Taxation of Digital Nomads in Brazil

With technological advances and increased mobility of individuals around the globe - digital nomads have emerged. These are professionals who carry out their work online and from anywhere in the world.

When moving from their countries of origin and living in other countries, digital nomads go through the process of applying for a specific visa. In Brazil, the granting of this visa is provided for in Resolution CNIG MJSP nº45, of 9th of September, 2021, which was published only in early 2022. Therefore, it is understood that it is something new and still needs to be explored.

The Resolution specifically provides for the granting of a temporary visa and residence permit for immigrants, without an employment relationship in Brazil, whose professional activity can be carried out remotely.

What is the procedure for obtaining a digital nomad visa in Brazil?

Below is the step-by-step process for obtaining a digital nomad visa in Brazil:

Step 1: Fill in the Electronic Application (it is not necessary to upload the documentation);

Step 2: Print the Application Delivery Receipt (RER) when you finish filling out the Application;

Step 3: Request the service via e-consular and wait for analysis by the Consulate team;

Step 4: After validation, schedule your appointment via e-consular;

ATTENTION: the documents scanned for the pre-conference in the e-consular must be original and must be presented on the day of the appointment;

Step 5: On the day and time scheduled, go to the Consulate General with the original documents listed below:

1. Visa Application Receipt (Recibo do Requerimento de Visto - RER) - it is necessary to upload the required documentation for the electronic application;

2. Passport valid for six months or more and a copy of the identification page;

3. Passport photograph less than six months old (from the front, with a light background, without advertising, and without glasses);

4. Birth or marriage certificate;*

5. Negative certificate of criminal record issued by the competent authority of each country of residence of the applicant in the last 12 months;*

6. Proof of residence dated from the last 12 months, such as a certificate of residence, issued by the Parish Council, or invoices, bills, or other documents of the interested party which contain the address; or Concession of Residence Permit (Concessão de Autorização de Residência para Cidadãos da CPLP);

7. Travel insurance and/or health insurance valid in Brazil or Medical Assistance Certificate in Brazil (issued based on the Social Security Agreement between Brazil and Portugal);

8. Statement by the applicant attesting the ability to carry out their professional activities remotely;

9. An employment contract that proves a relationship with a foreign employer;

10. Proof of means of income, from a foreign paying source, in a monthly amount equal to or greater than US$1,500 (one thousand five hundred dollars) or availability of bank funds in the minimum amount of US$18,000 (eighteen thousand dollars).

The Consular Authority may request any additional documents.

ATTENTION: Public documents (except passports) must be previously legalised by the Brazilian consular representation with jurisdiction over the territory where the document is issued or previously registered by the competent local authorities, depending on whether the country where the document was issued is a signatory to the Hague Apostille Convention. Documents issued in a language other than Portuguese, English, or Spanish must be accompanied by a certified translation.

For more information such as consular fees, access to the e-consular, and others, visit the Ministry of Foreign Affairs website or also the Practical Guide to Residence Permit for Digital Nomads in Brazil.

After obtaining the digital nomad visa and finally starting to officially reside in Brazil, the question arises as to how the Brazilian State taxes this category. To better understand this, we will start by analysing Normative Instruction No. 208/2002, which brings in its Article No. 2, the concept of ‘resident’ in the Brazilian State:

Art. 2. It is considered a resident in Brazil, the natural person:

III - who enters Brazil:

b) with a temporary visa:

2. on the date one completes 184 days, consecutive or not, of stay in Brazil, within a period of up to twelve months;

In comparison with Resolution No. 45/2021, a digital nomad is understood to be an individual who enters Brazil, with a temporary visa, without an employment relationship, and whose professional activity will be carried out remotely. Therefore, this individual will be considered a resident in Brazil when completing 184 consecutive or non-consecutive days in the country, within a period of up to twelve months.

Thus, we understand that the digital nomad will be considered a tax resident in Brazil if he complies with this time requirement.

Therefore, if you are considered a tax resident in Brazil, will you need to declare and pay taxes, even if you are a digital nomad?

The answer is yes.

When digital nomads receive their income from abroad, this income will be subject to taxation, through a ‘carnê-leão’ in Brazil, in accordance with the provisions of Article No. 16 of Normative Instruction nº 208/2002:

Art. 16. Other income received from sources located abroad by a resident in Brazil, whether or not transferred to the country, is subject to taxation in the form of a mandatory monthly payment (carnê-leão), in the month of receipt, and in the Declaration of Yearly Adjustment.

