Brazil Eliminates Crypto Tax Exemption, Implements 17.5% Flat Rate

Brazil has eliminated its cryptocurrency tax exemption system, implementing a flat 17.5% capital gains tax on all digital asset transactions under Provisional Measure 1303. The sweeping change, effective June 12, 2025, represents a significant shift in the country's approach to crypto taxation as the government seeks to increase revenue from financial market activities.

Brazil’s Regulatory Framework

Previously, Brazilian investors enjoyed tax-free crypto trading on profits up to 35,000 Brazilian reals ($6,300) monthly, with progressive rates of 15% to 22.5% applied to larger gains. Earlier this year, Brazil modernized its crypto tax system, allowing for greater transparency and security. However, the new uniform rate eliminates all exemptions, meaning even small-scale traders will now face taxation on their crypto profits for the first time.

The measure extends beyond traditional crypto trading to include assets held in self-custody wallets and foreign cryptocurrency holdings. Investors can offset losses from the previous five quarters, though this window will be reduced starting in 2026. The tax will be assessed quarterly, creating a more structured reporting system for crypto gains.

While smaller investors face increased tax burdens, high-net-worth traders may benefit from the flat rate structure. Large transactions previously taxed at rates up to 22.5% will now be capped at 17.5%, potentially reducing the tax liability for Brazil's wealthiest crypto investors. The change is part of broader financial reforms that also introduce new taxes on previously exempt fixed-income instruments and increase betting revenue taxation.