Published in 04/04/2016, Jornal Folha de S. Paulo
Are you going to live a period working abroad? Are you thinking about trying life in another country? It is okay with that but Internal Revenue Service (IRS) needs to know about. If your remoteness will be higher than 12 months, from IRS point of view you are a non-resident citizen, subject to distinct rules in comparison to the ones applicable to Brazilians residents. I talked to the lawyer Luciana Navarro Pantaroto, from Dian & Pantaroto, who is a specialist in this subject.
I AM GOING OUT OF THE COUNTRY DEFINITELY
In order to terminate your tax residency in Brazil, you have to provide: the Communication and the Declaration of Definitive Exit from the Country. They seem to be the same thing but they are not.
The Communication of Definitive Exit from the Country can be made via Internal Revenue Service’s website from the date of the departure until February of the following year. The Declaration of Definitive Exit from the Country must be filed between March and April of the following year using the same computer programs provided by Internal Revenue Services to submit the annual income tax returns. From this moment, your obligation to file tax returns in Brazil ceases. There is a tax authority in another country just waiting for you.
Your new condition of non-resident must be communicated to all income payment sources; the tax over them will change. Besides the company you work for, if any, warn also banks and financial institutions where you have a current account, investments, private pension plans and real estate offices that manage any real estate’s rentals.
The current account you will keep here becomes a CDE Account (Account of Domiciled Abroad), with specific rules for this type of account. Talk to your bank to understand what may change.
BRAZILIAN TAX AUTHORITIES DID NOT LIKE IT
Do not deceive yourself. Although a non-resident, you will continue paying taxes here. Income received from legal person are taxed at the source. The income from individuals, such as real estate’s rentals for example, are taxed by monthly income tax in the date of receipt, using specific code and tax for non-residents.
Forget everything you know about tax in Brazil. Many rules for Brazilian residents do not apply for non-residents. Do you know that VGBL Private Pension Plan that you bought with regressive taxes table to pay only 10% after 10 years? As a non-resident the tax will occur in the source with a fixed aliquot of 15%.
Another example is the loss of the right to the exemption benefit over capital gain during a real estate sale. It is essential talking to a tax lawyer or a financial planner with knowledge in this subject for an adequate tax planning.
And once your history with Brazil is not over, it is a good practice to appoint a proxy, resident in Brazil, to represent you towards the Internal Revenue Service and other institutions.
TAX ABROAD
Research how does the taxes work in the new country of residence. Some countries have signed a treaty to avoid double taxation of income with Brazil, what may alleviate the tax burden in some situations.
If you are going to work abroad, be aware that Brazil has signed social security agreements with some countries that enables, in specific situations, that your contributions to the social security be paid only in one of the countries during your staying abroad. The time of contribution may be considered to receive retirement benefits in both countries.
RETURN TO BRAZIL
Have you decided to return? It will be very easy to recover you tax resident condition in Brazil, you just have to file an Annual Tax Return here. Have you left a current account and assets abroad? Declare all of your assets to the Internal Revenue Service when you return.
Income such as salaries, retirement, interests, dividends and capital gains received abroad are taxed here, except those situations predicted in the agreements. As a rule, tax over abroad incomes must be collected in the following month of receipt.
It is important to consult a tax specialist so that the assets, debts and incomes abroad be reported and eventually taxed according to the Brazilian tax law, especially with regard to FX rates of the original currency for Brazilian reais.
Hopefully your life abroad be great! At least different, I can guarantee it will be.
Marcia Dessen, with the collaboration of Luciana Pantaroto
