Brazil Drops Crypto Tax Exemption, Sets 17.5% Flat Rate

• Michael Willson
• June 20, 2025

Brazil has removed its long-standing crypto tax exemption for small traders and replaced it with a flat 17.5% tax on all crypto capital gains, effective June 12, 2025. This new law applies to all individual investors — including those using offshore exchanges or self-custody wallets — and covers every crypto-related gain, from trading and staking to DeFi and token swaps.

In this article, we’ll explain what changed, who it affects, and how Brazilian investors need to adapt to stay compliant.

What Is the New Crypto Tax Law in Brazil?

The tax reform was introduced under Provisional Measure 1303. It ends the monthly tax exemption for crypto sales under R$35,000 and introduces a single 17.5% flat tax rate on all crypto gains.

Previously, taxes were only applied progressively:

• 15% on gains below R$5 million
• Up to 22.5% on gains above R$5 million
• No tax at all if monthly trades were below R$35,000

Now, all crypto users will pay the same 17.5% regardless of their transaction size or profile.

Who Does This Affect?

This rule impacts both small and large investors. Here’s a breakdown.

Small Crypto Traders

Small traders who previously paid no tax if their monthly sales stayed below R$35,000 will now pay 17.5% on every gain. This is a major shift that especially impacts casual traders, freelancers, and hobby investors.

High-Net-Worth Individuals

Wealthy traders and institutions that were previously taxed up to 22.5% on large trades may actually benefit. Under the new law, their tax burden is capped at 17.5% — reducing their overall liabilities.

Self-Custody and Offshore Holders

crypto stored on private wallets or earned through foreign exchanges is no longer ignored. All wallets, including cold wallets and offshore accounts, are now fully taxable.

DeFi and NFTs

The law also applies to DeFi protocols, staking rewards, token swaps, and possibly NFT trades. All of these activities are included under the capital gains umbrella.

Impact of Brazil’s New Crypto Tax by Investor Type

 

Investor Profile

Old Tax System

New Flat Rate System

 

Small Trader (<R$35K/mo)

0% capital gains tax

17.5% on all gains

 

Mid-Level Trader

15%–22.5% based on gains

17.5% uniform rate

 

Large Trader (>R$5M gains)

22.5% maximum bracket

17.5% capped rate

 

Self-Custody/Offshore

Often exempt or untracked

Fully taxable

What Else Is Covered Under Provisional Measure 1303?

The same reform package also impacts other areas of investment and income:

• Fixed-income instruments (LCIs, LCAs, CRIs/CRAs): Now taxed at 5%
• Online betting revenues: Tax increased from 12% to 18%
• Previous plans to raise IOF (Financial Operations Tax) were dropped in favor of this flat-tax framework

This broader financial tax reform is designed to increase state revenue, create uniformity across asset classes, and close long-standing compliance gaps.

How Will Reporting Work?

All taxpayers must now report crypto capital gains every quarter. Even if your wallet is private or offshore, you must disclose it.

Losses can be carried forward, but only up to five quarters. This carry-forward period will shrink further starting in 2026, making tax planning even more important.

Brazil’s government is also considering regulations that may allow companies to pay up to 50% of salaries in crypto, especially for contractors and remote workers — although this proposal is still under review.

Crypto Investors’ Reaction to Brazil’s Tax Law

Investor Type	Reaction Likely	Best Response
Casual Traders	May reduce activity or switch to hold	Track gains, limit frequent trades
Professional Traders	Neutral to mildly positive	Use carry-forward losses smartly
Offshore Wallet Holders	May seek alternative jurisdictions	Ensure full disclosure
Institutional Investors	Slightly relieved at capped rate	Rebalance and consolidate

What Should You Do Now?

If you trade or hold crypto in Brazil, here are five steps to take:

1. Track all trades and gains — even across DeFi, NFTs, and airdrops
2. Use crypto accounting tools to prepare for quarterly tax filing
3. Keep detailed records of losses so you can apply them before the deduction window shortens
4. Reassess your strategy if you’re a frequent trader — you may want to limit taxable events
5. Stay informed and trained — if you’re serious about trading, earning a crypto certification can help you stay compliant and tax-smart

If your role is more analytical or strategic, a Data Science Certification can help you understand and model crypto behavior. And for those in growth, marketing, or business ops, a Marketing and Business Certification can future-proof your career in Web3.

Final Thoughts

Brazil’s flat 17.5% crypto tax is a major change. It ends exemptions that benefited small traders and applies strict rules to all — including offshore and DeFi activity. While the move simplifies tax policy, it also increases the burden on casual users and forces everyone to report with precision.

The good news? High-net-worth investors now face less complexity. But for everyone else, this is a time to rethink strategies, organize records, and upskill.