Brazil Slams Crypto Investors with 17.5% Tax—Gone Are the Tax-Free Glory Days

Brazil just pulled the rug out from under crypto traders. The government axed its tax exemption policy and slapped a flat 17.5% rate on all investors—no exceptions.

From Zero to 17.5% Overnight

What was once a crypto tax haven now joins the ranks of revenue-hungry regimes. The move shocks retail traders who’d enjoyed tax-free gains since the early days.

The Irony of ‘Progressive’ Taxation

Politicians called it ‘fair.’ Critics call it a cash grab—another case of governments scrambling to milk the crypto golden goose dry. After all, why innovate when you can just tax?

One thing’s clear: Brazil’s crypto winter just got colder.

TLDR

• Brazil ends crypto tax breaks for small investors

• All crypto gains now face flat 17.5 percent tax

• Big traders save while small holders pay more

• Offshore crypto wallets no longer tax-free

• Brazil adds taxes on crypto, bonds, and betting

Brazil has introduced changes to cryptocurrency taxation through Provisional Measure No. 1303, eliminating existing exemptions. The measure sets a flat 17.5% income tax on all resident investors regardless of transaction volume. Authorities intend to boost revenue from financial investments while increasing regulatory oversight on digital assets.

New Tax Rules Eliminate Previous Exemptions for Small Investors

The new policy removes the R$35,000 monthly exemption previously enjoyed by individual investors trading small amounts of cryptocurrency. All gains, regardless of size, will now face a standard 17.5% tax. This rule replaces the earlier tiered tax rates that ranged from 15% to 22% depending on transaction volume.

Brazilian government has issued Provisional Measure No. 1303, abolishing the previous tax exemption on monthly cryptocurrency gains of up to 350,000 BRL (approximately $63,000), and introducing a uniform 17.5% income tax applicable to all resident investors.…

— Wu Blockchain (@WuBlockchain) June 12, 2025

Under the old structure, investors transacting under R$5 million paid 15%, while those above R$30 million paid 22%. The flat rate now benefits high-volume traders but increases the burden for smaller investors. Consequently, many individuals will experience their first exposure to crypto taxation under the revised law.

The measure also ensures uniform treatment of gains, including those derived from self-custodied assets and foreign-based VIRTUAL asset investments. Authorities aim to close loopholes used for tax evasion by ensuring offshore activity also falls within Brazilian tax jurisdiction. The quarterly tax calculation allows for loss offsets for up to five preceding quarters.

Flat Rate Reduces Tax Burden for Large Crypto Traders

While smaller traders face new obligations, high-net-worth investors may benefit from the single 17.5% tax rate. Previously, earnings above R$10 million attracted higher rates of up to 22%. This change reduces the complexity of crypto taxation and removes volume-based thresholds.

Authorities clarified that this simplified system applies only to individuals. Businesses operating under presumed or actual profit models must continue following separate regulations. Under the current regime, these firms cannot deduct losses from virtual asset investments.

Beginning in 2026, the allowance for loss deductions will be narrowed further, limiting tax planning flexibility. The tax authority expects improved compliance and more accurate reporting. This supports the government’s broader strategy to raise funds through financial sector adjustments.

Broader Financial Changes Accompany Crypto Tax Overhaul

Alongside crypto, fixed-income instruments such as LCAs and LCIs will incur a 5% tax on profits. This ends their long-standing tax-exempt status and aligns them with general investment income policies. The 5% rate applies to profits on agribusiness and real estate credit securities.

Additionally, tax on betting revenues will rise from 12% to 18%, excluding winnings or company income tax. These changes follow the withdrawal of a criticized plan to increase the IOF financial transaction tax. The Finance Ministry introduced these revisions to meet fiscal targets without escalating political tensions.

In parallel, Brazil’s Chamber of Deputies advanced a bill to establish Bitcoin as a sovereign reserve asset. The new legislation proposes using up to 5% of national reserves for Bitcoin investments. This signals Brazil’s expanding role in digital asset regulation and national strategy.