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How to declare assets abroad: 3 main mistakes and fines

Many of our clients are aware of the need to declare assets abroad to the Federal Revenue Service (RFB) through the annual tax return (DAA, the "normal" income tax return). Few, however, are accustomed to the obligation to report the same assets abroad to the Central Bank through the Brazilian Capital Abroad Declaration (CBE).

The purpose of this text on how to declare assets abroad is to describe which assets must be declared and under what conditions an individual may be obliged to file the two declarations. In particular, it is important to inform you of the administrative fines applicable for failure to comply with the obligations to file the DAA and CBE. We have already touched on this subject when dealing with the consequences of not delivering the Declaration of Final Departure from the CountryBut here we will focus more on what must be declared.

Obligation to declare assets abroad in the DAA

The Annual Adjustment Declaration (DAA) is a declaration that aims to determine the taxpayer's increase in assets during an annual period, on which the income tax due should be calculated. This declaration must be submitted in March and April of each year by individuals who are tax residents in Brazil and meet specific mandatory requirements.

With regard to their assets, the individual required to file the DAA must inform the following items in the assets and rights section of the declaration:

Type of asset and rightMandatory to declare if, on December 31st of the calendar year of the declaration:
All the shares and quotas of the same company, whether or not traded on the stock exchange, and gold financial assetIncorporation or acquisition value equal to or greater than R$ 1,000.00
Bank current account balances and other financial investmentsUnit value exceeds R$ 140.00
Other movable property and rightsUnit purchase value equal to or greater than R$ 5,000.00
Real estate, motor vehicles, boats and aircraftRegardless of the purchase price
Debts and liensAmounts above R$ 5,000.00

Thus, for example, if the balance of a bank account is equal to or less than R$ 140, the taxpayer will not be obliged to report it, even if they are obliged to file an annual tax return.

When declaring assets abroad, it is necessary to inform the values on December 31 of the calendar year of the declaration and on December 31 of the immediately preceding calendar year. Accordingly, for the declaration to be filed in 2020, the asset position on December 31, 2019 (calendar year of the declaration) and December 31, 2018 (previous year) must be reported.

The above rules apply both to declaring assets abroad and to declaring assets located in Brazil. For assets abroad denominated in foreign currency, the amounts to be reported on the assets and rights sheet must be converted into Brazilian reais using specific exchange rates:

Type of asset or rightHow to declare assets abroad
Non-interest-bearing depositsconvert the balance on December 31 at the buying exchange rate published by the Central Bank
Foreign currency in kindcalculate the weighted average cost of the foreign currency stock, and convert it into the average monthly US dollar exchange rate for sale, as published by the RFB
Financial applicationscalculate the acquisition cost, adjusted for each application, settlement or redemption, and convert it at the selling exchange rate published by the Central Bank for each acquisition date
Other assets and rightscalculate the acquisition cost and convert at the selling exchange rate published by the Central Bank for the acquisition date
Debts and lienscalculate the balance on December 31, and convert it at the buying rate published by the Central Bank

As you can see, the legislation has provided for very different ways of calculating the value in reais of the assets and rights reported when declaring assets abroad in the DAA. The most common mistake we find is to treat all the assets in the declaration as if they were non-interest-bearing deposits, i.e. to convert the value into foreign currency at the exchange rate on December 31st of the year of the declaration. In years of very significant exchange rate fluctuations, this can mean recording an increase in assets in the DAA that has no origin in the taxpayer's income.

Missing the deadline for submitting the DAA will result in a fine of (i). R$ 165.74; or, if higher, (ii). of 1% of the amount of tax due per month of delay, up to a limit of 20%. The amount of tax due is that reported on the return filed late. The aforementioned fine does not exclude the taxpayer's liability for the payment of any tax and legal increases for the delay.

It's worth mentioning that this fine only applies if you don't file a return within the legal deadline. If a declaration was filed on time, but had to be rectified, the fine does not apply.

Obligation to declare assets abroad at the CBE

ativos no

The CBE is a declaration created for statistical purposes, with the aim of allowing the Central Bank to estimate the need to maintain foreign currency reserves to honor external commitments. Both the DAA and the CBE must be filed by tax residents in Brazil, but there are some important differences that make filling in the CBE simpler:

  • who is obliged to deliver: the CBE must be submitted by individuals and companies, while the DAA is submitted only by individuals (companies are subject to submitting their own declarations to the tax authorities);
  • what should be informed: Unlike the DAA, only assets and rights located abroad must be reported on the CBE, and debts and encumbrances in rem must not be reported;
  • currency to be reported: In the CBE, assets are reported in their original currency, without converting the values to reais;
  • equity position: Only the declarant's asset position on the base date is of interest, not the gains and losses on assets that occurred during the period. Thus, if the declarant had a bank account and it was closed during the year, so that on December 31st of the year of the declaration there was no balance left, the item should not be reported. There is no comparison with the assets situation on December 31st of the previous year.

