How to Declare Cryptocurrencies on Income Tax in 2023

How cryptocurrency declaration works in Income Tax

In recent years, the cryptocurrency market has grown exponentially, attracting the attention of tax authorities in Brazil. Understanding the tax obligations related to cryptocurrencies is essential to remain compliant with the law and avoid issues with the Federal Revenue.

Some people believe that discussing the taxation of digital assets could limit their use. However, it is precisely the legal recognition of these assets that allows for advancements in the sector, such as the approval of cryptocurrency ETFs in various countries.

Rules for declaring cryptocurrencies in Brazil

According to the Federal Revenue, cryptocurrencies are treated as assets and must be declared on the Income Tax. It is mandatory to declare the possession of cryptoassets that exceed R$ 5,000, even if there has been no sale or transfer in the last year. In addition, transactions above R$ 30,000 must be reported to the regulatory agency.

Taxation only occurs in the case of a sale with profit. The important thing is to understand that if you hold cryptocurrencies above the mentioned values, you must declare them.

Step by step to declare cryptocurrencies in Income Tax

To correctly declare your cryptocurrencies, start by organizing all your financial information, including proof of purchase and sale, statements, and data on invested amounts. Then, access the official program for Income Tax declaration and navigate to the "Assets and Rights" section to enter information about your cryptocurrencies. Use the appropriate codes: 08 for Bitcoin, 89 for other cryptocurrencies, and 99 for NFTs and other digital assets. Provide details such as the name of the platform used, the amount acquired, the purchase date, and the amount paid. Finally, if you made a profit on the sale, calculate the tax owed on capital gains.

Calculation of capital gains tax

The capital gains tax on cryptocurrencies follows a progressive scale: 15% for profits up to R$ 5 million; 17.5% for amounts between R$ 5 million and R$ 10 million; 20% for profits from R$ 10 million to R$ 30 million; and 22.5% for gains above R$ 30 million. It is worth noting that profits of up to R$ 35,000 per month are exempt from taxation.

Tips to Avoid Problems with the Federal Revenue Service

To remain compliant with tax legislation, keep a detailed record of all your cryptocurrency transactions. Always convert the amounts to reais using the official exchange rate of the coin on the date of the transaction. Be mindful of deadlines, remembering that the capital gains tax must be paid by the last business day of the month following the transaction.

The role of platforms in tax compliance

Trading platforms operating in Brazil are required to report all transactions made by their clients to the Federal Revenue. This reinforces the importance of keeping records up to date and avoiding inconsistencies.

Penalties for not declaring cryptocurrencies

Failing to declare crypto assets or providing false information may result in fines ranging from 1.5% to 3% of the transaction value. In cases of tax evasion, the taxpayer may face more severe penalties, including legal proceedings.

Perspectives for tax rules in 2025

With the growing popularity of cryptocurrencies, it is expected that tax rules will become even stricter, primarily aimed at reducing potentially illicit activities. New monitoring mechanisms may be implemented, reinforcing the importance of staying updated on the legislation.

Tax regularization is an essential step for those who want to invest securely and build a sustainable financial future. Investing in knowledge, staying up to date with obligations, and taking advantage of opportunities in the cryptocurrency market is a combination that can yield good financial results in the future.