Brazil Implements 17.5% Flat Tax on Cryptocurrency Profits, Ending Tax Exemption for Smaller Investors
By Francisco Rodrigues
Edited by Aoyon Ashraf
June 14, 2025
In a significant shift in its tax policy regarding cryptocurrencies, Brazil has officially implemented a flat tax rate of 17.5% on profits derived from all cryptocurrency transactions for individual investors. This new measure, effective immediately, replaces a previous exemption that benefitted smaller investors, particularly those making transactions below R$35,000 (approximately $6,300) per month.
Overview of the New Tax Regulation
Under the newly enacted provisional measure, known as MP 1303, individuals are now required to pay taxes on cryptocurrency gains regardless of the total amount of their transactions. Previously, profits earned from selling cryptocurrencies that fell below the monthly limit were exempt from taxation, while profits above this threshold faced incremental tax rates, which could reach up to 22.5% for very high-volume trades exceeding R$30 million (around $5.4 million).
The reform is a move by the Brazilian government to increase tax revenue and simplify the tax structure, making it applicable uniformly across all forms of cryptocurrency holdings, irrespective of their location. This includes cryptocurrencies stored on overseas exchanges and personal wallets.
Changes to Loss Offset Rules
The new tax regulations also introduce modifications to how losses can be offset against profits. Under the updated guidelines, investors will be able to offset losses, but this process must occur within a rolling five-quarter window. Furthermore, starting in 2026, the rules regarding loss offsetting will become stricter, potentially impacting the strategies of crypto investors looking to balance their tax responsibilities.
Implications for Investors
The move to implement a flat tax is expected to create a more straightforward taxation process for many investors. However, it has been met with concern from smaller investors who will face higher tax burdens than under the previous exemption. The flat rate may provide an advantage to larger investors, allowing for lower effective tax rates on significant holdings.
The decision to overhaul Brazil’s cryptocurrency taxation framework comes in the wake of the government’s abandonment of a proposed increase to the IOF (Tax on Financial Operations) tax, which had received significant pushback from both the crypto industry and lawmakers.
Broader Tax Changes
In addition to the new cryptocurrency tax, the legislation impacts other sectors, including fixed-income investments, which will now be subjected to a fixed tax rate of 5% on earnings. Online betting operations will see an increase in the tax rate on their revenues from 12% to 18%.
Conclusion
This reform in Brazil’s cryptocurrency taxation represents a notable shift aimed at increasing government revenue while also creating a more uniform tax structure. As the landscape for cryptocurrency continues to evolve, investors will need to navigate these changes carefully, ensuring compliance with the new regulations. As Brazil takes these steps to refine its approach to cryptocurrency assets, the eyes of investors and industry stakeholders will closely monitor how these changes will unfold in practice.