Every year, the Central Bank publishes the criteria used to identify which assets should be reported when declaring assets abroad and how to determine their value, through the Declarant's Manual (the most recent one, referring to the 2021 annual CBE, to be submitted in 2022, is available here). at this link). In general, assets should be reported at their market value, unless otherwise stated.

Submission of the CBE is mandatory if the total value of the assets located abroad in the name of the tax resident in Brazil is equal to or greater than US$ 1,000,000 (annual declaration) or US$ 100,000,000 (quarterly declaration) or its equivalent in other currencies. The deadlines for submitting the CBE are as follows:

Base dateType of CBEDeadline for delivery
March 31stQuarterlybetween April 30 and June 5, at 6 p.m.
June 30thQuarterlybetween July 31 and September 5, at 6 p.m.
September 30thQuarterlybetween October 31 and December 5, at 6 p.m.
December 31stAnnual and Quarterlybetween February 15 and April 5 of the following year, at 6 p.m.

The above deadlines are general, and may be extended to the first following working day if they coincide with a day on which the Central Bank has no working hours or if working hours are closed before 6pm. Each year, the Central Bank publishes the exact dates depending on whether or not these events occur.

Failure to comply with the delivery deadline and other obligations relating to the completion of the CBE is subject to the following administrative penalties:

Fine (percentage of the amount subject to declaration)Limit per CBE declarationCause
1%R$ 25,000Failure to meet the delivery deadline. This may be reduced if the delay is between 1 and 30 days (90% discount) or between 31 and 60 days (50% discount).
2%R$ 50,000Incorrect or incomplete provision of information
5%R$ 125,000Failure to deliver or submit supporting documentation to the Central Bank
10%R$ 250,000Providing false information to the Central Bank

The first three fines above may be increased by 50% (fifty percent) in cases where the declarant fails to make, correct or supplement the declaration when requested by the Central Bank. The documentation supporting the information provided through the CBE must be kept by those responsible for providing the information for a period of 5 years, counting from the base date of the declaration.

The main error we find is that clients are unaware of the existence of the CBE and the delivery deadlines, which exposes them to the aforementioned fines for missing or late deliveries. There is also the possibility of errors in filling in the values. In this case, unlike the DIRPF, if a CBE is submitted on time and rectified after the deadline, the 1% fine will be levied on any positive difference between the two CBEs submitted.

Declaring assets abroad: conclusions

Based on our experience, we can say that the main mistakes made by taxpayers who keep assets abroad are the following:

  1. Failing to declare assets abroad in the DAA: Most people simply assume that they have to declare in Brazil what they have in Brazil and abroad what they have abroad. This is not true;
  2. Declare assets abroad in the DAA as if they were non-interest-bearing deposits: is the easiest, but incorrect, solution. Each type of asset or right must be declared in a different way, usually according to the acquisition cost, without updating to market value. This is a mistake we see most often in the work of accountants who are not familiar with the subject;
  3. Forgetting that the CBE exists: The CBE must be filed with the Central Bank, but because it is not an income tax return, few people know that it exists. Not only does it exist, but the fines for late filing are high and, at the very least, failure to file this declaration is a crime. can have criminal consequences.

These issues should always be taken with care, so as not to generate undue exposure for those who want to do things properly.

On this blog you will always find relevant, up-to-date information on the subject and guidance on how 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 WhatsAppClick here to send a message now.

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Author

  • Vinicius Tersi

    Vinicius Tersi is a lawyer and specialist in international tax law. He also has a degree in Accounting and a Master's in Tax Law from USP, and is familiar with different legal and accounting systems. He specializes in international transactions for entrepreneurs and families with tax residency and assets in multiple jurisdictions. He is qualified to act in Brazil and Portugal.

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Home Forums How to declare assets abroad: 3 main mistakes and fines

Visualizando 18 respostas da discussão
  • Autor
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    • #6351
      Vinicius Tersi
      Keymaster
      0
      ::

      Many of our clients are aware of the need to declare assets abroad to the Federal Revenue Service (RFB) through the annual tax return.
      [See the full article at How to declare assets abroad: 3 main mistakes and fines]

    • #7322
      Angela Maria Prado
      Participant
      0
      ::

      Excellent article! Congratulations. My son is already living abroad and is going to do the documents, but I have a question: he is selling his property in Brazil and would like to receive it in his account in Portugal. Legally and IR-wise, is it possible to do this directly or will he have to receive it in Brazil and then transfer it? Thanks 😊

    • #7323
      sonia medeiros
      Participant
      0
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      Congratulations!
      I'm an accountant and I needed an update.
      Your texts fit like a glove
      Thank you very much for sharing.
      Sonia Medeiros

    • #7324
      Vinicius Tersi
      Keymaster
      0
      ::

      Thank you very much for the compliment, Sonia!

