Brazilian Retirement Visa: where should I pay income tax?

Among the several types of Brazilian visas for foreigners, there is the visa intended for retirees and pensioners who wish to live in Brazil regularly, which may be granted as long as all requirements are met.

However, the decision of moving from one country to another may bring many questions about different aspects, including those related to taxes. For example, how and where should these citizens pay income taxes?

In this article, we are going to explain how this income tax payment must be made in regard to foreign retirees and pensioners living in Brazil. See more details below.

If you have any doubts and want to talk to our team of specialists, click here and send your case to us.

Author: Lucas Gomes Furtado

What is the Retirement Visa, and who can apply for it?

First, it’s important to explain about the nature of the Retirement Visa.

This type of temporary visa is aimed at retired people, or people who receive death benefits in another country, and who wish to live within Brazilian territory.

For such purposes, they must prove that this income is recurring, and they will also have to demonstrate their capacity to transfer at least US$ 2,000.00 (two thousand dollars) to Brazil every month, in foreign currency.

This amount may also be complemented by other recurring sources of income abroad, such as income from rental properties.

Thus, if they meet all the criteria, the foreigner must reunite all the necessary documentation, as well as proof of their income, and request the visa, which may be valid for two years, depending on each case.

At the end of this period, the visa may be extended permanently, or the foreigner may request a residence permit.

How does income tax payment work for foreigners in Brazil?

In reality, what defines the charging of income tax in Brazil, both for Brazilians and for foreigners, is whether the person is considered a tax resident in the country or not.

In other words, according to the Brazilian legislation, a tax resident is someone who meets at least one of the following conditions:

• has stayed in Brazil for more than 183 days in a period of twelve months, whether consecutive or not;
• owns companies or property in Brazil, or whose main source of income has origins in Brazil;
• has the intention of staying in Brazil permanently, which may be attested by the acquisition of property, employment bonds, family etc.

Therefore, in general, the foreigner who is considered a non-resident will only have to pay income tax in Brazil if they obtain any source of income here. Or if they are a part of an investment or lucrative activity in the country.

On the other hand, if the foreigner matches the conditions to be a tax resident, they will have to declare all of their sources of income in Brazil and abroad, in order to also pay income tax here.

Nonetheless, it is important to mention that Brazil has signed several diplomatic agreements with other countries to prevent double taxation, which means that the same income will not be taxed twice.

The text continues after the form.

Some countries which Brazil has signed this type of agreement with are:

• Argentina;
• Canada;
• Spain;
• France;
• Italy;
• Israel;
• Japan;
• Mexico;
• Portugal;
• Sweden;
• Uruguay;
• among others.

Thus, if a foreign tax resident in Brazil comes from a country with which Brazil has signed an agreement regarding this issue, and where the foreigner receives income, it is possible to compensate the difference to the Brazilian income tax.

For that to happen, the foreigner must prove, in Brazil, the payment of income tax in that other country in order to allow the compensation of money, therefore preventing a double payment on the same tax.

It is also recommended that they seek information regarding the details established in the agreement between both countries, since each treaty has specific rules and particularities which may affect their citizens.

And how does it work in relation to foreign retirees in Brazil?

As it was mentioned before, the rules referring to tax income are the same for both Brazilians and foreigners, including retirees, as long as they are considered to be tax residents.

In regard to foreign retirees/pensioners who are tax residents in Brazil, some things must be taken into consideration.

First is the possibility of no double payment through a diplomatic agreement, as previously mentioned.

That is why i’s vital for a foreign retiree to get informed about the existence of such treaties between Brazil and their country of origin, and what are the specific rules contained there, to make use of this benefit.

Generally, if there is no agreement, the foreign retiree who lives in Brazil is responsible for paying income tax, both in Brazil and in the other country, on the retirement they receive abroad.

It is clear, however, that there may be situations of exemption or reduction of income tax in certain scenarios, so every case must be examined in a special manner.

Among these situations is the possibility of exemption according to the actual amount received monthly, which we are going to talk about next.

What is the percentage of income tax for the foreign retiree in Brazil?

Overall, the rules about tax calculation and percentages determined by the Brazilian law apply for both Brazilians and foreigners, considering they are tax residents in the country.

Recently, the income tax chart has been altered as to extend the exemption bracket, in compatibility with the increase in minimum wage, which should be approved by the Brazilian President later this year.

Therefore, the new numbers will apply for the income tax declaration to be submitted in 2024, which are the following:

Tax Base	Percentage
Up to R$ 2,112.00	0%
From R$ 2,112.01 to R$ 2,826.65	7.5%
From R$ 2,826.66 to R$ 3,751.05	15%
From R$ 3,751.06 to R$ 4,664.68	22.5%
Above R$ 4,664.68	27.5%

 

It’s also important to mention that there will also be an optional deduction of R$ 528.00 on the salary, which will be applied automatically to those who choose it.

In other words, it is possible to conclude that monthly earnings as high as R$ 2,640.00 will then belong to the new exemption bracket, and it will also be applied to retirement income received abroad.

How should the income tax payment be made by a foreign retiree in Brazil?

Briefly, the foreign retiree who lives in Brazil must follow the instructions step-by-step below, in regard to tax income:

• verify whether their income qualifies within the existing income tax exemption bracket, according to Brazilian law;
• if they do, the income tax declaration will then be optional;
• if they do not, the foreigner will have to use the system of Federal Revenue of Brazil in a computer or a mobile phone, to fill out the income tax declaration;
• to do this correctly, they must seek information in regard to the existence, or not, of an international agreement about the prevention of double income tax payment between Brazil and the country where the foreigner receives their retirement;
• every month the foreigner must fill out a declaration, in the form of carnê-leão (monthly mandatory collection), which is the document determined by Brazilian law to collect taxes from income with sources in another country;
• therefore, they must declare the retirement money received abroad, as well as other property and income, and also declare the income tax already paid in the other country, for the money compensation to be performed, when possible;
• any money received or tax paid abroad must be converted initially to American dollars, according to the exchange rate of the day of reception or payment, and afterward, converted to reais;
• once the declaration is complete, the system will emit a DARF (Brazilian Federal Tax Payment Form) for the foreigner to pay the income tax, which can be made in a bank or online.

How can Koetz help the retiree with this proceeding?

A specialized lawyer is the fully equipped professional to assist a foreign retiree in all steps related to their income obligations.

That is because they have the technical knowledge about local laws, international laws, and diplomatic agreements. They are also able to help with the bureaucracy, especially during the fulfillment of the form, the payment of the tax, occasional requirements of compensation and other related subjects.