The Brazilian internal revenue service has issued a ruling (IN 1888/2019) regulating the disclosure of information on crypto-asset transactions, a requirement that will become effective in September.
Such ruling defines “crypto assets” as digital representation of value that are denominated in their own unit of account, whose price can be expressed in local or foreign currency, which can be traded electronically using encryption and distributed ledger technology, and which are not attached to a legally established currency.
Such disclosure requirement is applicable to (i) crypto exchange domiciled in Brazil, which is defined as the legal entity offering services related to crypto-asset transactions (brokers); and (ii) any individual or legal entity resident or domiciled in Brazil at the time the asset is traded on an overseas exchange, as well as in the event no exchange is used.
Individuals and legal entities are required to provide information whenever transactions, either individually or jointly, exceed BRL 30,000.
Transactions which are required to be disclosed include (IN 1888/2019, section 6, paragraph 2): (i) purchase and sale; (ii) exchange; (iii) donation; (iv) transfer of a crypto asset to an exchange; (v) withdrawal of a crypto asset from an exchange; (vi) temporary assignment (rental); (vii) accord and satisfaction; (viii) issue; and (ix) any other transaction involving transfer of a crypto asset.
Such information is to be provided on a monthly basis by 11:59 pm of the last day of the month following that in which the crypto-asset transaction occurred. The information will be provided online on the Brazilian internal revenue service’s website (http://idg.receita.fazenda.gov.br).
If information is delivered after such a deadline, legal entities will be subject to a fine ranging from BRL 500 to BRL 1,500 per month and individuals will be subject to a monthly fine of BRL 100. Provision of inaccurate, incomplete or incorrect information or the omission to provide required information will give rise to a fine of 3% of the transaction value (for legal entities) or 1.5% of the transaction value (for individuals).
Our tax team is ready to provide further information and assist our clients in submitting the required information to the Brazilian internal revenue.
