Brazil introduced a sweeping tax reform that imposes a flat 17.5% tax on all cryptocurrency profits individuals earn. The tax applies regardless of where they store or transact their assets. Enacted through Provisional Measure (MP) 1303, the reform removes a long-standing exemption that previously benefited small investors. It also aims to significantly increase tax revenue.
Under the previous tax structure, individuals who sold up to R$35,000 (roughly $6,300) worth of crypto per month were exempt from taxation. Authorities taxed gains above that threshold progressively. They applied rates from 15% to 22.5%, depending on the volume. The highest rate targeted gains over $5.4 million. The new flat tax system simplifies these tiers. However, it also increases the burden on smaller investors. They will now pay more. In contrast, wealthier individuals trading in large volumes may see their tax obligations slightly reduced.
The new measure applies to all crypto assets, including those held in overseas exchanges or in self-custodial wallets. This global scope underscores Brazil’s efforts to close loopholes that allowed residents to avoid taxes by moving assets offshore. Investors can still offset their losses, but they must do so within a rolling five-quarter period. Starting in 2026, the government will tighten this rule even further.
The Brazilian government says it designed this tax overhaul to recover lost revenue. It made the change after scrapping a controversial plan to raise the IOF (Tax on Financial Operations). The proposal faced strong backlash from the financial industry and drew heavy criticism in Congress.
In addition to cryptocurrencies, the reform extends to other sectors. The government will now tax fixed-income investments at a flat rate of 5% on earnings. At the same time, online betting operators will see their revenue tax rate increase from 12% to 18%.
This comprehensive reform shows Brazil’s broader push to regulate digital finance. It also aims to ensure more consistent tax contributions from every sector of the economy.
