Brazil: Income Tax Deadline Approaching with New Rules for Foreign Income Reporting

The deadline for filing income tax in Brazil is May 30th. Over half of taxpayers still need to submit their returns, with the expectation of 46.2 million filings this year, according to Agência Brasil. Failure to file on time can result in a suspended CPF or a fine, with a minimum value of R$ 165.74. Individuals with taxable income exceeding R$ 33,888 must file. This includes income from salary, retirement, and rent. Furthermore, tax-exempt income exceeding R$ 200,000, such as alimony, savings account income, and FGTS, must also be reported. The requirement extends to those with assets totaling over R$ 800,000. A significant change this year involves the taxation of foreign income. According to Andresa Bernhoeft, financial income or profits and activities declared abroad must now be reported to the Brazilian Federal Revenue Service. This income is subject to a flat tax rate of 15%, with taxes paid abroad deductible in Brazil. Bernhoeft recommends using the IRPF 2025 program for complex returns. She also advises caution when using pre-filled forms. While useful, these forms may lack information, especially for those with extensive financial activity. Therefore, it is crucial to review and complete the declaration carefully. Discrepancies between taxpayer-provided details and the Federal Revenue Service database can lead to issues. This can result in falling into the 'malha fina' (fine mesh), leading to an irregular CPF. Consequences include delayed restitution, ineligibility for public positions, and difficulty obtaining loans or passports. Resolution requires paying a fine, potentially up to 75% of the tax owed, and regularizing the tax situation.