Is it better to declare income tax in Brazil or abroad?

Is it better to file your income tax return in Brazil or abroad? Each country that taxes income has its own rules on how to file the return. In most countries, information is usually asked only about income. The Brazilian tax return, on the other hand, is much more complete in terms of what is reported within it, as it also compares the evolution of the taxpayer's assets during the base period of the return.

The IRS wants to analyze not only the income, but also whether the income the person had is compatible with the increase or loss of assets that is being reported. If it is incompatible, the person may be asked to explain the difference in a "fine mesh" inspection.

Is it more expensive to declare income tax in Brazil or abroad?

With regard to the tax burden itself, the maximum personal income tax rate in Brazil is 27.5% of income, while other countries allow maximum rates of 40% to 60%. The higher the foreign country's income tax rate, the less likely it is that a person with dual tax residency will have to pay income tax in Brazil on the same foreign source income.

The opposite can also happen. There are countries where income taxation is lower or non-existent (for example, the United Arab Emirates). In this case, maintaining double tax residency means submitting income held abroad to Brazilian taxation, and paying income tax in Brazil on that income.

For more information on this subject, I suggest reading the text "Living in Brazil and in another Country: Dual Tax Residency, Brazilian Agreements and Reciprocity", "Declaration of Final Departure in 2020: what you should know"and content about "Taxation of foreign earnings and income".

On this blog you will always find relevant information and up-to-date information on the subject, as well as guiding you to avoid problems with the tax authorities and other authorities. Feel free to tell us about your experience, share the content with other friends who need guidance and contact us by e-mail at contato@tersi.adv.br or via WhatsApp. Click here to send a message now.

Check out more posts on taxation and estate planning at information for residents abroad.

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Vinícius Tersi.

This text about Filing income tax returns in Brazil or abroad was prepared by Vinícius Tersi Advocacia, a law firm specializing in International Tax Consulting.