      We look forward to hearing from you.

    • #7325
      Ruth Resende
      Participant
      0
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      Hello Vinicius, thank you for sharing your knowledge. I have the following doubt: in a few months I will go to Portugal to work for a company there, from what I have been reading I prefer to stay with double tax residency, because I have a mortgage to pay, so I will still need to declare income tax in Brazil, but how to declare a source of payment from abroad? How do I declare my salary, which will be in euros, in my income tax? Thank you.

    • #7326
      Guilherme Neiva
      Participant
      0
      ::

      Excellent article. Very useful information at the right time. Are the criteria for declaring assets (acquisition cost or market value) in the DCBE the same as those used in the DAA? For example, stocks, real estate, vehicles, stock funds, real estate funds at acquisition cost and fixed income funds, multimarket funds, balances in interest-bearing accounts at market value? Thanks, Guilherme

    • #7327
      Vinicius Tersi
      Keymaster
      0
      ::

      Hello, Ruth!

      Thank you for your interest in our content. Normally, income from abroad is reported on the "carnê leão" form, taxed at up to 27.5%. There is a specific rule on how to convert the amounts in euros to reais, including to convert the tax paid abroad and allow it to be offset in Brazil. On how to make this conversion, I deal with the subject in this text.

      There are specific situations in which I argue that the agreement between Brazil and Portugal to avoid double taxation rules out Brazilian taxation in specific situations of double tax residence. This is a much more complex issue, and it would be more appropriate to deal with it in a consultation, to find out whether or not it will become applicable to you.

      I hope I've helped. If you need our support, just contact us at WhatsApp or by e-mail contato@tersi.adv.br!

    • #7328
      Vinicius Tersi
      Keymaster
      0
      ::

      Hello, Guilherme!

      Thank you for your interest. No, they are two different declarations, with data entered in different ways. The declaration to the Central Bank is made in the original currency (be it USD, EUR or whatever), and is usually at market value. For each type of asset, specific information is requested, which may or may not be detailed. The Central Bank's aim is to compile statistics to assist economic policy, not to collect taxes.

      I hope I've helped. If you need our support, just contact us at WhatsApp or by e-mail contato@tersi.adv.br!

    • #7329
      Diana
      Participant
      0
      ::

      Hello,
      I've read several posts on your site, very informative, congratulations!
      I have a question about CBE. I financed a property abroad that cost a little over 1 million dollars, however I did the financing together with my husband, we each have 50% of the property. We put down 20% and financed the rest. In this case, as we bought the property together and we each have 50%, do we still have to do the CBE? If so, would it only be one in the name of one of the two?
      Do we have to split the amount in half in the tax return, since we don't file the return together? And does the financing part come under debts and encumbrances or do I just put the asset?
      Thank you

    • #7330
      Vinicius Tersi
      Keymaster
      0
      ::

      Hello, Diana!

      Your question about the CBE is interesting, thank you for asking it. The DCBE has a different logic to the income tax return. Each of you has to report the assets you own, regardless of the marriage regime. If you and your husband bought the property together, then you would each report 50% of the property. If the property is in the name of only one member of the couple, only that person declares. In the case of a financed property, the total value of the property applies, with an indication of how much was financed.

      Regarding whether you are obliged when you are 50% each, the CBE Declarant Manual, page 8, states that:

      "ATTENTION: The mandatory criterion for declaring assets in condominium (such as demand and term deposits or real estate) in the declaration of Brazilian Capital Abroad (CBE) takes into account the full value of the asset, not the individual quota of each holder, as provided for in § 4 of art. 2 of Resolution 3.(...) Thus, if the full value of the asset exceeds the limits stipulated in the caput and/or in §1 of art. 2 of Resolution 3.854, of 2010, all holders are obliged to provide the CBE declaration, in accordance with the periodicity determined by the regulations, even holders whose quotas do not reach these limits. Please note that each holder must only declare the value of their quota. Also
      in the case of spouses, each must declare their share, regardless of the marriage regime or the information provided to the IRS."

      So, in your case, it's possible to say that yes, you are both obliged to file the DCBE, each informing 50% of the property.

      I hope I've helped. If you need our support, just contact us at WhatsApp or by e-mail contato@tersi.adv.br!

