Brazil

Individual - Significant developments

Last reviewed - 31 August 2020

The social security contribution table applicable for 2019 was updated by an Ordinance, dated 16 January 2019, issued by the Brazilian social security authorities (see the Other taxes section for more information). The progressive tax table applicable as of April 2015 was updated by the Provisional Measure (PM) 670/2015, dated 11 March 2015, and converted to the Law 13,149, dated 21 July 2015 (see the Taxes on personal income section for more information).

Brazil is negotiating new totalisation agreements (see the Foreign tax relief and tax treaties section for more information), including Bulgaria, China, India, Switzerland, and the Portuguese speaking countries Multilateral Agreement (Brazil, Angola, Cabo Verde, Guinea Bissau, Mozambique, Portugal, Sao Tome and Principe, and East Timor).

Regarding the report of overseas assets in Brazil (Annual Income Tax Return and Brazilian Central Bank reporting), there is an Agreement between the Brazil and the United States (US) whose main objective is the exchange of financial information between the countries. This occurs through the tax authorities, which can exchange data with regards to balances in checking and saving accounts, earnings from financial investments, brokers, and insurance accounts. Further information (e.g. information related to real estate purchased abroad by Brazilians) may also be requested, but is not automatically provided.

On 14 January 2016, the Special Regime of Taxation and Foreign Currency Regularisation was established, which creates a legal mechanism for voluntary declaration by individuals and companies of their assets located outside the country that were not declared or were declared incorrectly. For regularisation, the taxpayer must bear a tax burden of approximately 30% of the assets amount. The deadline to avail of the regime finished on 31 October 2016.

Law 13,429, in force as of 30 March 2017, brought a second version of the Special Regime of Taxation and Foreign Currency Regularisation for those who have not benefited in the first stage. In this second phase, for regularisation, the taxpayer must bear a tax burden of approximately 35% of the assets amount. The deadline to avail of the regime finished on 31 July 2017.

A new obligation, called eSocial, is implemented to substitute several payroll related ancillary obligations of Brazilian companies. PwC Brazil is tracking all the news regarding eSocial in order to assist companies that are looking forward to be in compliance with the Brazilian legislation.

The eSocial implementation started on 1 January 2018 for companies with revenue in 2016 that has surpassed 78 million Brazilian reais (BRL). For other companies, the implementation started in July 2018.

On 29 October 2014, the Brazilian authorities issued the Normative Instruction (NI) 1,500, which aims to consolidate several sparse regulations regarding individuals' income tax. This NI does not change the legislation, but contains specific rulings for the application of the individual tax laws.

New Law 13,467/2017 amends the Consolidation of Labor Laws (CLT) and adjusts various legal rules applicable to labour relationships. The newly introduced rules entered into force on 11 November 2017. Given their importance, companies should give these rules special attention due to their potential impacts on international assignment processes and costs.

The ‘New Migration Law’ (Law 13,445 issued in May 2017) has formally revoked the ‘Foreigner Statute Law’ (Law 6,815/1980), defining the rights and duties of Brazilian migrants and the legal situation of foreign individuals in Brazil. The main purpose of the new legislation is to ensure equal rights and opportunities to foreigners as if they are Brazilians citizens, as well as simplify the procedures for entrance and residence in Brazil. With respect to the latter, the Law has created new types and characteristics for allowable visas, extended the coverage conditions for the temporary visa, and introduced a new authorisation for residence.

On 21 November 2017, the Brazilian Internal Revenue Service (IRS) published NI 1,761/2017 determining a new mandatory report, the Declaration of Operations Settled in Cash (DME), due for individuals or companies who have received an amount of BRL 30,000 in cash in original currency or the equivalent in foreign. The fine for non-reporting or reporting incorrect data ranges from 1.5% to 3% of the transaction.

NI 1,831/2018, published by the Brazilian tax authorities on 21 September 2018, deals with procedures of customs control and tax treatment applicable to the traveller's goods and aims to improve and simplify the procedures adopted in the entrance of the goods of the return traveller to the country.

On 23 November 2018, the Brazilian IRS published the 16th version of the Income Tax Regulation thru the Decree 9,580/2018.

On 12 November 2019, the Brazilian government promulgated the Social Security Reform though the Constitutional Amendment (EC) n. 103. The new legislation has changed the social security system in Brazil, introducing, among other aspects, new rates for the individual social security contributions and new rules for granting pension benefits.

Based on the Law 13,932/2019, the government has extinguished the social contribution due by companies in cases of employee's dismissal without just cause. This charge, previously calculated at 10% on the total deposits made by the employer to the employee's FGTS account during the employment relationship, ceases to exist as of January 1 2020.