Brazil Imposes Flat 17.5% Tax on All Crypto Profits, Hits Small Traders Hard

Brazil has eliminated its R$35,000 monthly exemption for cryptocurrency gains, imposing a flat 17.5% tax on all profits regardless of transaction size or asset location. The move harmonizes crypto taxation but disproportionately affects retail traders, who previously benefited from the exemption. High-volume investors, meanwhile, face lower effective rates compared to the prior progressive structure.

The new rules apply equally to offshore holdings and self-custodied assets, closing a loophole that allowed some investors to avoid taxation. Provisional Measure No. 1303 implements these changes as part of broader financial reforms, which also include adjustments to fixed-income securities and online betting taxes.

Market participants previously faced rates between 15% and 22.5% on monthly volumes exceeding R$35,000. The simplified 17.5% flat rate represents a compromise—reducing burdens for institutional players while expanding the tax base to include small traders.