Taxation on cryptoassets: operations in a foreign Exchange

The taxation of cryptoassets is a new topic in Brazil, for this reason, it generates a number of doubts. One of them relates to the declaration of operations in a foreign Exchange.

In a webinar promoted by Drummond Advisors, Roberto P. Vasconcellos, tax consultant, answered if the operation must also be declared at the place where it is conducted in the Exchange. “Depends on the country you are dealing with. Most countries still have no regulation that provides enough security. So, when you enter the universe of cryptoassets, you have to walk carefully. […]. Particularly if the operation is not conducted in the official Exchange, you could be violating laws in other countries, you never know.”

Michel de Amorim, partner at Drummond, stressed that first of all, the obligation is with the country where the individual is a tax resident.

“At first, you have an obligation to the country of your tax residence, so you must, at least, pay attention to the rules in Brazil, if you are a Brazilian tax resident. Depending on the legislation in other countries, where such Exchanges are registered, you could eventually have additional obligations.”

Amorim mentioned that this issue is new and that problems with local Exchange countries should not be dismissed.

“Everything is so new. I have not seen it yet – at least here with our clients – problems with countries where these Exchanges are located […], but it does not mean that it could not happen.”

The foreign exchange market is growing among Brazilians

On the consequences of the failure to declare cryptocurrencies in foreign Exchange, Vasconcellos associated doing that with tax evasion. “In theory, you are evading, because you have the obligation to declare, even if it is abroad. And for cryptoassets not declared, you have to correct the statement, so as to report and fulfill your obligation as a tax resident in Brazil.”

Drummond’s partner, on the other hand, highlighted that one should not fail to report income abroad, due to potential problems with the Federal Revenue Service. “Keeping in mind that Brazilian tax residents, as well as American tax residents, should report their global assets and global income. So, if you have income outside the USA (country of tax residence) which may have been subject to any type of taxation, you also report such taxation abroad. But we really do not recommend not reporting it, since you start to have potential problems with the Federal Revenue Service.”


Written by Marcos Ferreira, Content Assistant at Drummond Advisors

Watch the full webinar through the link:

Michel de Amorim, Camila Cabral and Roberto P. Vasconcellos answered several questions related to the taxation of crypto assets in Brazil
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