How to declare investments abroad in IR?
Find out how to declare investments abroad on your income tax!
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Brazilians who invest in international assets need to declare investments abroad on their income tax return.
After all, the taxation of this type of investment, in addition to being different for each asset, varies according to the way in which the allocation was carried out.
To avoid problems with the Federal Revenue Service, the declaration must be made correctly and within the established deadline.
And if you want to know more about the process of declaring investments abroad, keep reading!
Step by step guide to declaring investments abroad on your income tax return
Individuals must start by filling out the “Assets and rights” form with information about the application.
In addition, it is necessary to inform the account number, the type of investment and the financial institution in question.
It is also necessary to inform the number of assets, the amount invested and the exchange rate on the day the investment was made. The balance remains unchanged until new investments or withdrawals are made.
When the assets exceed R$1 million, in addition to declaring them to the tax authorities, the investor must also inform the Central Bank, through the declaration of Brazilian Capital Abroad (CBE).
Another highlight is the legislation of each country, as there are countries that have reciprocity agreements with Brazil.
How to declare BDRs?
BDRs (Brazilian Depositary Receipts) allow Brazilians to invest in assets that reflect foreign shares.
Previously, this type of investment was restricted to qualified investors. But now, this investment has become more accessible.
Although declaring BDRs on Income Tax is not complex, you need to pay attention to the main details to avoid making mistakes when filling out the information.
You will need to have the income statement provided by the broker on hand.
With that in mind, we have prepared a step-by-step guide. Check it out:
Install the Federal Revenue program
After completing the download, open the Federal Revenue program and fill in your personal information.
Understand the taxation of BRDs
Taxation on BDR transactions is 15% on gains from common transactions. For day trading, the rate is 20%.
In BDRs, the tax is progressive and can reach 27.5%.
· Earnings of up to R$ 1,903.98: exempt.
· Earnings from R$ 1,903.99 to R$ 2,826.65: tax rate of 7.5%
· Earnings from R$ 2,826.66 to R$ 3,751.05: tax rate of 15%
· Earnings from R$ 3,751.06 to R$ 4,664.68: tax rate of 22.5%
· Earnings above R$ 4,664.68: tax rate of 27.5%
Declare profits obtained from BDRs
In the revenue program, go to the “Assets and Rights” tab and choose group 04 “Applications and investments” and the code “04 – Assets traded on the stock exchange in Brazil (BDR, options and others)”.
In the “Location” field, “105 – Brazil”.
Unlike shares, BDRs are not exempt from profits when sales are up to R$20,000 in the same month, i.e., all profits are taxed. Tax on profits made in the month must be collected via DARF. The deadline for payment is the last business day of the month following the month in which the profit was recorded.
Using this DARF data, you can declare your BDRs on your IR. However, this gain will be declared on another form, the “Variable Income” form.
In the “Common Operations/Day trade” field, enter the profit or loss obtained in each month of the year in which sales operations occurred in the “Spot market” line.
The method of collection depends on the reciprocity agreement with the country in which the shares represented by the BDR were issued.
If there is no such agreement, the tax is paid via carnê-leão and the progressive income tax table must be considered.
Source: Trade Map
Declaration of dividends received abroad
According to the Corporations Law (6.4040/76), in Brazil, every publicly traded company must distribute to shareholders at least 25% of its net profit through dividends or interest on equity.
However, this does not mean that all Brazilian companies listed on the stock exchange pay dividends. After all, if there is no profit, the company will not be able to distribute it.
But it is important to remember that these rules vary according to the country's legislation.
If you receive dividends that originate from companies outside Brazil, it is important for you to know that they are taxable and you must pay tax on a monthly or quarterly basis.
To collect income tax on dividends received abroad, you must use the Carnê-leão system for the year in which you received the income.
You do not need to download the program or application to your cell phone to access Carne-Leão.
To do this, go to the Virtual Service Center (e-CAC Portal), select the option “My Income Tax > Declarations > Access the lion’s share.
The system will automatically calculate the tax and generate a DARF, which must be paid to make the tax payment.
How is taxation for international funds?
Regardless of the category, international funds are subject to Income Tax.
What changes is the tax rate.
In local funds, gains on redemption are taxed between 15% and 22.5%.
In foreign investment funds, redemptions are taxed at 15% on profits.
How to declare an account abroad in IR?
If you have a balance in a current account (non-interest-bearing) in another country, you need to report this in your income tax return.
In fact, the declaration is mandatory for amounts above R$ 140.
The process is done as follows:
• Go to the “Assets and rights” tab
• Select code 62 – Bank deposit into a current account abroad
• Select country location
• Fill in the “Discrimination” field with your overseas bank account details.
• In “Situation on 12/31/2021”, indicate the balance in your account on that specific date. Enter the amount converted to reais based on the exchange rate set by the Central Bank on that date.
What is CBE?
CBE is the acronym that identifies Brazilian Capitals Abroad.
Residents in Brazil who hold assets abroad totaling US$1 million must file a tax return by December 31 of each tax year.
These assets can be a current account abroad, shares, real estate, among others.
What happens if I don't declare investments abroad in my income tax?
If you have investments abroad but do not file a declaration, you may be liable for tax crimes, such as tax evasion and concealment of assets.
Additionally, you may have to pay a fine, which amounts to more than 70% on the tax due.
Conclusion
Now you know how to declare investments abroad in your income tax and the importance of this process.
If you have any difficulties, it is best to seek out a specialized accountant, as this will allow you to complete the declaration correctly, avoiding errors when filling it out and, consequently, problems with the Federal Revenue Service.
