Brazil Law No. 14,754/2023 Offshore Crypto Asset Tax Regime

The core rule separates capital income held abroad from other income and capital gains in the annual individual income tax return, known as the Declaração de Ajuste Anual, or DAA. Qualifying foreign financial-application income and profits or dividends from covered controlled foreign entities are subject to a 15% individual income tax rate in the annual adjustment, without deductions from the tax base. For direct foreign financial applications, the taxable event remains tied to receipt or realization, including interest, redemption, amortization, sale, maturity, liquidation, and gains that include foreign-exchange or crypto variation against the Brazilian real.

Law No. 14,754/2023 names virtual assets, digital wallets, and accounts with income among examples of foreign financial applications. RFB guidance narrows the analysis: not every virtual asset is automatically treated as a foreign financial application. The agency’s Q&A says virtual assets and virtual-asset financial arrangements, including income-producing wallets, fall within the offshore financial-application category when they digitally represent another foreign financial application or otherwise have the nature or characteristics of one. The same guidance says Bitcoin is generally treated as a financial application, while an NFT representing a work of art would not be treated that way solely on that basis.

The location test is also custody-sensitive. RFB guidance states that virtual assets and virtual-asset arrangements are treated as located abroad when they are custodied or traded through institutions located outside Brazil. It also states that assets self-custodied by a Brazil-resident taxpayer, without an intermediary, are not considered located abroad for this particular rule. This distinction is important editorially because the law’s crypto profile is not a general licensing statute or a blanket tax rule for every token-holding scenario.

The statute also affects crypto exposure held indirectly through foreign entities or trusts. Controlled offshore entities may be taxed annually when statutory control, low-tax, or passive-income conditions are met. The law separately addresses trusts by treating trust assets as remaining with the settlor until distribution to a beneficiary or the settlor’s death, and by applying income-tax rules to the person treated as holding the assets. A one-time transition mechanism allowed certain foreign assets and rights to be updated to market value as of Dec. 31, 2023 with an 8% final tax, subject to a May 31, 2024 payment deadline.

Article 44 adds a broader virtual-asset reporting hook: companies operating in Brazil with virtual assets, regardless of domicile, must provide periodic activity and customer information to RFB and to the Financial Activities Control Council, Coaf. Article 47 states that the law entered into force on publication and that most provisions produced effects from Jan. 1, 2024, while specified transition and Civil Code-related provisions applied immediately.