Residents of Brazil are taxed on their worldwide income, and non-residents are taxed exclusively at source on their Brazilian-sourced income. The source of income is determined by the place where the income payer is located, irrespective of where the work is performed.
For reference, non-resident taxpayers are taxed only on Brazilian-earned income at a flat rate of 25% (no deductions are allowed). Rental income received from a Brazilian-located property is taxed at 15%. Income receive abroad by non-residents is tax exempt.
Personal income tax rates
Resident taxpayers who receive income from Brazilian sources are subject to withholdings. Resident taxpayers who receive income from non-Brazilian sources (e.g. through split payroll arrangement) or from individuals (e.g. rental income) are subject to mandatory monthly tax payments on amounts not subject to withholdings.
The monthly income tax will be calculated based on the following progressive tax rates (in Brazilian real or BRL) as of April 2015:
|Income at or over (BRL)||Up to (BRL)||Tax rate (%)||Deductible tax amount (BRL)|
Alternative income taxes
In December 2012, the Brazilian authorities issued PM 597/2012, converted into Law 12,832 (20 June 2013), altering Law 10,101/2000, which regulates profit sharing distributed to employees. The referred law established new rules, as follows:
- A new specific progressive table applicable only for profit sharing paid by companies to its employees, which is valid as of April 2015:
Annual profit sharing (BRL) Tax rate (%) Deductible tax amount (BRL) 0 to 6,677.55 0 0 6,677.56 to 9,922.28 7.5 500.82 9,922.29 to 13,167.00 15.0 1,244.99 13,167.01 to 16,380.38 22.5 2,232.51 Above 16,380.38 27.5 3,051.53
- The possibility for the employee to use the alimony paid as a deduction from the profit sharing or from the regular salary.
- The periodicity of payment must be twice a year, considering a minimum period of three months between the payments.
Local income taxes
There are no provisions for local, state, or provincial income taxes in Brazil.