In our Business in Brazil material nº03, we had shared some scenarios of when the expatriates become taxpayers in Brazil for tax purposes.

In today’s material we are informing about the incomes’ taxation of the expatriates residing in the country  by the income tax.

All individuals who are tax residents in the country are subject to the payment of income tax over all their income. The income mentioned here is not limited to those generated only in Brazil, but throughout the world.

These incomes will be subject to monthly income tax, called “Carnê Leão”, following the tax table below:

Income at or over (BRL)Up to (BRL)Tax Rate ( % )Deduction (BRL)
4,664.68and above27.5869.36

For example:

A Japanese expatriate with tax residency in Brazil received a salary of BRL20,000.00 (already converted into Real) paid directly to his bank account in Japan by his parent company, in addition to the salary paid to his Brazilian bank account made by the local subsidiary.

There is no doubt that over the salary received in Brazil, the expatriate will pay income tax following the same tax table mentioned above, but in addition to this amount, the person will have to pay income tax over the salary received in Japan too in the amount of BRL4,630.64 ( BRL20,000.00 X 27.5% – BRL869.36).

Main doubts:

Only the income made abroad and transferred to Brazil will be taxed by the “Carnê Leão”?

No. The income is subjected to taxation regardless of whether or not the funds was or will be transferred to Brazil.

Will the income tax (carnê Leão) be levied over the incomes’ gross amount or over the net amount?

The tax will be levied over the gross amount.

Should the amounts received abroad needs to be reported in the individual’s annual income tax return?

Yes. All the incomes made globally as well as all the taxes paid, must be informed and will be subject to annual income tax adjustment.

Does Brazil have an agreement with other countries to avoid double taxation?

Yes and among the various countries one of them would be Japan.

Can the income tax paid in the countries where Brazil has an agreement to avoid double taxation be offset locally?

Yes, but the income tax that will be offset here can not be subject to compensation or refund in the origin country.

Do Japanese expatriates stop paying income tax in their home country when such income is paid directly by their parent company in Japan?

Yes, but each case must be analyzed individually.

Such income will be subject to exclusive taxation in Brazil.

Bear in mind that the tax mentioned here would be only the income tax and does not relate to the taxes charged by the States and Municipal that continues to be paid in Japan.

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