Brazil Imposes 17.5% Flat Tax on All Crypto Profits

Brazil has implemented a 17.5% flat tax on all cryptocurrency profits, eliminating the previous exemptions for small investors. This new policy, stemming from Provisional Measure No. 1303, affects all retail investors, regardless of the size of their transactions or the platform they use. The change removes the prior R$35,000 monthly exemption and the progressive tax structure, leading to higher tax burdens for small and mid-sized traders while reducing the effective rates for large-scale investors.

The new tax policy is part of a broader fiscal strategy aimed at harmonizing the taxation of various financial products, including crypto, online betting, and fixed-income securities. The government has also increased taxes on online betting and fixed-income securities, signaling a shift in revenue collection priorities. Individual investors are now required to report their crypto gains quarterly, with the ability to offset losses for up to five previous quarters. However, this loss offset window will be restricted starting in 2026, reducing future tax advantages.

Under the new tax regime, small crypto holders are treated similarly to institutional players, facing a single 17.5% tax rate. This eliminates opportunities for tax arbitrage and simplifies compliance. However, corporate entities remain under different tax structures and cannot offset losses using virtual asset performance. The reforms also removed the tax-free status from fixed-income instruments like LCAs and LCIs, applying a 5% tax that affects sectors such as agriculture and real estate. Online betting platforms will now pay 12% to 18% in operator revenue taxes, reflecting the government’s intent to widen its tax base.

In parallel, Brazilian fintech Méliuz has raised R$180 million ($32 million) through a follow-on share offering to purchase Bitcoin. The shares were sold at a 5% discount, demonstrating investor confidence in the company's crypto strategy. Méliuz currently holds 320.25 BTC and aims to expand its digital reserves further. The company positions itself as Brazil’s first corporate Bitcoin treasury holder, reflecting Bitcoin’s growing appeal as a hedge against inflation and currency risks. This strategy aligns with Méliuz’s tech-savvy customer base and brand, enhancing its balance sheet strength amid global financial uncertainties.