Brazil Implements 17.5% Flat Crypto Tax, Affecting All Traders

On June 12, 2025, Brazil implemented a comprehensive new cryptocurrency tax law under Provisional Measure 1303. This law replaced the previous progressive tax model with a flat 17.5% tax on all capital gains from cryptocurrency, regardless of the amount earned or the location of the assets. This policy eliminated the previous exemption that allowed individuals to sell up to 35,000 Brazilian reais (~$6,300) in crypto each month without incurring taxes. The new tax applies to all digital asset activities, including those held on local or offshore exchanges, in self-custody wallets, and across decentralized finance (DeFi), non-fungible tokens (NFTs), or staking platforms. Tax calculations are now made quarterly, and losses can be carried over for up to five previous quarters, although this window will be shortened in 2026.

The previous crypto tax rules in Brazil were tiered, with small trades enjoying a generous exemption and larger profits being taxed progressively. Trades up to 35,000 reais per month were exempt from crypto tax, making it ideal for small investors and casual traders. Once that threshold was crossed, the following brackets applied: 15% tax on gains up to 5 million reais and up to 22.5% for gains exceeding 30 million reais (~$5.4 million). This meant that hobbyists typically paid nothing, medium-scale traders paid moderately, and only the largest investors faced top-tier taxation.

The most immediate consequence of the new crypto tax rules is felt by everyday users. Casual traders who previously stayed below the 35,000-real monthly cap are now fully taxed at 17.5%. For example, a modest 30,000-real profit, which was previously tax-free, now incurs a 5,250-real liability. This flat-rate model hits small investors and gig-economy traders the hardest, as the ease and simplicity of the exemption are gone, replaced by full liability, even for low-frequency users.

Under the prior regime, medium-scale investors paid a manageable 15% on gains under 5 million reais. They now face a 17.5% tax. However, for high-net-worth traders, the new system can actually reduce the tax burden. Previously, gains over 30 million reais were taxed at 22.5%. Now, that’s capped at 17.5%, leading to significant savings on large positions. For some, this reform is a windfall.

Brazil’s cryptocurrency tax law is part of a broader tax reform that expands the tax base across both traditional and digital assets. The 17.5% flat tax now also applies to digital assets held outside of centralized Brazilian exchanges, whether in offshore accounts or self-custody wallets. This closes a major loophole that once allowed avoidance through foreign platforms or cold storage. The law explicitly includes new sectors like DeFi lending, staking rewards, and NFT trades. Returns from yield farming or NFT sales are now taxed like any other crypto gain. These once-gray areas are now fully regulated.

Provisional Measure 1303 also introduces a new 5% tax on fixed-income investments like LCIs, LCAs, CRIs, CRAs, and other formerly tax-incentivized bonds. Additionally, the online betting tax will jump from 12% to 18% on gross gaming revenue starting October 2025.

Brazil’s flat 17.5% crypto tax places it in the middle of the global spectrum, stricter than tax havens but far more lenient than countries with punitive rates. In India, crypto capital gains face a steep 30% flat tax, coupled with a 1% tax deducted at source and no option to offset losses, making it one of the harshest regimes in the world. Japan’s crypto tax system is equally aggressive, with profits classified as miscellaneous income and rates climbing to 55% depending on the investor’s overall income. At the other end of the spectrum, countries like the United Arab Emirates, Switzerland, and El Salvador offer 0% capital gains tax on personal crypto holdings. These zero-tax jurisdictions are magnets for high-volume traders and crypto startups, but Brazil has opted for a middle path, still taxing but without suffocating the market.

The introduction of MP 1303 is a strong move in Brazil’s fiscal strategy. Previously, the government experimented with raising the IOF tax, a financial operations levy that briefly increased on credit and FX transactions. The hikes sparked backlash from markets and regulators, prompting a retreat. Rather than continuing with piecemeal tax hikes, Brazil has now opted for structural change. The move to tax digital assets, fixed-income investments, and online betting revenues reflects a broader Brazilian tax reform in 2025, aimed at broadening the tax base with more permanent and enforceable policies.

From tighter enforcement to payroll innovation, here’s what investors, companies, and regulators should expect next from Brazil. The Receita Federal is preparing to expand its oversight, especially on offshore accounts and self-custodied wallets. Expect enhanced data matching between declarations and onchain activity, particularly as Brazil begins to collaborate more closely with international tax bodies. Currently, investors can deduct losses across five previous quarters, a provision designed to smooth volatility. But, starting in 2026, this crypto tax loss carryover period will shrink, pressuring small investors to harvest losses in 2025 for maximum benefit. Legislation under review could allow Brazilian companies to pay up to 50% of employee salaries in crypto. Foreign contractors and freelancers may even receive 100% of compensation in digital assets, provided payments are routed through approved exchanges for conversion at official rates. This opens the door for crypto to move from an investment vehicle to a wage standard, at least for some. Even with new taxes, crypto adoption at the corporate level continues. Brazilian fintech Méliuz, for example, raised 180 million reais (~$32 million) in mid-2025 and has become one of Latin America’s largest public holders of Bitcoin (BTC), now holding nearly 600 BTC. This mirrors global trends where private firms are using Bitcoin as a strategic hedge despite rising crypto tax burdens.