US–Brazil Tax Rules

How American and Brazilian tax systems interact for cross-border investors

For U.S. citizens investing in Brazil, understanding the tax relationship between the two countries is essential. Although there is no tax treaty between the U.S. and Brazil, both nations allow mechanisms that prevent double taxation when investments are handled correctly.

This page explains how the systems work together and what U.S. investors must comply with when investing abroad.

1. No US–Brazil Tax Treaty: What It Means

Unlike the U.S. relationship with many countries, Brazil does not have an income tax treaty with the United States.
This affects investors in three important ways:

✔️ 1. No reduced withholding tax

Investors do not receive treaty-based reduced tax rates on Brazilian investment income.

✔️ 2. No formal prevention of double taxation

Both countries may tax the same income — but the U.S. tax code offers credits to avoid this.

✔️ 3. No automatic information exchange treaty

However, FATCA (explained below) still applies and requires Brazilian institutions to report information about U.S. investors.

Even without a treaty, U.S. investors can still avoid double taxation effectively.

2. How the U.S. Taxes Foreign Investment Income

The United States taxes its citizens on worldwide income, meaning all income earned in Brazil must be reported on U.S. tax returns.

✔️ Income the U.S. requires you to report:

  • Interest from Brazilian fixed income
  • Dividends from Brazilian companies
  • JCP (Interest on Equity)
  • Capital gains from assets sold in Brazil
  • Rental income from Brazilian property
  • Income distributed by Brazilian funds

✔️ How double taxation is avoided

Although there is no treaty, the U.S. allows use of the Foreign Tax Credit (FTC).
This means:

  • Any tax paid to Brazil (usually 15% withholding)
  • Can often be used as a credit
  • To reduce the tax owed in the U.S.

If the Brazilian tax is equal to or higher than the U.S. tax for that income category, you may end up owing zero additional tax.

3. FATCA: Reporting Requirements for U.S. Citizens in Brazil

The Foreign Account Tax Compliance Act (FATCA) requires foreign financial institutions — including those in Brazil — to report account information belonging to U.S. persons.

✔️ What Brazilian institutions report to the U.S.:

  • Account ownership
  • Account balances
  • Investment holdings
  • Certain income distributions

Because of FATCA:

  • Brazilian brokers and banks require U.S. investors to complete extra forms
  • U.S. investors must file specific IRS forms for their foreign accounts

This does not increase taxation, but it increases reporting obligations.

4. Brazilian Taxes and How the U.S. Credits Them

Most Brazilian taxes for foreigners are withholding taxes collected automatically, including:

  • 15% on fixed income interest
  • 15% on JCP (Interest on Equity)
  • 15% on rental income
  • 15% on capital gains from real estate

✔️ How the U.S. treats these Brazilian taxes

You can typically claim these as Foreign Tax Credits on your U.S. tax return, which prevents paying tax twice.

✔️ Example

  • You receive $1,000 in interest from Brazilian bonds.
  • Brazil withholds $150 (15%).
  • When filing your U.S. taxes, you may credit that $150, reducing or eliminating the U.S. tax owed on that same income.

5. Reporting Obligations for U.S. Investors

Beyond income tax, Americans investing in Brazil must comply with U.S. foreign asset reporting rules.

✔️ FBAR (FinCEN Form 114)

Required if your total foreign account balances exceed $10,000 at any moment during the year.
Includes:

  • Brokerage accounts
  • Bank accounts
  • Investment accounts

✔️ FATCA Form 8938 (Statement of Foreign Financial Assets)

Required if your foreign investments exceed certain thresholds (varies depending on filing status and whether you live in the U.S. or abroad).

✔️ Other possible forms

Depending on the structure:

  • Form 8621 (for certain funds classified as PFICs)
  • Form 3520/3520-A (for certain trusts or foreign structures)

These forms do not generate taxes on their own; they only ensure compliance.

6. Currency Conversion Rules (Important!)

The U.S. and Brazil use different tax calculation rules for currency conversion.

✔️ In Brazil

Taxes are calculated in Brazilian Reais (BRL).

✔️ In the United States

Gains or losses must be converted to U.S. Dollars (USD) using IRS-approved exchange rates.

This can create different taxable results in the two systems.
For example, it is possible to have a gain in Brazil but a loss in the U.S., or vice versa.

7. Summary: What U.S. Investors Must Keep in Mind

  • Brazil taxes most investment income at the source (usually 15%).
  • The U.S. taxes global income but allows a credit for Brazilian taxes paid.
  • There is no tax treaty, but you can still avoid double taxation.
  • FATCA requires Brazilian institutions to report information on U.S. investors.
  • You must file U.S. forms like FBAR and FATCA Form 8938.
  • Currency differences may lead to different results on U.S. tax returns.

✔️ Explore the Next Sections

➡️ READ MORE → Taxes for Foreigners
➡️ READ MORE → Capital Gains
➡️ READ MORE → Declarations

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