EN 
BR The Communication of Final Departure (CSD), also known as the Communication of Final Departure from the Country, is an obligation created by the Federal Revenue Service (RFB) through the SRF Normative Instruction no. 208/2002. At no point in the Normative Instruction does it state that communication is optional, which is why many clients have doubts about what to do when they want to formalize the loss of their tax resident status in Brazil.
The aim of this text is to briefly explain the logic of the CSD and answer the main questions about this procedure:
What is the purpose of the Notice of Final Departure (CSD)?
The Communication of Final Departure from the Country (CSD) came into existence in 2010. Before that, there was only the obligation to submit the Declaration of Final Departure from the Country (DSDP). At that time, anyone who wanted to formalize their tax exit and their non-resident status in Brazil had until the end of the month following the exit to submit the Declaration, a very short deadline.
This came about because of inertia: legislation in the 1950s demanded the immediate delivery of the DSDP, making the payment of taxes conditional on obtaining a visa in the passport to allow the change of country1Law 3.470/1958, art. 17. A later law also required proof of tax clearance from those who wanted to transfer their tax residence abroad2Law 7.711/1988, art. 1, inc. I. In 2008, the Supreme Court ruled that this requirement was unconstitutional because it violated freedom of movement 3ADI 394-1, j. 25.09.2008.
With the short deadline, in practice most people missed the deadline and had to pay fines, or submit the DSDP twice: once to meet the deadline, and again the following year to include all the information obtained after the turn of the year.
Perhaps because of the Supreme Court, in 2010 all the deadlines for submitting income tax returns were unified, for submission in March and April of the year following the facts. To cover this gap, the IRS had to create a new ancillary obligation. For this reason Notification of Final Exit serves to allow taxpayers to organize themselves during the period from the tax exit itself (date on which a person ceases to be a tax resident in Brazil) until the moment you need to submit the Declaration of Final Departure from the Country.
What is the Communication of Final Departure (CSD)?
The Final Exit Communication is a electronic form filled in on the website of the Federal Revenue Service which is reported to the RFB:
- the date of loss of tax resident status in Brazil (i.e. the date of tax exit);
- if there are dependents leaving with the taxpayer (e.g. wife and minor children), the name and CPF of the person who must accompany the taxpayer; and
- if interested, also the name, CPF and full address of the attorney appointed by the taxpayer to carry out any procedures before the RFB.
Filling in the online form is simple. However, we suggest enlisting the help of a professional when the information that needs to be declared in the CSD is not yet clear:
- know whether the final output is in line with reality of a person and their family;
- which tax exit date is best to describe the situation of the person and their family;
- know if the tax output that you want to formalize is of the current year or if it is retroactive to a previous year;
- know which paying sources must be informed in advanceto avoid future problems with income from Brazilian sources (salaries, pensions, rents, financial income, stock market operations, etc;)
- know whether there is a need to appoint a proxywho will perform this task, and for what functions; or
- anticipate any difficulties in remitting funds from Brazil abroad or from abroad to invest in Brazil after the tax exit.
Let's assume in this text that all of the above doubts have been resolved, and that all you have to do is carry out the work. In this case, there are still some doubts about the CSD deadline, which will be dealt with in the following sections.
The deadline for submitting the Notice of Final Departure (CSD)
The Notice of Final Exit must be submitted by last day of the month February of the year following the year of the tax exit.
This means for those who left Brazil in 2021, the CSD must be delivered by 28.02.2022. For those leaving Brazil in 2022, the CSD must be submitted by 28.02.2023.
1. What is the delivery time for permanent departure and temporary departure?
For final exitThe date to be entered in the CSD is the date on which the taxpayer effectively left the country (i.e. the date of departure by plane or other means abroad). For those temporary exitThe date to be entered is the day following that on which the taxpayer completed 12 consecutive months of absence after leaving the country.
2. What happens if the CSD delivery deadline is not met?
You can't deliver a CSD late. The RFB only makes the electronic form available during the submission deadline. Therefore, those who left Brazil in 2021 and have not transmitted the CSD by 28.02.2022 will no longer be able to do so.
The regulations are confusing in this respect, and make no clear distinction between the loss of time for temporary departure and permanent departure. As a result, it appears that the consequence of failing to submit the CSD would make the taxpayer a tax resident in Brazil for another 12 months, as with temporary departure.
Even so, we found no express provision stating that anyone who misses the deadline is obliged to submit the CSD the following yearWe also found no provision for a fine for failure to deliver the CSD. We also found no provision for a fine for failure to submit the CSD.
Requiring a fine or extending tax residency in Brazil for 12 months also seems inconsistent with the reason the CSD was created in 2010. The criteria for losing tax residency are laid down by law. None of them make the loss of tax residency conditional on submitting the CSD or the Declaration of Final Departure from the country on time.
What matters for the loss of tax residency is the situation of an individual's social and economic ties with Brazilian societynot the fulfillment of a formality within an arbitrary deadline set by the RFB, no matter how justified it may be.
In any case, it is advisable to submit the CSD on time, mainly as a means of proving to paying sources that you have lost your tax residency status in Brazil until the DSDP can be submitted.
Notice of Final Exit and Paying Sources
The CSD form also makes it possible to identify the CPF or CNPJ of the paying sources so that communication letters can be prepared automatically to inform them of the taxpayer's new situation. Sources of payment in Brazil are, for example, banks and brokerage houses that hold financial investments, the INSS, the private pension plan administrator and any other entities that pay income to the taxpayer.
This is important because paying sources are obliged to inform the RFB of withholding income tax (IRRF) on income payments. The withholding tax codes and rates may be different for tax residents and non-residents.
Thus, if the source of payment is not informed, the taxpayer may be treated by the RFB as a tax resident. The proof of delivery of the information to the source of payment is instrument of proof to avoid this consequence, even if the source of payment continues to pay the IRRF incorrectly.
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 WhatsApp. Click here to send a message now.
Count me in!
References:
- 1
- 2
- 3ADI 394-1, j. 25.09.2008
Home › Forums › When do I have to submit the Notice of Final Exit?