Income Tax and Dollar: Updated Guidelines and Procedures

When declaring purchases or investments in dollars in Income Tax, taxpayers must be aware of certain specificities of foreign currency, especially with recent changes in tax legislation.

Dollar Investment Options and their Importance

International investments in dollars are a highly sought after option by Brazilians who wish to diversify their portfolios and reduce exposure to national market risks. The United States currency is widely accepted and traded around the world, making it a popular choice for both investment and travel use.

In addition, purchasing dollars can also be used for international travel, whether through cash, prepaid cards or travel money, providing travelers with a convenient way to deal with expenses abroad.

Read also: Simplified IRPF: Learn How to make the declaration easily

Declaration of Dollar Purchase on Income Tax

To declare the purchase of dollars in Income Tax, taxpayers must pay attention to different types of investment in foreign currency that need to be included in the declaration. This includes both possession of dollars in cash and balances held in bank accounts abroad.

To declare the purchase of dollars in cash or on a card (prepaid or travel money), the taxpayer must access the IR application or the official IRS website and follow the following steps:

1. Select the “Assets and Rights” tab;
2. Choose Group 6 (demand and cash deposit) and code 64 (cash – foreign currency);
3. Complete the breakdown form with details about the nature of the currency (dollars), the total quantity purchased and, if applicable, the institution’s CNPJ;
4. Inform the asset situation by December 31st of the previous year.

For taxpayers who have balances in bank accounts abroad, it is necessary to fill in the corresponding category, declaring the amount held in financial institutions outside Brazil. The bank or broker usually provides instructions on how to obtain this information for inclusion in the statement.

Read also: Alert: Revenue wants to close loopholes for income tax evasion with cryptocurrencies and tax havens

Declaration of Investments in Dollars in IR: Changes and Procedures

In December 2023, Income Tax legislation underwent significant changes that affect the taxation of financial investments abroad. From January 1, 2024, known as “Exterior IR”, income and gains will be calculated annually and taxed at a fixed rate of 15% on the net balance on December 31 of each year.

This change represents a transition in the way individual investors calculate and declare their income and gains abroad. Previously, income was calculated monthly through Carnê-Leão and the Capital Gains Program, but now it will be consolidated into a single declaration form.

In addition, taxpayers can choose to update the value of their financial investments in dollars to the market value on December 31 of the previous year, by paying tax at a reduced rate of 8% on the difference between the market value and the cost of acquiring the assets.

More Guidelines for IRPF 2024

For more detailed guidance on declaring dollar purchases and other aspects related to Income Tax, taxpayers can consult the official website of the Federal Revenue of Brazil. There, you will find updated information and specific forms that assist in the declaration process.

It is important that taxpayers are aware of the tax obligations related to purchases and investments in dollars and make the declaration correctly and within the deadline stipulated by the Federal Revenue Service, which is generally May 31st. This knowledge and compliance ensures accurate reporting and avoids potential tax penalties.