    • #7331
      Vera Fernandes
      Participant
      0
      ::

      Hello, Dr. Vinícius.
      Your articles on the taxation of investments abroad are always the most enlightening on the internet.
      However, I still don't know how to declare the BB Americas E-money account (interest paid monthly). I imagine it should be declared as an investment (I filled it in as group 4, code 99). However, I'm not sure how to calculate the amount in reais, since the balance on December 31st will be the amount of dollars I deposited throughout the year (originating from an account in Brazil) plus the interest paid over the months. Nor do I know how to pay the IR on the interest credited - but not withdrawn - from the interest-bearing account; as I understand it, the payment is by GCAP, but BB Americas sends an infome with no monthly breakdown.
      Thank you.

    • #7332
      Alexandre Ludvig
      Participant
      0
      ::

      A really good read, congratulations on the article! I have a question, I own shares traded on the NY stock exchange of American companies, the total value of the shares does not even come close to the value of US$1.000.000,00, however I did some other readings that gave me the understanding that I should consider the equity value of the companies and not the value that I have of shares, so I would be obliged to do the DCBE, since the companies that I own the shares exceed the stipulated value of net equity ... is this true?

    • #7333
      José Claudio
      Participant
      0
      ::

      Excellent article, my friend,

      I have a company in Paraguay, but I never declared it in Brazil more than 10 years ago.

      Is there any way of making a spontaneous report and declaring it at the moment?
      if so, does the income received by this company need to be taxed retroactively?

    • #7334
      Junior
      Participant
      0
      ::

      Hello, if I work remotely from Brazil for an American company, receive my salary in dollars in an account there in the USA, and spend it here with the international card from this account, what kind of declarations do I need to make? And if I don't declare it, can the tax authorities find out about these transactions, given that the account is there? Is there any kind of link between the IRS and US banks? And what penalties apply in this case? Thank you for your help.

    • #7335
      Rita
      Participant
      0
      ::

      Do individuals who make online purchases on international websites (legalized foreign exchange) need/are they obliged to declare these transactions in their income tax return? If you don't declare it, do you commit a tax crime or currency evasion?

    • #7336
      Vinicius Tersi
      Keymaster
      0
      ::

      Hello, Junior! Thank you for your interest.

      I can't give you concrete recommendations in a blog post, as the subject is complex and I don't have all the necessary data.

      In general terms, Brazil has international collaboration and information exchange agreements, including with the United States of America, so that the cross-checking of bank account information has been a reality since 2014. The use of this information in fine mesh is apparently not yet done in Brazil, although it is a matter of technological implementation.

      If you are a tax resident in Brazil and receive income from the USA, as a general rule you must report it on your tax return (up to 27.5%), and you can offset the federal income tax already paid in the USA in Brazil. If you have assets of more than USD 1 million abroad, you are also required to file a declaration of Brazilian capital abroad.

      I hope I've helped. If you need our support, just contact us atWhatsApp or by e-mail contato@tersi.adv.br!

    • #7337
      Eliza Zoboli
      Participant
      0
      ::

      Congratulations on the excellent content and thank you for sharing your knowledge!
      I'm moving to another country and I'm going to file my final tax return. I'm in doubt as to whether or not I should put my property up for sale, because I checked the website and found out that I couldn't deduct the major renovation I did as soon as I bought the property in 2011. I have updated the value of the property in all my tax returns to date with the value of the renovation in addition to the deduction for financing costs. Please could you confirm the correct calculation of the capital gain on the sale of this property of mine for Darf calculation? Would the capital gain be sale value - purchase value (deducting only brokerage fees) * 15%, or could it be sale value - property value from the last tax return * 15%? Thank you very much for your attention.

    • #7338
      Thais
      Participant
      0
      ::

      Hello, very good article.
      I have a question. In the company I work for, we have Accounts Receivable from Abroad and Accounts Payable to suppliers. We were told that the CBE was only necessary to declare amounts in offshore accounts, so we always closed the months with a low value in the accounts, always using the amount within the month, and so we only declared the CBE when the balance was higher.
      However, we were told that export accounts receivable with a base date of December 31st and an overdue period of more than 29 days must also be declared.

      And if so, on the declaration, would we have to declare the total amount (the sum of all the clients with overdue accounts) or the amount of each client's outstanding receivable?
      Would it be the same for Adtos at a supplier?

      And would the minimum values be the sum of all the fields, or for each item (offshore, AR receivable, Adto supplier), each with its own minimum value that must be declared?

      Thank you in advance

    • #7339
      José Alves
      Participant
      0
      ::

      Hello, Vinicius!
      Thank you very much for the clarifications made in the article. But I still have a question about the CBE.

      How should I (if at all) declare a vehicle (a gasoline car) that I bought in 2022 on the 2023 CBE?

      I haven't found any specific code for motor vehicles that I can use in the Description or Consolidated Assets field.

      Thank you if you can guide me and congratulations on the article.

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Hi, I'm Vinicius Tersi, a specialist in international tax law.

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