gains generated both inside and outside of the country.

Further, the 15% rate is significantly less than the 22.5% progressive rate that applies to capital gains more broadly.

However, he argues that the tricky part is the existing R$35,000 (US$7,000) monthly exemption, whereby a user doesn’t need to report gains to authorities if his trades sum up to less than R$35,000 in a month.

Because this exemption isn’t included in the new legislation, retail traders who would not have exceeded the threshold previously would be forced to pay the 15 percent moving forward.

We go into a lot more depth on this issue, including:

the bill’s chances of progressing in the Senate
how the Receita Federal would treat this rule should it be passed
significant gaps and non-sequitors in the current text of the bill

There has been a lot of FUD and inaccurate takes on these topics being circulated over the last couple of weeks, so I appreciated Daniel coming on the show to help clarify some of these points.

To be fair, taxation — and especially crypto taxation — issues are always difficult for both laymen and professionals to fully understand, so many thanks to Daniel for laying a helpful foundation here.

You can connect with Daniel on Linkedin.

Have a great weekend everyone

-AWS