Are you a Brazilian expat? Get to know your obligations with the Treasury

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Whoever left Brazil permanently or temporarily in the year 2018 — for whatever reason, such as work or study — must regularize their exit with the Federal Revenue Service.

The first step is to send the Communication of Definitive Exit to the tax authorities by the last day of February in the year following the exit. Joice Izabel, accountant and partner at Drummond Advisors, explains that this communication is important to avoid problems with the Revenue, mainly because the sending of the Communication of Definitive Exit (and also of the Statement of Definitive Exit, which we will talk about later) “‘liberates’ the taxpayer from declaring their income tax in the years in which they are out of Brazil.”

Leaving Brazil? Let the tax authorities know!

In addition, Joice points out that clarifying the situation of non-resident in Brazil before the Federal Revenue avoids double taxation — that is, it prevents the expatriate from being taxed twice in the same source of income. Thus, the person is accountable only to the country where he or she is residing.

Another important point related to tax obligations of those who live abroad concerns the explanation of the assets if that person decides to return to Brazil. “Without the Communication of Definitive Exit, the increase of the equity without explanation results in the collection of the tax in its totality”, warns the accountant.

Temporary and definitive exit: what is the difference?

It is important to note that the deadlines for submitting the Communication of Definitive Exit are different for each situation:

  • Temporary exit is one in which leaving the country happens in an unplanned way — for example, when someone travels abroad for a few days or months and ends up deciding to stay permanently. In this case, the deadline for submitting the Communication starts to apply as soon as the person becomes an expatriate (that is, he/she has been abroad for 12 consecutive months) and runs until the last day of February of the following year.
  • Permanent exit is one that derives from a previous decision to leave the country — in other words, when someone goes abroad already knowing that they will spend more than 12 months out of Brazil. As this situation usually involves planning in advance, the deadline for sending the Communication becomes valid from the day the taxpayer left Brazil until the last day of February of the following year.

The Communication of Definitive Exit can be submitted through Receitanet, available at the Brazilian Federal Revenue website.

Statement of Definitive Exit

Despite having names, the Communication and the Statement of Definitive Exit are different things and should not be confused — however, submitting both documents is mandatory for those who are absent from the country for 12 consecutive months.

The Statement of Definitive Exit is the last statement of Personal Income Tax of someone who goes abroad permanently. This document must be sent to the Federal Revenue Service from the first working day of March to the last working day of April of the year following the final departure or characterization of the non-resident status.

Joice Izabel highlights that “it is important to respect the deadline, because if the Statement of Definitive Exit is submitted late, there will be penalties: a fine of 1% per month or a fraction of the delay on the Income Tax due.” The minimum amount is R$ 165.74 and the maximum amount is 20% of the tax due.

Remember that the expatriate who submits the Communication and the Statement won’t have to fulfill the obligations again while remaining abroad or declaring the Income Tax in Brazil.