Paragraph 5. The tax related to the ‘carnê-leão’ must be calculated using the monthly progressive table in force in the month in which the income is received and paid until the last business day of the month following the month in which the income is received.

ATTENTION!

In the same way that Brazil has an interest in taxing the income received by the digital nomad, so too will the country of origin of that individual.

This fact makes it necessary to analyse whether both countries have a non-double taxation agreement, or even a compensation agreement since this would avoid double tax payment.

Brazil currently has an agreement with 37 countries, including France, Norway, Portugal, and the United Arab Emirates, among others. By default, these agreements address issues regarding the status of citizens in each country and, mainly, deal with the rules of non-double taxation and the prevention of tax evasion.

Tax Compensation - Germany - US - UK

If you live in one of the following countries, be aware that there is a compensation system in Brazil for taxes paid in Germany, the US, and the UK.

Below is specified how this compensation works in relation to each country:

Germany: The Agreement to Avoid Double Taxation on Income and Capital Taxes entered into between Brazil and Germany is no longer applicable to income earned or paid, credited or remitted as of the 1st January 2006. However, the Interpretative Declaratory Act No. 16, of the 22nd December 2005 declares that the tax paid in the Federal Republic of Germany on income earned in that country may be offset against the tax due in Brazil, subject to the limits referred to in Articles 15, Paragraph 1, and Article 16, Paragraphs 1, 2 and 6, of the SRF Normative Instruction No. 208, of the 27th September 2002.

United States of America: The federal legislation of the United States of America allows the deduction of the tax recognised as paid in Brazil on revenues and income earned and taxed in Brazil, which constitutes reciprocity of treatment. The tax paid in the United States of America can be offset against the tax due in Brazil, subject to the limits referred to in Article 15, Paragraph 1, and Article 16, Paragraphs 1, 2, and 6, of the SRF Normative Instruction No. 208 of 2002.

United Kingdom: The United Kingdom’s legislation allows the deduction of income tax paid in Brazil on income earned and taxed in Brazil, which constitutes reciprocity of treatment. The tax paid in the United Kingdom can be offset against the tax in Brazil, subject to the limits referred to in Article 15, Paragraph 1, and Article 16, Paragraphs 1, 2, and 6, of the SRF Normative Instruction No. 208 of 2002.*

*The non-double taxation agreement between Brazil and the United Kingdom was approved at the end of 2022 and is currently awaiting approval by the legislature of both countries, to enter into force.

ATTENTION!

This compensation system only occurs when there is previously an agreement/treaty signed between Brazil and the country of origin or another form of reciprocity treatment. Afterward, if you understand that the declaration and taxation of income of the digital nomad in Brazil are due, ask yourself:

How do I issue the DARF (carnê-leão) and subsequently complete the Declaration of Annual Adjustment of Individual Income Tax (DIRPF)?

DARF

Let's start with the monthly issue of DARF or ‘carnê-leão’.

According to the Federal Revenue website, the ‘carnê-leão’ is defined as the income tax that must be paid monthly, on a mandatory basis, by individuals residing in Brazil who receive income from another individual or from abroad.

Thus, the digital nomad is obliged to issue and pay monthly the ‘carnê-leão’, as he is a tax resident in Brazil and receives income from abroad.

To issue the DARF it is necessary:

1. To access the My Income Tax system (e-CAC Portal);

2. Login with the GOV account;

3. Click on "Access Carnê-Leão" and;

4. Fill in the information necessary to issue the DARF (to fill in this data it is important to have access to your monthly income report).

DIRPF

Afterward, upon completion of the calendar year, the period for filing the individual's annual income tax return comes up.

The Federal Revenue provides two ways to declare, it can be through the online system or through a download of the program corresponding to the year you want to declare.

This statement is a means for the Tax Authorities to be aware of your assets and income, although it is necessary to pay the ‘carnê-leão’ monthly, the DIRPF is also mandatory.

This is because, after the declaration, the Revenue may understand that it is necessary to charge more taxes or even refund amounts that were paid in excess.

What is the deadline to declare income tax in Brazil?

As of 2023, the DIRPF delivery period begins on the 15th of March and will end on the 31st May.

Finally, if you are a digital nomad residing in Brazil and want to better understand your tax situation, schedule an appointment with one of our specialists.

Read our related article on Experts for Expats.