Property Tax Brazil

Non-residents are taxed in Brazil on income arising from Brazilian sources only and are liable to a number of other property related taxes outlined below. An individual is considered resident in Brazil if s/he spends 183 days or more in any tax year (calendar year), consecutives or not.

Non-residents may also be liable for tax on the same source of income in their home country of residence, where taxes are levied on worldwide income. The presence of a Double Tax Treaty will impact the tax implications on income received from Brazilian Property. There are double taxation agreements with Brazil and France, Germany, Hungary, Portugal, Spain the UK but currently there is no DTA in place between Ireland and Brazil.

Tax Identification Number

Non-resident who have assets or rights subject to public registration in Brazil, inclusive properties, vehicles, bank account, investment in financial market, investment in capital market are obliged to register for a CPF (Personal Tax ID Number). When a Brazilian company is set up, a CNPJ (Corporate Tax ID Number) should be requested.

Taxes payable when purchasing a property are as follows:

Transfer Tax on purchase (ITBI) Upon the Notary verification of the property purchase deal you will be required to pay transfer fee @ 2% of property market value attributed by City Hall (Prefeitura). There is no VAT equivalent in Brazil. If Brazil was to substitute its taxes for the VAT version it would get rid off many major taxes such as: COFINS, PIS, IPI, ICMS, ISS and even ITBI.

Ongoing taxes payable in Brazil on property are as follows:

Local Property taxes (IPTU) is paid once a year and its value is based on the property market value which is evaluated accordingly to laws established by Municipal Chamber. Thus, the criteria can differ from one municipality to another. It varies from 0.6% to 2%. Waste Collection fee (TCRS) applies in Brazil. It has a complicated formula that takes in consideration localization, type of property and its size.

Personal Income Tax on rents for a non-resident is subject to 15% tax on rents up to R12,000 and is payable monthly; over that value a 27.5% rate applies. Tax is payable after allowable deductions for expenses incurred in connection with letting the property.

Personal Income tax form must be submitted by 30th April – any balance of tax payable must be paid within 30 days of a notice of assessment being received.

Corporate Income Tax is payable if property is purchased through a company and is calculated @ 15% on the company profits. All deductions will be allowed for costs incurred since receipts are kept and informed on the ledger. The Corporate Income tax form must be submitted by 30th March – any balance of tax payable must be paid within 30 days of a notice of assessment being received.

Even if you do not receive income in Brazil you still have an obligation to file an Annual

Tax Return in Brazil.

Other applicable taxes are as follows:

Capital Gains Tax is payable on any increase in value since acquisition @ 15%. The gain is calculated on the difference between the sale price and the higher of the tax estimation and the price of acquisition (Notary Deeds), corrected by an inflation index.

Inheritance Tax is payable by non-resident beneficiaries on certain transferred assets Donations and Inheritances are charged at a rate of 2.5% or 4% depending on the donation or inheritance value.

If you are considering buying property abroad or have already made an overseas property investment, it is important that you are aware of your tax obligations and the property taxes associated with such a purchase.

Worldwide income

If you are an Irish or UK resident you are obliged to declare and file your Brazilian income in your resident country. There is a double taxation agreement between Brazil and the UK but not Ireland so double taxation relief applies to UK residents but not Irish.

More Here Property Tax Advice