In 2025, Brazil introduced a significant change in its cryptocurrency taxation policy through Provisional Measure 1303. This new regulation replaced the prior progressive tax model with a flat 17.5% tax on all cryptocurrency capital gains, irrespective of the total earnings or the location of the assets. This marks the termination of a long-standing exemption that enabled individuals to sell up to 35,000 Brazilian reais (approximately $6,300) in crypto tax-free each month.
The new tax policy applies universally, whether the assets are on local or international exchanges, self-custody wallets, or even across decentralized finance (DeFi), non-fungible tokens (NFTs), or staking platforms. All digital asset activities are subject to taxation. Taxes are calculated quarterly, and losses can be carried forward for up to five previous quarters. However, this window will be shortened in 2026.
Prior to this change, small investors and casual traders enjoyed a generous tax exemption for trades up to 35,000 reais per month. Moreover, larger profits were taxed progressively. Once the threshold was crossed, a 15% tax was levied on gains up to 5 million reais, and a 22.5% tax on gains exceeding 30 million reais (approximately $5.4 million). This structure meant that hobbyists usually paid nothing, moderate traders paid moderately, and only the largest investors faced the highest tax rates.
The immediate impact of the new tax rules is felt by everyday users. Casual traders who previously stayed below the 35,000-real monthly cap are now fully taxed at 17.5%. For example, a modest 30,000-real profit, previously tax-free, now incurs a 5,250-real liability. This flat-rate model significantly affects small investors and gig-economy traders.
Under the new policy, medium-scale investors now face a 17.5% tax, up from the previous 15% on gains under 5 million reais. However, the new system can reduce the tax burden for high-net-worth traders. Previously, gains over 30 million reais were taxed at 22.5%. Now, that’s capped at 17.5%, leading to substantial savings on large positions.
The 17.5% flat tax now applies to digital assets held outside of centralized Brazilian exchanges, closing a major loophole that allowed tax avoidance through foreign platforms or cold storage. Furthermore, new sectors like DeFi lending, staking rewards, and NFT trades are explicitly included in the tax regime. Returns from yield farming or NFT sales are now taxed like any other crypto gain.
The introduction of Provisional Measure 1303 is a major step in Brazil’s fiscal strategy. Rather than continuing with piecemeal tax hikes, Brazil has now opted for structural change. The move to tax digital assets, fixed-income investments, and online betting revenues is part of a broader Brazilian tax reform in 2025, aimed at expanding the tax base with more permanent and enforceable policies.
