Capital Gains

How capital gains are taxed for U.S. investors in Brazil

Capital gains occur when you sell an asset for more than you paid for it.
For foreigners investing in Brazil, the rules depend on the type of asset — stocks, investment funds, fixed income, or real estate — and whether the tax is withheld at source or must be paid manually.

This guide explains, in one complete page, how capital gains taxation works for non-resident investors.

1. Capital Gains on Stocks (Equities)

For foreigners investing in Brazilian stocks through a brokerage account, the system is simpler than for Brazilian residents.

✔️ Tax rate

  • 15% on capital gains for non-residents
  • No exemptions, even for small monthly gains (Brazilians have a small exemption; foreigners do not)

✔️ How the tax is collected

  • For non-residents, the tax is often withheld automatically by the broker
  • If not withheld, it must be paid manually using a monthly DARF (but foreign investors rarely need to do this)

✔️ Example

  • Buy shares for $5,000
  • Sell them later for $7,000
  • Capital gain = $2,000
  • Brazil taxes: $300 (15%)

2. Capital Gains on Investment Funds

Different types of funds (equity funds, multimarket funds, fixed-income funds, etc.) can trigger taxation in different ways.

✔️ How it works for foreigners

  • Most taxes for non-residents are withheld at source
  • You receive the net amount, already taxed
  • No annual Brazilian tax filing required in most cases

✔️ Typical rates

  • Gains distributed by funds → 15%
  • Gains upon redemption → 15%

✔️ Special note

Some Brazilian funds may be classified as PFICs (Passive Foreign Investment Companies) for U.S. tax purposes, which affects U.S. taxes, not Brazilian taxes.
But this does not change the tax in Brazil.

3. Capital Gains on Fixed Income Products

Fixed income earnings in Brazil generally fall under withholding tax, meaning gains are already taxed before you receive them.

✔️ Tax treatment

  • Earnings from fixed income products are typically taxed at 15% IRRF
  • This includes interest and certain gains upon redemption
  • For foreigners, these amounts are always net, already taxed by the institution

✔️ When capital gains may apply

If you buy and sell fixed-income securities on the secondary market (less common), you may trigger a capital gain.
These gains are also generally taxed at 15%.

4. Capital Gains on Real Estate

Real estate taxation for foreigners is different because the government does not withhold the tax automatically — the investor must pay it manually.

✔️ Tax rate

  • 15% on capital gains for non-residents

✔️ How it works

When a foreigner sells a property in Brazil:

  • The gain must be calculated in Brazilian Reais (BRL)
  • The tax must be paid through a DARF, usually within 30 days of the sale
  • An accountant or notary can assist with the calculation

✔️ Example

  • Bought a property for R$ 600,000
  • Sold for R$ 800,000
  • Gain = R$ 200,000
  • Tax = R$ 30,000

✔️ No step-up basis

Brazil does not use the U.S. concept of “step-up basis.”
Capital gains are calculated based on the original purchase price.

5. Currency Conversion Considerations

Brazil and the U.S. use different rules for calculating gains.

✔️ In Brazil

Gains are calculated entirely in BRL.

✔️ In the U.S.

Gains must be converted into USD using IRS-approved exchange rates.

This can create situations where:

  • You have a gain in Brazil but a loss in the U.S.
  • You have a loss in Brazil but a gain in the U.S.

Both tax systems must be followed independently.

6. Do Foreigners Need to File a Brazilian Tax Return for Capital Gains?

Usually no, unless:

  • You sold real estate
  • Your broker or fund did not withhold the tax
  • You earned income that is not subject to automatic withholding
  • You become a Brazilian tax resident

For most investments through regulated platforms, the tax is automatically withheld.

7. Summary for US Investors

  • Capital gains for non-residents are usually taxed at 15% in Brazil
  • Stocks, funds, and fixed-income gains are often withheld automatically
  • Real estate sales require manual tax payment
  • Gains must be calculated in different currencies for Brazil and U.S. tax returns
  • The U.S. allows a Foreign Tax Credit to avoid double taxation

✔️ Explore the Next Sections

➡️ READ MORE → US-Brazil Tax Rules
➡️ READ MORE → Taxes for Foreigners
➡️ READ MORE → Declarations

Rolar para cima