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.

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Previously, Brazilian residents who disposed of up to 35,000 Brazilian reals (approximately $6,300) in crypto assets every month were not subjected to income tax. Any gains beyond this limit were progressively taxed, starting at 15% and escalating to as much as 22.5% for volumes surpassing 30 million Brazilian reals.

The new flat rate, effective from June 12, eliminates all exemptions and uniformly applies to all investors, regardless of their transaction sizes, reveals a report by local news outlet, Portal do Bitcoin.

While this change implies higher taxes for smaller investors, wealthy individuals may end up paying less. Previously, huge trades exceeding 5 million Brazilian reals, were taxed between 17.5% and 22.5%. With the new 17.5% uniform rate, many large-scale investors will experience a decrease in their effective tax rate.

Brazil’s provisional measure also widens the tax base, now encompassing crypto assets held in self-custody wallets and offshore crypto holdings. Taxation will now be assessed on a quarterly basis, with investors allowed to offset losses from the preceding five quarters. However, this loss deduction window will be more stringent from 2026.

Brazil also has plans to allow Bitcoin salary payments. In March, Brazilian legislators proposed a bill that would allow employers to pay a portion of their employees’ salaries in cryptocurrencies such as Bitcoin (BTC). However, under these proposed rules, crypto payments should not exceed 50% of an employee’s salary. Full crypto payments would only be permissible for foreign workers or contractors, and only under specific conditions outlined by Brazil’s central bank.

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