Brazil’s 17.5% Crypto Tax: What It Means for Retail Traders, Whales & Offshore Wallets

Key Takeaways

• Brazil will apply a 17.5% flat tax on all crypto gains starting January 1, 2026.
• The tax affects all Brazilian residents, including those with offshore wallets or self-custodied crypto.
• Retail traders lose the R$35,000 monthly exemption and must report gains quarterly.
• The new law closes offshore loopholes and ends crypto-to-stock loss offsets.

Brazil has changed its approach to crypto taxation by applying a flat 17.5% tax on all profits. This includes both small investors and large-scale traders. The measure covers onshore and offshore holdings and aims to close existing legal loopholes.

While Brazil remains one of the most influential countries in Latin America, its strong position is shaped by the leadership of President Luiz Inácio Lula da Silva, elected in 2022. 

His administration aims to boost revenue, fight inequality, and increase regulatory oversight. Tax reform is the center of these efforts, and crypto is no exception.

This article explains Brazil’s new 17.5% crypto tax and what it means for different users. It looks at how the law affects everyday traders, high-net-worth investors, and offshore wallet holders.

Overview of Brazil’s New Crypto Tax Law

Provisional Measure No. 1.303, published on June 11, 2025, introduces a unified tax framework for financial applications and crypto assets. 

While the law is in effect, the practical application of the new tax rules begins on January 1, 2026. This means taxpayers will start calculating and paying the 17.5% tax on cryptocurrency gains realized from this date forward. 

The delay allows for necessary adjustments in tax reporting systems and provides taxpayers time to prepare for compliance.

However, the crypto community has already had a strong reaction. 

While the crypto community has expressed concerns, some consider the measure reasonable.

Key Aspects of Brazil’s Crypto Taxation: What Article 30 Reveals

Brazil’s new tax law broadly defines virtual assets to ensure full coverage of digital assets.

According to Article 30 of Provisional Measure No. 1.303, “income, including net gains, earned from transactions involving virtual assets and financial arrangements with virtual assets that represent digital value traded or transferred electronically and used for payment or investment purposes, including crypto-assets and cryptocurrencies, shall be subject to taxation.”

This is a broad definition that includes:

• Digital assets: Any digital asset that holds value and can be traded or transferred electronically, whether or not it is linked to a fiat currency.
• Cryptocurrencies and instruments: Mainstream tokens like Bitcoin (BTC) and Ether (ETH), as well as altcoins and decentralized financial (DeFi) instruments for transactions or investments.
• Token use cases: Any token, whether utility or security in nature, used to transfer value, pay for services, or generate returns through holding or trading.

What Are the New Key Crypto Tax Rules in Brazil?

The 17.5% crypto tax applies to Brazilian tax residents and some businesses under the Simples Nacional regime. The rate is charged on net gains, calculated as the difference between the sale and purchase costs.

• Deductible costs: Users can subtract transaction fees and other proven costs from their gains.
• Loss offsetting: Losses can be used to offset gains, but only for up to five future quarters.

• Quarterly reporting: Starting in 2026, crypto gains must be reported and taxed quarterly, not just in the annual tax return.
• Old vs. new losses: Losses accrued before 2026 must follow previous rules and cannot be mixed with those from 2026 onward.
• Self-custody included: The tax applies to crypto held without intermediaries, including hardware wallets and self-custody apps.
• Offshore crypto taxed: Assets held abroad, even through foreign platforms or legal entities, are included if the owner lives in Brazil.
• No cross-asset offsets: After January 1, 2026, users cannot offset crypto losses against profits from non-crypto investments. This means they will no longer be allowed to reduce taxes on gains from stocks, real estate, or fixed-income assets using losses from crypto.

Impact on Retail Traders

The end of Brazil’s R$35,000 monthly exemption affects small crypto users the most. Before this change, individuals could sell crypto under that threshold without paying tax. Now, even small gains from minor trades will be taxed. Therefore, retail traders must take specific steps:

• Track every transaction: This includes recording trade amounts, dates, and platforms used.
• Include fees and costs: Transaction fees and other verifiable expenses are deductible, but only if properly documented.
• Use crypto tax software: Using specialized tools can help automate tracking, reporting, and compliance.
• Stay compliant across platforms: Tax rules apply even when using self-custody wallets or foreign exchanges.

Essentially, all crypto activity, no matter how small or where it takes place, can create a tax event for Brazilian residents.

Implications for Whales and High-Net-Worth Hodlers

While small traders are among the most affected by the end of the tax exemption, crypto whales and high-net-worth holders face a different scenario. Under the old rules, large profits could be taxed at rates as high as 22.5%. 

Starting in 2026, the new 17.5% flat tax will apply to all gains, regardless of size. For wealthy individuals, this means a lower and more predictable tax rate.

This change offers some relief to those with large crypto portfolios, but it also comes with tighter oversight. The flat rate applies to both domestic and offshore holdings. 

It also covers assets held in self-custody or on foreign platforms. All crypto users must now follow stricter rules. However, a flat rate might incentivize investment.

Brazilians’ Offshore Wallets Under the Microscope

As the new taxation applies to all Brazilian tax residents, it does not exclude assets kept outside the country. 

Brazil’s crypto tax will apply to wallets on foreign exchanges, hardware wallets stored abroad, and crypto held through DeFi protocols or overseas platforms. The location of the asset does not matter if the owner is a Brazilian resident.

The change brings offshore crypto activity under the same tax framework as domestic holdings. This may create new challenges for foreign exchanges and decentralized platforms that do not currently report to Brazilian authorities. 

Without automatic data sharing agreements, enforcement will rely heavily on user self-reporting. Brazilian residents using international services must now track and declare their offshore gains with the same level of detail as domestic transactions.

Conclusion

Brazil’s flat 17.5% crypto tax marks a turning point for digital asset regulation in Latin America. 

By removing the R$35,000 exemption and enforcing taxation on both domestic and offshore holdings, the government is signaling that crypto must follow the same rules as traditional finance.

The new law simplifies the tax rate but increases compliance burdens for all users.

From casual retail traders to crypto whales using DeFi protocols, everyone must now report gains quarterly, track costs, and declare offshore assets. 

While the flat rate brings clarity, it also ends the flexibility that once attracted small investors. 

As the new rules take effect in 2026, all Brazilian tax residents must adjust their strategies to stay compliant.

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