Non-resident property owners in Brazil are only taxed on income arising from a Brazilian source, but may also be subject to a number of other property related Brazilian taxes, which we have outlined below. It should be noted also that non resident property owners may also be subject to tax in their home country on the same source of income, depending if there is a double taxation treaty between Brazil and their home country. The exact terms of the double taxation treaties differ between country to country.
Tax Identification Number
Non-resident property owners in Brazil will be required to apply for a tax i.d number, known as a CPF number. This will also be required also for setting up a Brazilian bank account to receive your rental income, or for investment in their financial markets. Brazilian companies will also need to apply for a corporate tax i.d number, known as a CNPJ.
Taxes payable when purchasing a property are as follows:
Transfer Tax on purchase - (ITBI)The City Hall (Prefeitura) set the property’s market value, and the transfer tax is set at 2% of the market value. The Brazilian transfer tax is payable once the notary verifies the purchase deal.
Ongoing taxes payable in Brazil on property are as follows:
These are payable annually and are based on the market value of the property. They do tend to differ from one municipality to another and vary from anywhere between 0.6% to 2%. A waste collection fee, known as TCRS will also be applicable. The TCRS is calculated on the following factors, the square meter of the property, the location (municipality) and the market value of the property.
Personal Income TaxPersonal income tax in Brazil for non residents is calculated on rents at a rate of 15% for rental income received up to the amount of 12,000. For any income received above that threshold, a rate of 27.5% applies. Non residents are allowed to take expenses incurred in connection with the letting of the property. The deadline date for submitting Brazilian income tax returns is the 30th April annually. Once final liability has been issued from the Brazilian tax authorities, any tax payable must be settled within 30 days.
Corporate Income TaxIf the property has been purchased through a company name, Brazilian corporate income tax will be payable at a rate of 15% on any profits gained. Allowable deductions can be taken against any liability, but receipts must be recorded and informed on the ledger. The deadline date for submitting a Brazilian corporate income tax return is the 30th March and any tax payable must be settled within 30 days of being issued. If no income has been made, a nil return must still be filed annually for properties purchased through a company name.
Other applicable taxes are as follows:
Capital Gains TaxIs payable Brazilian capital gains tax is calculated on the difference between the original purchase price (as per the notary deed) and the sale price. This is corrected by an inflation index. Any increase in value since purchase will be taxed at 15%.
Inheritance TaxBrazilian inheritance tax is calculated at a rate of between 2.5% and 4%, depending on the inheritance value.
Worldwide incomeIf you are a UK resident there is an agreement in place which means double tax relief applies.
If you are an Irish resident you are obliged to declare and file your Brazilian income in Ireland. There is currently no double taxation agreement in place between Brazil and Ireland so double taxation relief will not apply. The exact terms of the double taxation treaties differ between country to country.
Property Tax International can organise the completion and filing of your Brazilian tax returns in addition to advising on your property tax obligations in your home country.
Page added August 2010