How to declare cryptocurrencies in Income Tax?
Learn how to declare cryptocurrencies in your Income Tax!
Announcements
Brazilians who make these investments and need to declare cryptocurrencies on their Income Tax must be careful when filling out this document.
IR 2022 brought some changes to the declaration process, and one of them is the specific categories for cryptocurrencies, such as Bitcoin, NFT and other digital assets.
Brazilians who had cryptocurrencies, in 2021, worth more than R$5,000.00, need to declare them to the Federal Revenue Service.
The deadline to make the declaration ends on April 29, 2022.
If you already know that you need to declare cryptocurrencies in your income tax, keep reading. We will explain the process step by step!
Why declare cryptocurrencies in Income Tax?
There was already a requirement to declare cryptocurrencies in the IR, as there was also a monthly capital gains tax, even before the validity of Normative Instruction RFB 1888/2019.
But due to IN1888/2019, now, the Federal Revenue will have access to information about financial operations related to crypto assets carried out by individuals and legal entities.
How to make the declaration?
In Brazil, interested parties can trade cryptocurrencies through brokers or digital wallets.
In this case, it will be necessary to inform the quantity of each asset, acquisition cost, name and CNPJ of the company where the cryptos are held.
If you have your own custody, through your digital wallet, you will also need to inform the model used.
To begin, go to the “Assets and Rights” tab and click on one of the existing codes:
• 81 – Bitcoin
• 82 – other cryptocurrencies
• 83 – stablecoins
• 88 – NFTs
• 89 – tokens
Then, indicate the acquisition value of the digital asset (not the current market value).
If the cryptoassets were acquired via mining or stacking, the taxpayer must report the zero acquisition value.
In the “Discrimination” section, you will detail the type and quantity of the asset, in addition to the name and CNPJ of the company where it is held.
In the case of self-custody, please inform the digital wallet model you use.
How is Income Tax taxation for cryptocurrencies?
Profits obtained from trading crypto assets or digital currencies are taxed when sales exceed the value of R$35,000.00.
Below this amount, earnings are exempt. But this does not mean that you should not declare them on your Income Tax.
In fact, positions on December 31 of each year need to be declared and, if there is a gain on the sale of digital assets throughout the year, these may be taxed.
Taxation follows the limits below:
• 15% on the portion of the gains that does not exceed R$ 5 million;
• 17.5% on the portion of the earnings that exceeds R$ 5 million and does not exceed R$ 10 million;
• 20% on the portion of the gains that exceeds R$ 10 million and does not exceed R$ 30 million;
• 22.5% on the portion of earnings that exceed R$ 30 million.
The limit of R$35,000 includes crypto assets traded by the investor and considers the exchange of digital currencies, that is, without the need to convert to reais or fiat currencies.
Is it necessary to declare cryptocurrencies in Income Tax 2022?
You need to declare cryptocurrencies and other digital assets in your IR even if the gain was less than R$35,000.
Cryptoassets are considered financial assets subject to capital gains and must be declared according to the acquisition value.
To do this, you must enter the Assets and Rights tab of the declaration.
You will declare your operations for the period from January 1, 2021 to December 31, 2021.
Investments in crypto assets abroad
If you invest in crypto assets abroad, you also need to inform the Federal Revenue Service.
If you are a resident of Brazil and taxed here, you must inform the Brazilian tax authorities.
In fact, anyone who stays in Brazil for more than 180 days a year is considered a tax resident. For this reason, they are required to declare any income they earn worldwide.
You must inform the Federal Revenue Service in which country you are investing in crypto assets and if transactions exceed US$1 million, you will have to submit a declaration of Brazilian capital abroad to the Central Bank (BC).
Cryptocurrency ETFs
ETF stands for Exchange Traded Fund.
Here, the declaration is made differently, as they are subject to ETF taxation.
The shares must be declared in the “Assets and Rights” section, with code 74, and the position must be informed as long as the balance is greater than R$ 140.
Each ETF must be declared with the amount paid for the shares. It is also necessary to fill in the CNPJ, name of the manager and number of the account linked to the asset.
The tax is collected through the DARF and is issued by the taxpayer himself, as with shares. The difference, basically, is that there is no exemption for sales if the income is less than R$20,000 per month.
Source: Suno
Who must file an income tax return in 2022?
The rules that require a person to present the declaration in 2022 are the same.
The mandatory group are people who:
• Had an annual taxable income value above R$ 28,559.70;
• Non-taxable income above R$40,000;
• Access to the sale of assets, stock exchange or similar;
• Received an annual amount above R$300,000, including all assets;
• People who sold real estate;
• Workers in rural activities who have an annual income greater than R$142,798.50.
Refund schedule
The 2022 IRPF refunds will be made in five batches:
• May 31, 2022;
• June 30, 2022;
• July 29, 2022;
• August 31, 2022;
• September 30, 2022
Conclusion
Now you know how to declare cryptocurrencies in your Income Tax.
To avoid problems, it is best to separate all the necessary information and start filling out the declaration before the final delivery date.
This way, you can be better prepared if a problem arises!
